Client Alert · Corporate Law · Prasetyo Law Office · Updated 14 August 2026
Legal framework
Law No. 40 of 2007 on Limited Liability Companies (UUPT) addresses two different mechanisms: the use of net profit and payment of dividends decided by the General Meeting of Shareholders (RUPS) under Article 71, and interim dividends under Article 72. “Final dividend” is a common commercial expression, not a defined term in the UUPT.
Dividend from net profit after year-end
The RUPS decides how the company’s net profit will be used after approving the annual report and financial statements. A dividend may be distributed only if the company has positive retained earnings. An audit is required only where Article 68 of the UUPT or applicable sectoral rules require audited financial statements; it is not a universal condition for every Indonesian limited liability company.
Under Article 70, a company with positive net profit must make an annual allocation to the mandatory reserve until the reserve reaches at least 20% of issued and paid-up capital. The UUPT does not require that the full 20% be accumulated in a single year before any dividend can ever be considered.
Interim dividend under Article 72
- The Articles of Association must permit interim dividends.
- The distribution must not cause net assets to fall below issued and paid-up capital plus the mandatory reserve.
- The distribution must not disrupt creditor payments or the company’s business activities.
- The Board of Directors may resolve the distribution only after obtaining the Board of Commissioners’ approval.
If the company records a loss at the end of the financial year, shareholders must return the interim dividend. If they cannot do so, the members of the Board of Directors and Board of Commissioners are jointly and severally liable for the shortfall.
Practical checklist for a PT PMA
- Confirm positive retained earnings, available cash, and the required reserve allocation.
- Check the Articles of Association and obtain the correct corporate approvals.
- Determine whether Article 68 or sectoral rules require an audit.
- Analyse tax withholding, treaty relief, banking documents, and foreign-exchange execution based on the shareholder and transaction. There is no single 20% rate that applies to every shareholder, and an up-to-date LKPM is not stated in Articles 71–72 as a universal remittance condition.
- Record the decision in the form required by the UUPT, the Articles of Association, and applicable capital-market rules. Notarisation or a SABH filing is not automatically required for every dividend resolution.
Conclusion
A PT PMA should not treat dividends as a routine cash-transfer step. The legal route, financial evidence, reserve position, corporate approvals, tax treatment, and disclosure obligations must be tested for the specific company and shareholder.
Sumber utama: Law No. 40 of 2007 on Limited Liability Companies, particularly Articles 68 and 70–72.
This article provides general legal information and does not constitute a legal opinion for any specific transaction.
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