Ship Finance in Indonesia: Due Diligence

Shipping

SSEK Indonesian Legal Consultants founding partner Dyah Soewito, senior foreign legal advisor Michael D. Twomey and Stephen Igor Warokka, an associate at the firm, have contributed the Indonesia chapter of the new Getting the Deal Through global guide to Ship Finance.

SSEK Legal Consultants has one of the leading shipping practices in Indonesia. SSEK advises multinational and joint venture shipping and offshore drilling companies on all aspects of their operations in Indonesia, including advising on the establishment of joint venture companies, the opening of representative offices and the acquisition and sale of vessels.

SSEK is ranked as a tier-one shipping firm by The Legal 500 and is highly recommended for its shipping practice by Asialaw.

The following is an excerpt from the Indonesia chapter of the Getting the Deal Through global guide to Ship Finance written by SSEK Legal Consultants.

How does one demonstrate title to or legal ownership of a vessel registered under the laws of your jurisdiction?

Title to and legal ownership of a vessel registered under Indonesian law is evidenced by a registration deed issued by the Indonesian Directorate General of Sea Transportation (DGST) at the Ministry of Transportation in Jakarta or a DGST official appointed by the DGST at an Indonesian port.

How can one determine whether there are any liens recorded over a vessel?

Upon receipt of a written request, the DGST may, but is not required to, issue an official statement in a letter verifying the registration deed or list­ing the mortgages of record registered against the vessel. Read more »

Ongoing Requirements for Insurance/Reinsurance Providers

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.

The following is an excerpt from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

The key ongoing requirements that insurance/reinsurance companies must comply with are to (among others):

  • Ensure that the board of directors (BOD), board of commissioners (BOC), sharia supervisory board, actuary, internal auditor and controller pass the fit and proper test administered by the Financial Services Authority (Otoritas Jasa Keuangan) (OJK).
  • Maintain the financial soundness of the company, including minimum solvency level based on a risk-based capital (RBC) calculation (that is, 120% of minimum capitalization, self-retention and permitted investment).
  • Appoint a controller and report the appointment and any change of controller to the OJK.
  • Comply with OJK and public reporting requirements, including submission to the OJK of:
    • an annual report on the implementation of good corporate governance (GCG);
    • periodic operational reports (annually, quarterly and monthly); and
    • the strategic investment policy of the insurance/reinsurance company.
    • Comply with GCG requirements, including requirements related to the general meeting of shareholders (GMS), BOD and BOC, formation of committees (such as investment committee and development of insurance product committee), shareholders and investment.
    • Obtain prior approval from the OJK for the launch of any new product.
    • Report any amendment to the articles of association (AOA), including any increase of capital through the issuance of shares.

The OJK does not require private insurance and reinsurance companies to notify the OJK of any material transaction that is outside the ordinary course of business, or if there is an affiliated transaction. However, in practice, private insurance and reinsurance companies usually notify the OJK of any material transaction. Read more »

Establishing a Business in Indonesia

businessmen

SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and partner Denny Rahmansyah have contributed the Indonesia chapter of the new Practical Law global guide to Establishing a Business in …

SSEK Legal Consultants is one of the leading corporate and commercial law firms in Indonesia. It works with leading international and domestic companies on all aspects of their business in Indonesia. SSEK is widely experienced in the establishment of businesses in Indonesia and their ongoing operation.

The following is an extract from Establishing a Business in Indonesia.

Establishing a presence from abroad

The most common option for an overseas company as a foreign investor to establish a presence in Indonesia is by setting up a limited liability company (Perseroan Terbatas (PT)) with foreign ownership (PT PMA). The first step in establishing a PT PMA is to determine whether the PT PMA can be wholly foreign owned or only partially foreign owned. This involves what is known as the Negative Investment List. The current Negative Investment List is contained in Presidential Regulation No. 39 of 2014 outlining the list of business fields that are closed and business fields that are open with requirements for investment (PR 39).

To establish a PT PMA, a foreign investor must submit an application to the Capital Investment Coordinating Board to obtain a principle license (izin prinsip). Once the principle license is issued by the Capital Investment Coordinating Board, the founding shareholders or their proxies need to execute the deed of establishment containing the PT PMA’s articles of association, which must be signed before a notary public and filed with the Ministry of Law and Human Rights for its approval. The filing process is handled by the notary. Once the Ministry of Law and Human Rights approves the articles of association, the PT PMA must then register with the Ministry of Trade. Read more »

Insurance and Reinsurance in Indonesia: Licensing

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.

The following is an extract from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

Authorization or licensing of insurance/reinsurance providers in Indonesia

Insurance and reinsurance companies doing business in Indonesia must be licensed by the Financial Services Authority (Otoritas Jasa Keuangan or OJK). The OJK must approve or reject the license application no later than 30 days after the complete application is received. Specific procedures to obtain a license from the OJK will be further regulated by an OJK regulation.

Due to the lack of implementing regulations under the new Insurance Law, the procedure for applying for an insurance/reinsurance business license is still subject to the requirements set out in the implementing regulations of the old insurance law:

  • Government Regulation No. 73 of 1992 dated 30 October 1992 regarding the Implementation of the Insurance Business, as amended (GR 73).
  • Minister of Finance Regulation No. 426/KMK.06/2003 dated 30 September 2003 regarding Business Licensing and Institutional Aspects of Insurance and Reinsurance Companies (KMK 426).

Under the Insurance Law, an insurance or reinsurance company that applies for a business license must comply with the following requirements and provide the following information: Read more »

SSEK Legal Consultants Marks 23rd Anniversary

SSEK anniversary

SSEK Indonesian Legal Consultants is marking its 23rd anniversary on August 19. Two of SSEK’s founding partners, Dyah Soewito and Ira A. Eddymurthy, are seen in the accompanying photo during the very early days of the firm.

