How much authorized capital should a PT PMA state? How does it differ from issued capital and paid-up capital? Is the capital figure in the deed automatically the same as the investment value in OSS? These questions often arise when foreign investors want to establish a company in Indonesia.
When establishing a PT PMA, capital is more than a formal figure in the deed. It reflects the ownership structure, shareholder commitments, and the company’s readiness to implement its business plan. If capital is structured without understanding the distinctions, the company may face difficulties during establishment, deed amendments, or business licensing.
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JHY Legal often finds that capital is misunderstood because investors focus only on “the minimum capital required”. The amount is not the only factor to check. The company also needs to consider the type of capital, share composition, business field, investment value, and data to be entered into OSS.
Understanding Three Types of Capital in a Limited Liability Company
In a limited liability company, capital is usually discussed using three main terms. They appear similar but serve different functions. The Limited Liability Company Law provides that company capital comprises authorized capital, issued capital, and paid-up capital.
Authorized capital
Authorized capital is the capital limit provided in the company’s articles of association. The articles of association contain the company’s basic rules in its deed of establishment. In simple terms, authorized capital can be understood as the “maximum capacity” of shares available within the company structure.
However, shareholders do not immediately subscribe for all authorized capital. Some may be issued and paid up at establishment, while the remainder may be used for future capital increases.
Issued capital
Issued capital is the part of authorized capital subscribed for by shareholders. This means shareholders have committed to own those shares. Issued capital shows how many shares have been allocated to the shareholders.
For example, a company has authorized capital of IDR 10 billion. The shareholders subscribe for IDR 2.5 billion of that amount as their shares. The IDR 2.5 billion then becomes issued capital.
Paid-up capital
Paid-up capital is issued capital that shareholders have actually paid to the company. It is the money or value already contributed as capital. In practice, paid-up capital often receives attention because it demonstrates fulfillment of shareholder commitments.
For a PT PMA, paid-up capital may also relate to statements in the licensing system and the company’s readiness to carry out business activities.
Why Do These Differences Matter for a PT PMA?
A PT PMA is a company with an element of foreign investment. Because it has foreign shareholders, establishment needs to be considered from several perspectives: limited liability company law, investment, OSS, business fields, and sectoral licenses.
If authorized capital is too small, the company may lack sufficient room for a capital increase. If issued capital does not match the ownership plan, the share composition can create problems. If paid-up capital is not actually fulfilled, the company may face difficulties when asked to provide compliance evidence.
Capital should therefore be structured for more than completing the deed. The figures need to match the business plan, licensing requirements, and shareholder structure.
Comparing Authorized, Issued, and Paid-Up Capital
The following table helps distinguish the three types of capital that often cause confusion when establishing a PT PMA.
| Type of Capital | Simple Meaning | Effect on a PT PMA |
|---|---|---|
| Authorized capital | The capital limit provided in the company’s articles of association. | Provides the initial framework for the share structure and room for capital increases. |
| Issued capital | The part of authorized capital subscribed for by shareholders. | Shows the share ownership composition of foreign and local shareholders. |
| Paid-up capital | Issued capital paid by shareholders. | Demonstrates fulfillment of capital commitments and may be relevant to OSS or particular permits. |
Must Authorized Capital Always Be Large?
Authorized capital does not always need to be very large. However, the chosen figure must be reasonable. Too little may make issuing additional shares difficult. Too much may make the structure appear out of line with the business’s initial needs.
Government Regulation No. 29 of 2016 governs changes to the authorized capital of limited liability companies. Under that regulation, authorized capital is determined by agreement among the company’s founders. Source: peraturan.bpk.go.id
Even so, a PT PMA needs to consider more than the general rules on authorized capital. It must also review investment and business licensing rules. This is because a PT PMA is usually treated as a large enterprise and is subject to certain investment value requirements.
Relationship with planned capital increases
If the company intends to grow, receive new investors, or add business fields, the initial capital structure needs sufficient room. Otherwise, it may need to amend its deed earlier than planned.
A deed amendment is not a problem when needed. However, overly frequent amendments can slow business processes, particularly when they must be reconciled again with OSS, sectoral licenses, or investors’ internal documents.
