Definition of PT (Limited Liability Company), Types, Advantages

All information about Limited Liability Companies (PT) that needs to be known before deciding to establish this business entity.

The economic growth sector in Indonesia is inseparable from the establishment of various business entities. One of them is a Limited Liability Company or PT. So, what is PT, and what are the characteristics of this business entity? What are its strengths and weaknesses? Here is a complete review.

Read Also: Complete Guide to Registering PT Online, Easy and Fast!

Definition of Limited Liability Company (PT)

Simply put, the definition of PT is one type of business entity protected by law with capital consisting of shares. An individual is considered the owner of PT if they own a portion of the shares in proportion to the amount invested.

According to Law Number 40 of 2007 concerning Limited Liability Companies (PT), a Limited Liability Company is a legal entity established based on an agreement and conducts business activities with basic capital entirely divided into shares, also known as a joint venture.

In running a Limited Liability Company, the owned share capital can be sold to others, allowing for changes in organization or ownership without having to dissolve and re-establish the company. Additionally, as it is formed by agreement, PT must be established by a minimum of 2 (two) people. The agreement must be known to a notary and documented to obtain approval from the Minister of Law and Human Rights before officially becoming a PT.

Read also: Check This Out! Tips for Choosing a Company Name for PT

Capital of Limited Liability Company

After understanding the definition of PT, where does the capital come from to establish a PT? Basically, the sources of funding in a PT are divided into 3 (three), namely:

  1. Authorized Capital
    • This is the company’s capital that can assess its size. The existence of this capital will help the company determine its class, whether it is a large, medium, or small class PT.

Read Also: What is TDP (Tanda Daftar Perusahaan)?

  1. Placed Capital
    • This capital refers to the owners’ ability regarding the amount of capital invested in the company. Article 33 of the Limited Liability Company Law states that the minimum amount of placed capital is 25% of the company’s authorized capital.
  2. Paid-Up Capital
    • Paid-up capital is considered the most tangible source of PT funds because it indicates the amount of capital contributed by shareholders. The minimum amount of paid-up capital for PT is at least 25% of the authorized capital. In other words, it is equal to the capital placed by shareholders.

Read also: Differences Between Individual PT and CV Every Prospective Entrepreneur Should Know

Types of Limited Liability Companies

Law Number 40 of 2007 Concerning Limited Liability Companies or UUPT classifies PT into 3 (three) types:

  1. Closed Limited Liability Company (PT)
    • A characteristic of a closed PT is that shareholders come from a specific group or individuals who already know each other, such as in a family company.

Read Also: What is NIB (Nomor Induk Berusaha)?

  1. Public Limited Liability Company (PT)
    • Article 1 paragraph 8 of UUPT states that a Public Company is a type of company that has met the criteria for the number of shareholders and paid-up capital according to its regulations. Meanwhile, Law Number 8 of 1995 concerning the Capital Market or UUPM Article 1 paragraph 22 states that a company is considered a public company if its shares are owned by at least 300 people with a minimum paid-up capital of Rp3 million.
  2. Open Limited Liability Company (PT) (Tbk.)
    • Article 1 paragraph 7 of UUPT states that an Open PT offers shares openly. Not only that, this type of PT must also be able to meet all the requirements needed for a Public PT, offering shares on the Stock Exchange or selling shares to the public.

Read Also: Differences Between Open PT and Closed PT

Advantages and Disadvantages of Limited Liability Companies

Every business entity has strengths and weaknesses. So, what are the advantages of a Limited Liability Company?

  • The legal entity form ensures the existence of PT, even in the event of a change in ownership.
  • Easy access to funding, facilitating the expansion of the company.
  • The transfer of shares from previous owners to new owners can be done more easily.

On the other hand, the disadvantages of PT are:

  • Requires a large amount of capital to establish.
  • The establishment process tends to be complex.
  • Sometimes transparency does not occur, especially concerning profit figures.

Understanding the definition of PT is essential before establishing a company. If you need assistance in establishing a PT or establishing a CV, contact immediately. Hope it’s useful.