Since its founding in 1992, SSEK has grown into one of the largest, if not the largest, independent law firms in Indonesia. SSEK has been recognized by Chambers & Partners as the Indonesian Law Firm of the Year in 2013 and 2011, and the International Who’s Who Legal Indonesian Law Firm of the Year in 2006 to 2008 and 2012 to 2014, among its other awards and recognitions.

SSEK has had the privilege during its 23 years of working with the biggest multinational and domestic companies in Indonesia, helping them achieve their business goals.

We thank everyone who has been involved with SSEK over the past 23 years and we look forward to another 23 successful years and beyond.

Legal Alert August 2015

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Please find the new Legal Alert for August 2015.

The SSEK Legal Alert is a monthly survey designed to keep you up to date with the latest legal developments in Indonesia. Read more »

Regulation of Insurers and Reinsurers in Indonesia

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.

The following is an extract from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

Both insurers and reinsurers must be licensed by the Financial Services Authority (Otoritas Jasa Keuangan or OJK). Insurers and reinsurers are regulated under a separate set of regulations.

The main regulations for insurers and reinsurers are the:

  • Insurance Law.
  • Government Regulation No. 73 of 1992 regarding the Implementation of Insurance Business, as amended.
  • Minister of Finance Regulation No. 422/KMK.06/2003 regarding the Implementation of the Business of Insurance and Reinsurance Companies.
  • Minister of Finance Regulation No. 426/KMK.06/2003 regarding Business Licensing and Institutional Aspects of Insurance and Reinsurance Companies.
  • Minister of Finance Regulation No. 53/PMK.010/2012 of 2012 regarding the Financial Soundness of Insurance and Reinsurance Companies.

Only insurance and reinsurance companies licensed by the OJK are allowed to engage in the insurance and reinsurance business in Indonesia. Foreign insurance companies can engage in the insurance and reinsurance business in Indonesia through either:

  • A joint venture insurance/reinsurance company.
  • Acquiring an existing insurance/reinsurance company.

Restrictions on insurers and reinsurers Read more »

New Manpower Regulation: Foreign Domiciled Directors and Commissioners Must Have Indonesian Work Permit

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By Indrawan Dwi Yuriutomo

The newly issued Indonesian Ministry of Manpower Regulation No. 16 of 2015 regarding Procedures to Utilize Foreign Manpower (“New Regulation”) has replaced the contentious Minister of Manpower Regulation No. 12 of 2013 regarding the same (“Old Regulation”).

The Old Regulation was known mostly for its provision that the Government would introduce an online Indonesian-language proficiency test for foreign workers, which never came to pass.

With the New Regulation the Government has dropped the provision on Indonesian-language proficiency tests for foreign workers. That should, for the time being at least, end discussion of foreign nationals being required to master Indonesian before they are able to obtain a work permit.

But the New Regulation may not be all good news. One point in particular stands out, with the Government creating a new requirement for members of the Board of Directors (“BOD”) and  Board of Commissioners (“BOC”) of Indonesian companies, and the Board of Patrons, Board of Management and Board of Supervisors of Indonesian foundations who are domiciled abroad to obtain a work permit in Indonesia. Read more »

Regulation of Insurance and Reinsurance Contracts in Indonesia

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life, Hanwha Life and Prudential.

The following is an extract from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

Insurance Contract

Under the Indonesian Commercial Code, insurance is an agreement between the insurer (insurance company) and the insured party under which the insurer agrees to compensate the insured party on the occurrence of uncertain events (such as losses, damages and loss of revenue) in return for receiving premiums from the insured party.

Additionally, under the Insurance Law, insurance is a written agreement between the insurance company and the policyholder under which, in return of a premium, the insurance company agrees to either:

  • Provide compensation to the insured party or policyholder due to losses, damage, costs, loss of revenue or legal liability to any third party that may be suffered by the insured party or the policyholder due to uncertain event.
  • Provide payment due to the death/life of the insured party according to a stipulated benefit and/or based on the result of fund management.

The object of insurance can be in the form of life, health, liability, goods and services, and any other interest that may be lost, damaged, and/or decrease in value (Insurance Law). Read more »

Insurance and Reinsurance in Indonesia

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SSEK Indonesian Legal Consultants founding partner Ira A. Eddymurthy and Maria Yudhitama, an associate at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to insurance and reinsurance.

SSEK Legal Consultants has one of the leading insurance law practices in Indonesia and has been involved in numerous high-profile cross-border transactions. SSEK’s insurance clients include ACE, Chartis Insurance, Dai-ichi Life and Prudential.

The following is an extract from the Indonesia chapter of the Practical Law global guide to insurance and reinsurance written by SSEK Legal Consultants.

Market trends and regulatory framework

The main trend in the insurance and reinsurance business over the last 12 months has been the acquisition of existing Indonesian insurance and reinsurance companies, rather than the establishment of new insurance/reinsurance companies (greenfield projects).

The 2014 report of the Financial Services Authority (Otoritas Jasa Keuangan) (OJK), the authority that oversees the Indonesian insurance industry, shows a 40% increase in insurance claims in 2014. In the authors’ view, this was due to the numerous natural disasters that occurred in Indonesia in 2014 including floods, earthquakes and air disasters.

Regarding underwriting, there has been an emphasis on implementing the “know your customer” (KYC) principle as a tool to prevent insurance and reinsurance companies being used to launder money. The KYC principle is mainly applied to perceived high-risk persons (such as civil servants and public officials) and high-risk companies (such as property agents and automotive dealers). Read more »