Paid-Up Capital and Investment Value Are Not Always the Same
A common misconception is equating paid-up capital with investment value. They are related but are not always the same. Paid-up capital consists of shareholders’ share contributions. Investment value is the planned investment for carrying out business activities, which may include operational needs, machinery, equipment, construction, or other elements under the applicable provisions.
Minister of Investment and Downstream Industry/Head of BKPM Regulation No. 5 of 2025 contains the format for a foreign investment (PMA) issued/paid-up capital self-declaration and governs guidelines for business licensing through OSS. Under the PMA provisions, minimum investment value needs to be read together with the business field, KBLI code, and project location, subject to certain exceptions under the rules. Source: jdih-storage.bkpm.go.id
Why does this affect licensing?
OSS is an electronically integrated business licensing system. Capital data, KBLI codes, business locations, risk levels, and required permits are interconnected. If capital data and investment plans are not prepared systematically, the licensing process can become more difficult to explain.
Government Regulation No. 28 of 2025 governs risk-based business licensing, including basic requirements, business licensing, PB UMKU, OSS services, supervision, and sanctions. Source: peraturan.bpk.go.id
Documents That Need to Align
When establishing a PT PMA, the company needs to ensure capital figures and shareholder data align across several documents. The deed of establishment is not the only document to check. Other documents used for licensing and company administration also need review.
- The deed of establishment and articles of association.
- The Ministry of Law’s approval decree.
- Shareholder data and ownership composition.
- The amounts of authorized, issued, and paid-up capital.
- NIB and OSS data.
- Selected KBLI codes and business fields.
- Planned investment value for each business field and project location.
- Sectoral licensing documents, where required.
- Evidence of capital contributions or internal supporting documents.
If figures differ between documents, the company may face obstacles during data changes, audits, bank account opening, licensing, or the entry of new investors.
Common Mistakes When Determining PT PMA Capital
The first mistake is determining capital solely from a minimum figure heard from someone else. Each PT PMA needs to be considered in terms of its business field, shareholder structure, project location, and operational plan.
The second mistake is failing to distinguish authorized, issued, and paid-up capital. As a result, shareholders do not understand the commitments they actually need to fulfill.
The third mistake is creating a capital structure without considering business permits. For example, a company selects a particular KBLI code but does not prepare investment value and capital data that align with licensing requirements.
JHY Legal usually recommends that investors review the capital structure together with the share structure and business licensing plan. This makes the PT PMA more ready for business activities as well as administratively established.
JHY Legal’s Experience with Capital Structures and PT PMA
JHY Legal handles corporate actions, immigration, and regulatory licensing through an approach connecting company structure with licensing needs. For PT PMA matters, work may involve company establishment (PT PMA / local PT), share transfers & restructuring, changes to directors & commissioners, capital increases, due diligence, corporate compliance audits, NIB & OSS compliance, sectoral licensing, and operational permits. In practice, capital structures often need to be considered alongside KBLI codes, investment value, and shareholder plans. An initial review helps investors understand whether the capital figures in the deed match the business direction and licensing documents.
Checklist Before Setting PT PMA Capital
Before signing the deed of establishment, you can use the following checklist.
- Have the business fields and KBLI codes been selected correctly?
- Is the shareholder structure clear?
- Does authorized capital allow room for growth?
- Does issued capital reflect the correct share composition?
- Can shareholders fulfill the paid-up capital?
- Does investment value match the business plan?
- Will the deed, OSS, and sectoral licensing data be consistent?
- Are there plans for a capital increase or new investors?
Closing
Authorized, issued, and paid-up capital serve different functions. Authorized capital is the capital framework in the articles of association. Issued capital is the portion subscribed for by shareholders. Paid-up capital is the portion already paid.
For a PT PMA, these differences matter because they relate to the share structure, OSS licensing, investment value, and readiness to conduct business. If capital figures are prepared carelessly, the company may face obstacles during establishment, data changes, or licensing.
A practical step you can take now is to create a table of authorized capital, issued capital, paid-up capital, shareholders, KBLI codes, and planned investment. Then compare it with the business licensing plan. If any figures or documents do not align, JHY Legal can help review the PT PMA’s capital structure so that it is better prepared from the outset.