Paid-up Capital and Its Rules Under the Limited Liability Company Law

What is paid-up capital – Since ancient times, capital has always been an important part
of a business.
Good capital in the form of money, time, creativity, even passion.
This departs from the definition of capital in KBBI which means: (a) property (money, goods, and so
on) that can be used to produce something that adds to wealth or (b) goods that are used as a basis or
provision for work.

Of all the types of capital, money capital is inevitably the most crucial because it will relate to
operations and the future of the business.
Even so important, the law also regulates the
provision of this capital.

For example, if you want to set up a Limited Liability Company (PT), you must prepare three types of
capital, namely authorized capital, issued capital and paid-up capital.
Unfortunately, there
are still many people who do not understand about these three types of capital, even though by understanding
them, the possibility for a business to grow is greater.

Therefore, in this article we will discuss one of the three capitals, namely paid-up capital.
This is because paid-up capital is important to support and ensure that the company

Definition of Paid-up Capital

To understand what paid-up capital is, you must first know about authorized capital. Rudhi
Prasetya (in Sulin, 2008) says that the authorized capital is the entire nominal value of the maximum shares
that can be issued by a Limited Liability Company.
In other words, it is the total number of
shares a company can issue.

Then, what is meant by paid-up capital? Paid-up capital, in short, is shares that actually
exist (real) and have been deposited into the company with a minimum amount of shares issued which must be
fully paid up and proven by valid proof of deposit.

Legitimate deposits here can be in the form of proof of shareholder deposits into a bank account in the name of
the Company, financial statement data that has been audited by an accountant, or the Company’s balance sheet
which has been signed by the Directors and Board of Commissioners.

Furthermore, in the book Theory & Practice of Limited Liability Companies , Rudhi
Prasetya explains that paid-up capital can be considered as company assets which serve as collateral for
creditors or third parties who enter into a legal agreement with the company.

Legal Basis of Paid-up Capital

The Indonesian government, through Law Number 40 of 2007 concerning Limited Liability Companies or commonly
referred to as the Company Law, regulates and oversees the paid-in capital participation system.

In this Law there are around 161 articles which completely and in detail regulate the mechanism for the
establishment of a limited liability company.
This includes discussions regarding capital and
terms of participation.

If Sinaumed’s wants to study the legal basis of paid-up capital even further, RI Law No.
40 of 2007 & RI Presidential Regulation of 2014 concerning Limited Liability
compiled by the Citra Umbara Team can be the main
This book provides a complete explanation of the Limited Liability Company

Paid-up Capital Provisions

In Law no. 40 of 2007 concerning Limited Liability Companies, it is stipulated that a company
must have an authorized capital of IDR 50 million.
Now, from this nominal, 25 percent must be
placed and fully paid whose deposit is proven by valid proof of deposit.

This means, if you want to set up a Limited Liability Company, then you must deposit a capital of IDR 12.5
million as evidenced by valid proof of deposit.

In addition, another provision regarding paid-up capital states that if there is an issuance of shares by the
company, then the company must pay it in full.

Types of Paid-up Capital

Basically, paid-up capital is money, but it can also take other forms. So, this other form
that is deposited must be able to be valued in money, the value of which is estimated by independent experts
or those who are not affiliated with the company.

In addition, paid-up capital can also be in the form of: (1) share capital which is a nominal amount of
money or shares outstanding;
or (2) Agio and Disagio shares which are the difference between
the amount deposited to the shareholders and the real nominal value of the shares held.

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Agio itself is a term that refers to the difference whose value is above normal. Meanwhile,
disagio is a term whose value is below the original value.

How to Deposit Capital

Regarding the deposit of capital into the company, Law no. 40 of 2007 Article 3 stipulates
that this capital deposit cannot be made in installments or must be paid in full in the amount of the issued
capital and must be made during the process of submitting an application for approval.

At least 25% of the authorized capital must have been issued and fully paid up, and further issuance of shares
made each time to increase the issued capital must be paid in full when submitting an application for company
authorization accompanied by valid proof of deposit.

Meanwhile, for depositing capital in other forms during the establishment process, it can be done by including
the capital in an authentic deed where the deed is placed in the deed of establishment.

Article 34 paragraph (1) Law no. 40 of 2007 states that the deposit of shares in the form of
immovable objects must be clearly stated regarding the amount, price, type or type, status, domicile, and
other things that are deemed necessary.

So, the method of determining fair value is first adjusted to the existing market value. If
there is no market value, then the fair value will be determined by a valuation technique that is most
suitable for the characteristics of the deposit based on the best and relevant information.

Meanwhile, the independent expert referred to here is an expert who:

  1. Has no biological family relationship or is married to employees, members of the Board of Directors, Board
    of Commissioners or shareholders of the Company.
  2. Has no relationship with the company due to the similarity of one or more members of the board of directors
    or the board of commissioners.
  3. Does not have a controlling relationship with the company either directly or indirectly.
  4. Does not have a share ownership relationship in the company of 20% or more.

It doesn’t stop there, the deposit of immovable objects must also be announced in at least 2 newspapers published
in the company’s jurisdiction or it can also be in national-scale media.

That way, if anyone has any objections regarding the deposit of immovable objects into this company, they
can be immediately known.
This announcement must be made a maximum of 14 days after the deed of
establishment of the legal company is signed.

Example of Paid-up Capital

So that Sinaumed’s understands more about paid-up capital, here is an example of a case of paid-up capital in a
company which can give you a little picture.

Let’s say Andri and Bintang agree to build PT. XYZ. Then in this establishment,
both of them agreed to start with an authorized capital of IDR 200 million and be divided into 2,000 shares.
So, each share has a value of IDR 100,000.

