ABSTRACT
Indonesian companies are largely divided into purely domestic companies (Penanaman Modal Dalam Negeri, PMDN) or foreign capital companies (penanaman modal asing, PMA), based on whether they have any foreign shareholders. To establish a PMA, two or more founders are required to subscribe the shares and become shareholders, in the same manner as for a PMDN. If a PMDN issues new shares to a foreigner, or a PMDN's shareholders transfer or sell its shares to a foreigner, the company's legal status is converted from a PMDN to a PMA. The documents for Indonesia Investment Coordinating Board's (BKPM) approval of a shift from PMDN to PMA are the same as the documents required to submit when establishing a PMA. Although a foreign shareholder's payment for shares subscription is not a mandatory requirement to obtain BKPM's approval, the foreign investor may remit the price for shares in advance.
