Capital is one of the most important components in establishing a business, including a Limited Liability Company (PT). According to Law No. 40/2007 on Limited Liability Companies (UU PT), there are three types of capital: authorized capital, issued capital, and paid-up capital. So, what are the definitions and differences of the three types of capital? Here’s the review.
Authorized Capital
The first type of capital in a PT is authorized capital. Authorized capital is the entire nominal value of the company’s shares mentioned in the articles of association. In principle, this capital is the total number of shares that can be issued by a PT. The amount of shares used as authorized capital depends on the articles of association of the PT. This is in line with Government Regulation (PP) No. 8 of 2021 which states that the amount of authorized capital of a PT is determined based on the decision of its founders. Thus, it can be concluded that currently there is no longer a minimum limit on the authorized capital of a PT. However, for PTs that carry out certain business activities, the minimum amount of authorized capital must comply with statutory provisions. For example, for insurance companies, since the paid-up capital at the time of establishment must be at least Rp150 billion, the authorized capital must also not be less than this amount.
Issued Capital
In addition to authorized capital, there is also something called issued capital in a PT. This capital must not only be included in the form to obtain legal entity approval, but must also be included in the articles of association of the PT. Issued capital is the number of shares that have been taken by the founder or shareholder, and the shares taken are paid and unpaid. In other words, issued capital is the capital that the founders or shareholders have agreed to repay, and the shares have been delivered for ownership. It should be noted that the amount of issued capital has been determined in the PT Law, which is at least 25 percent of the total authorized capital and is fully paid up by including valid proof of deposit.
Paid-up Capital
The last type of capital in a PT is paid-up capital. Paid-up capital is capital that has been entered by shareholders as payment for the number of shares taken and owned. The PT Law requires that at least 25 percent of the authorized capital must be issued and fully paid up when establishing a PT.
Here’s an illustration
Arta, Budi, and Aldi agreed to build a company engaged in frozen food. The three of them then established their business in the form of a PT named PT Asri Boga. After having a PT name, the three of them agreed to set the authorized capital of IDR 50 million. Where the distribution of the authorized capital is Arta agreed to Rp20 million, then Budi and Aldi each agreed to Rp15 million. Furthermore, from the value of the authorized capital, the three of them put 25 percent or Rp12.5 million. So, this amount is considered as issued capital. If the capital has not been given, it will be considered a debt. Then, when they have deposited the Rp12.5 million into the company’s account, the debt is considered paid off and is referred to as paid-up capital. That is the explanation of the types of capital that exist in PT. Now, Friend KH certainly understands better, right, the difference between authorized capital, issued capital, and paid-up capital along with examples?
READ ALSO: Founders Agreement in Establishing a Business, How Important is it?
With the Job Creation Law that has simplified the procedures and requirements for establishing a PT and removed the minimum amount of authorized capital, it is expected that there will be many new PTs established in Indonesia.
KH Contact
Capital is an aspect that needs to be considered well since the early stages of establishing a PT. Besides being important for business continuity, capital is also related to business licensing. Well, for KH pals who are still confused about the distribution of PT capital, it would be better if you use trusted legal services to help facilitate the establishment of PT. KH pals can leave all the management of the establishment of PT to Kontrak Hukum. We provide the most complete PT establishment service including the required legality documents such as deed of establishment, NIB, OSS, NPWP, and business address in just a matter of hours! For booking information, please visit this page. Or if you still have questions about PT or other business entities, please consult with us at Tanya KH and via Direct Message (DM) to Instagram @kontrakhukum.