So, from the initial capital of IDR 200 million, it turns out that those from Andri and Bintang only
reached a total of IDR 100 million.
Even then, only IDR 75 million or 75% can be paid.

The IDR 100 million is issued capital and the remaining IDR 25 million and is not yet owned by anyone is
referred to as portfolio shares or shares that have not been issued.
This type of shares can be
issued at any time if the company needs issued capital which must be paid in full or cannot be paid in

In other words, Andri and Bintang, who had just deposited Rp. 75 million, were still required to pay off the
remaining Rp. 25 million in accordance with the principle of paid-up capital.

Addition and Reduction of Paid-in Capital

After running, a company can increase capital or reduce capital if necessary. However,
according to Article 21 paragraph 1 of the 2007 Company Law, additions and reductions in company capital are
categorized as changes in certain AD.
In addition, according to Article 19 paragraph 1 every
amendment to the AD must be determined by the General Meeting of Shareholders (GMS).

This means that the addition or reduction of capital in a company must be based on the prior approval of
the GMS.
The provisions for increasing authorized capital in the Limited
Liability Company Law
book written by Yahya Harahap are as follows:

1. Increase in capital based on the GMS

  1. The quality and nature of the GMS of paid-up capital is not categorized as a GMS for changing AD but is the
    same as an ordinary GMS as regulated in article 86 of the 2007 Limited Liability Company Law
  2. Therefore, GMS decisions can only become valid if:
  • The GMS is held with a quorum of attendance of more than ½ (one half) of the total number of shares with
    voting rights
  • Approved by more than ½ (one half) of the total number of votes cast, unless otherwise specified in the AD.
  1. Required to notify the additional paid-in capital to the Minister so that it can be recorded in the Company
    Register and to be announced by the Minister and TBN RI.
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Increase in capital by first offering all issued shares to each shareholder

The company can also increase capital by offering shares that have been issued to increase capital to each
shareholder in accordance with the following rules:

a. Offer of shares of the same

For this type of shares with the same classification, the provisions are regulated in Article 43 paragraph
(1) which requires that all shares issued for the purpose of increasing capital are first offered to each
shareholder and;
The offer must also be balanced with share ownership for the same

b. Share
classification offering that has never been issued

If the shares to be used to increase capital are shares that have never been issued, then according to
Article 43 paragraph (2) all shareholders who have the right to purchase said shares first;
then the method of purchase must be in accordance with the balance of the number of shares owned by
the prospective buyer.

Unnecessary issuance of shares offered to shareholders

In Article 43 paragraph (3) UUPT 2007 there are also several provisions that can abort the obligation to offer
shares issued to increase capital to shareholders, such as if the issuance of shares:

1. Addressed to company employees

The meaning of “shares addressed to employees of the company” in Article 43 paragraph (3) letter a is shares
issued in the framework of the Company’s Employee Stocks Option Program (ESOP) including all the rights and
obligations attached to them.

2. Addressed to bondholders

Shares addressed to bondholders or other securities that can be converted into shares and have been issued with
the approval of the GMS

3. Conducted
with the aim of reorganization or restructuring with the approval of the GMS

So, what is meant by reorganization or restructuring here is a merger, takeover, consolidation, separation, or
compensation of receivables.

Offer the remaining shares that are not subscribed by shareholders to third parties

Article 43 paragraph (4) allows the company to offer the remaining shares that are not subscribed by
shareholders to third parties.
With a note that if the shareholders do not exercise their right
to buy and pay in full for the shares that have been purchased within fourteen days from the date of the

In addition, an offer of shares to a third party can only be made if within fourteen days the shareholder does
not exercise his right to take part from other shareholders.

3. Reduction of paid-in capital

Reducing paid-in capital can be done by withdrawing the shares that have been issued by the company to be deleted
or by reducing the nominal value of the shares.

However, these methods can only be realized based on valid GMS decisions and in accordance with the requirements
of the quorum provisions and must also be approved by the Minister.

Once approved, the Board of Directors must notify the GMS decision to reduce this capital to all creditors.
This notification is made in the form of an announcement which is published in one newspaper or
more no later than seven days after the date of the resolution of the GMS.

That way, the creditors will know that the company will make paid-in capital expenditures. So
if someone feels that their interests have been harmed, the creditor can file a lawsuit with the District

Furthermore, the technical reduction of paid-up capital has been regulated in article 44 paragraph (1) and
article 47 of the 2007 Company Law by:

a. Share recall

This method means that shares that have been issued are withdrawn from circulation in order to reduce
paid-up capital.
Shares that have been issued here mean shares that have been bought back by
the Company or shares that meet the classification to be recalled.
Once withdrawn, the shares
will “disappear” from circulation.

b. Decrease in nominal value of

In this second method, the nominal value of the shares is reduced without repayment to the shareholders which,
according to Article 47 paragraph (3) of the 2007 Company Law, must be carried out in a balanced manner to all
shares of each class of shares.

However, this balance can be waived if all the shareholders whose par value is reduced agree.
If there is more than one classification of shares whose nominal value has been reduced, then a GMS
decision regarding reducing paid-in capital can only be taken after obtaining approval from all shareholders
of each classification of shares whose rights have been impaired.

From the discussion above, what is paid-up capital are shares that do exist (real) and have been deposited
into the company with a minimum number of shares issued which must be fully paid up and proven by valid
proof of deposit.
Thus the discussion of paid-up capital, I hope all the discussion above is
useful for you.

If you want to find various kinds of books about capital, then you can get them at . To support Sinaumed’s in adding insight, sinaumedia always
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Author: Gilang Oktaviana Putra