DEFINITION of 'PT (Perseroan Terbatas)'

PT is an acronym for Perseroan Terbatas, a term that represents a limited liability company in Indonesia. Any company in Indonesia that directly receive foreign investments are required to take the form of PT. A limited liability company (LLC) is significant in that investors in the company are liable only for the amount of their original investment should the company go into debt or become insolvent.

BREAKING DOWN 'PT (Perseroan Terbatas)'

A PT is a business entity that is formed and acts per commercial law. In most instances, business entities are formed to sell products or services, however business entities exist that perform charitable acts or perform other allowable activities.

Legality

Types of business entities are defined and outlined differently in the legal systems of various countries. In terms of comparison, a PT in Indonesia is similar to a public limited company (plc) or an Ltd in the United Kingdom, Ireland or the United States. While these are English-speaking equivalents, specific rules and guidelines are adherent to Indonesia law regarding business entities. Such laws, rules or governing may vary from jurisdiction to jurisdiction within Indonesia as well.

Types of PTs in Indonesia

There are a few basic types of PTs in Indonesia. An open PT is an LLC that has shares that may be purchased or owned by the public. Typically, this type of LLC shares ownership of a bearer not in the company’s name and thus buying and selling shares is fairly simple.

A closed PT is an LLC that allows shares to be purchased or owned only be certain individuals or groups and does not make shares available to the public. This is most common for companies that are family owned and/or operated.

A domestic PT is an LLC that physically exists and offers its goods and/or services within Indonesia. These types of PTs must strictly comply with rules governing businesses in the Republic of Indonesia.

An individual PT is an LLC with shares that have been issued to and are owned by only one person. This person, typically the owner/director of the company, has a singular authority within this type of PT.

A foreign PT is an LLC that is incorporated in a foreign country and is thus subject to the foreign country’s regulations and restrictions. Likewise, if a foreign country establishes a PT in Indonesia, that LLC is subject to the laws and regulations of Indonesia.

A general public PT is an LLC that has a free-shares type ownership system. Shares of this type of company can be owned by anyone, similar to an open PT, however shares of this type of company can also be listed on the stock exchange.

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