The concept of beneficial ownership has become an essential component of modern corporate governance, aimed at increasing transparency regarding individuals who ultimately control or benefit from a corporation. In Indonesia, this principle is reinforced through Minister of Law and Human Rights Regulation No. 2 of 2025 on the Verification and Supervision of Corporate Beneficial Owners (“Regulation 2/2025”) and Minister of Law and Human Rights Regulation No. 49 of 2025 concerning Requirements and Procedures for the Establishment, Amendment, and Dissolution of Limited Liability Companies (“Regulation 49/2025”). These regulations introduce clearer obligations for corporations in identifying, reporting, and updating their beneficial ownership information.
In general, a beneficial owner refers to an individual who ultimately owns, controls, or benefits from a corporation, whether directly or indirectly. Control may arise through majority share ownership, voting rights, the authority to appoint or dismiss directors or commissioners, or other arrangements demonstrating effective control over the company. Indonesian regulations further clarify that a beneficial owner may be a person who exercises control over the corporation, receives economic benefits from it, or is the true owner of the corporation’s funds or shares.
Under the current regulatory framework, corporations are required to identify and determine their beneficial owners as part of the Know-Your-Beneficial-Owner (“KYBO”) principle. Once determined, the beneficial ownership information must be submitted through the Legal Entity Administration System (“AHU”) maintained by the Ministry of Law and Human Rights. The information generally includes the identity of the beneficial owner, nationality, identification number, and explanation of the ownership or control relationship.
Documents relating to the Company’s beneficial owner that shall be submitted to AHU, including: (i) a power of attorney from the Board of Directors to the appointed notary for the submission of beneficial owner information; (ii) a statement from the Board of Directors identifying the beneficial owner; and (iii) a letter of consent from the beneficial owner
To stay compliant, corporations are required to update their beneficial ownership information on an annual basis, or more frequently if there are changes in ownership or control. Non-compliance with these obligations may lead to administrative sanctions, including written reprimands, inclusion on a blacklist, or suspension of access to the AHU online system for corporate legal services.
Overall, the strengthened beneficial ownership framework reflects Indonesia’s broader efforts to enhance corporate transparency and prevent the misuse of corporate entities for illicit activities, including money laundering and tax evasion. Corporations are therefore advised to ensure that their beneficial ownership data is accurate, properly documented, and regularly updated in accordance with the applicable regulations.
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