Authorised Capital in Indonesia: How It Relates to Issued and Paid-Up Shares

Read the capital clause as three linked figures

The capital clause in an Indonesian Perseroan Terbatas (PT) describes both capacity and commitment. Read each Indonesian term beside its English translation; treating every occurrence of “capital” as money already received will produce the wrong share allocation.

• Authorised capital, or modal dasar, is the aggregate nominal share capital permitted by the articles of association. Part may remain unissued.
• Issued or subscribed capital, or modal ditempatkan, is the nominal value of shares taken up by shareholders. It uses part of the authorised capacity.
• Paid-up capital, or modal disetor, records payment for those shares. A commitment to subscribe and evidence of payment answer different questions, even where the amounts must coincide.

Company Law Articles 15 and 31 connect the capital figures to the articles, share numbers and nominal values; Articles 33 and 49 supply the full-payment requirement and rupiah denomination. For ordinary nominal-value shares, compare all three figures on the same nominal basis. Do not include a share premium or an unrelated shareholder loan in the paid-up nominal amount.

Current Article 32, as amended through the Job Creation legislation , lets the founders determine authorised capital. The former IDR 50 million wording in the original 2007 text is therefore not the present general rule. PP 8/2021 Articles 3–5 retain the payment ratio and preserve activity-specific capital requirements.

The chosen capital clause belongs among the underlying documents for company formation in Indonesia . A registration project should settle the share numbers, nominal values and subscriptions together, rather than choose an impressive authorised figure and leave its funding consequences unresolved.

Test the 25% rule against authorised capital

The 25% denominator is authorised capital, not issued capital. Under PP 8/2021 Article 4(1) , at least a quarter of authorised capital must be subscribed and fully paid, with valid payment evidence. Company Law Article 33(3) also requires further shares issued to increase subscribed capital to be fully paid. You cannot issue shares worth IDR 100 million and satisfy that obligation by paying only IDR 25 million.

For a simple ordinary PT with one class of equal nominal-value shares, let A mean authorised capital, I issued capital and P paid-up nominal capital. A compliant fully paid structure satisfies A ≥ I = P, with P ≥ 25% × A , before applying any additional floor. This is a reconciliation test for the stated structure, not permission to leave a subscription unpaid.

Consider an illustrative local PT with 400 authorised shares, each worth IDR 1 million. Its authorised capital is IDR 400 million. If the founders take 100 shares and pay for all of them, issued and paid-up capital are each IDR 100 million. The other 300 shares remain unissued; they are not IDR 300 million of overdue shareholder payments.

These are arithmetic examples, not sector eligibility approvals. In the first row, a founder holding 60 of the 100 issued shares holds 60% of the issued share count, not 15% calculated against 400 authorised shares. Different share classes can carry different rights, so do not infer voting control from nominal totals alone. Keeping unused capacity separate from actual holdings prevents both a funding error and a misleading ownership chart.

The same share pool can therefore have unused capacity while every share already taken up is fully paid. The distinction becomes easier to check when the reserve and the issued portion are shown together.

Apply the additional PMA and sector capital tests

A foreign investment PT (PT PMA) must satisfy a separate capital floor as well as the general ratio. Minister of Investment and Downstream Industry/Head of BKPM Regulation 5/2025, Article 26(9)–(10) , sets issued/paid-up capital at at least IDR 2.5 billion per PT, unless legislation provides otherwise. This is a company-level issued/paid-up requirement; it does not declare that every PT must have IDR 10 billion of authorised capital.

For a new PT PMA subject to that general floor, with no different sector requirement, the planning test is P ≥ the larger of 25% × A and IDR 2.5 billion, while I = P and I ≤ A. For example, authorised capital of IDR 8 billion with issued and fully paid capital of IDR 2.5 billion gives 31.25% and passes those two numerical tests. With authorised capital of IDR 12 billion, the same payment gives only 20%; issued and fully paid capital would need to reach at least IDR 3 billion.

That arithmetic is an application of the rules, not an additional statutory threshold. A company cannot cure the second example merely by referring to the IDR 2.5 billion floor. Equally, it should not multiply an authorised amount by 25% and assume the result overrides a higher applicable floor.

Article 26 separately regulates investment value, generally above IDR 10 billion excluding land and buildings per five-digit KBLI business field per project location, with exceptions to the unit and land/building treatment. That project test is not the authorised-share ceiling. The distinction between project investment and company share funding matters when a proposed deed is compared with an investment plan.

Activity-specific rules and existing approvals require a separate check. PP 8/2021 Article 5 preserves special authorised-capital requirements, and Regulation 5/2025 Article 395 contains transition treatment for specified existing PMA licensing situations. Record the activity, applicable rule and existing approval before applying the examples to an established company. A newer general floor does not itself reduce an amount already written into a deed.

Match the deed, payments and shareholder records

A capital clause and a payment trail should reconcile shareholder by shareholder. Company Law Article 50 requires the directors to maintain a shareholder register containing share holdings and amounts paid on each share. The review should connect that register to the deed and supporting contribution records, rather than rely on a screenshot of a total bank balance.

1. Start with the operative deed and any amendments. Extract authorised shares, nominal value, issued shares and the allocation to each shareholder. Keep older versions separately so their totals cannot be mistaken for current figures.
2. Recalculate each shareholder’s nominal subscription and the aggregate. For one equal-value class, shares multiplied by nominal value should match the issued amount. Check the payment evidence against each obligation.
3. Trace cash contributions through the remittance and company receipt records. Explain a different remitter, currency conversion or bank deduction rather than silently treating the instructed transfer amount as the amount received.
4. Compare the reconciled figures with the shareholder register and incorporation or amendment filing records. Ask the notary to resolve a legal-record discrepancy before reproducing the disputed number in another submission.

PP 8/2021 Article 4(2) requires valid payment evidence to be submitted electronically to the Minister within 60 calendar days of the PT’s deed of establishment. The evidence-submission deadline is not permission to describe an unpaid subscription as paid. Agree with the notary how actual contributions and the required evidence will be documented within the applicable process.

Capital need not always be cash: Company Law Article 34 permits other forms, subject to fair-value assessment and additional formalities for immovable property. A non-cash contribution therefore needs its own valuation and transfer evidence. Bank acceptance of documents remains a separate review; a corporate filing does not guarantee that a bank will accept an unexplained source of funds.

Identify which capital figure a transaction changes

Unused authorised capacity can accommodate a future issue, but it does not make that issue automatic. First identify whether money is entering the company for new shares, whether an existing holder is selling shares, or whether the authorised ceiling itself must change.

In the local-PT example, a further issue of 50 shares at IDR 1 million nominal each would raise issued and fully paid capital from IDR 100 million to IDR 150 million, within the existing IDR 400 million ceiling. The company needs the relevant corporate action and full payment for the new issue. Company Law Articles 41–43 address shareholder approval, notification of an increase within the authorised limit, and existing shareholders’ offer rights and exceptions.

By contrast, a sale of 20 existing shares by one shareholder to another ordinarily changes who holds those shares. The seller’s sale proceeds do not become a fresh capital contribution to the company merely because the ownership chart changes. Separate the buyer-to-seller payment from any simultaneous subscription, and check the applicable transfer restrictions and recording requirements.

If a proposed issue exceeds the authorised ceiling, changing a spreadsheet is insufficient. Company Law Article 21 places changes to authorised capital among amendments requiring ministerial approval. An increase in authorised capital also requires a fresh ratio calculation: with issued and paid-up capital unchanged at IDR 100 million, raising A from IDR 400 million to IDR 800 million leaves only 12.5% paid, below the general minimum.

Company cash and paid-up share capital should also remain separate in the reconciliation. An ordinary business payment changes available cash; it is not, by itself, a formal reduction of nominal capital. For PMA companies, Regulation 5/2025 Article 27 additionally restricts moving the contribution from the company account for at least 12 months, with exceptions for asset purchases, building construction and company operations. Keep evidence of the permitted use instead of assuming unrestricted withdrawal.

Approve the capital structure after reconciling both tests

Approve the proposed capital clause only after the nominal-value arithmetic, full-payment position and applicable capital floors agree. Start with the actual issued share allocation, test it against the authorised ceiling and 25% denominator, then apply the PMA or sector rule that governs the company.

If a number fails, identify the specific remedy before signing: fund the intended issue, reconsider an unnecessarily high authorised amount, correct a documentary mismatch, or obtain the corporate amendment required for the intended transaction. Stop for individual legal review where an existing approval, special sector requirement, non-cash contribution or different share class changes the assumptions. The completed reconciliation should explain both who owns the issued shares and what evidence supports their payment.