Foundations (yayasan) play a vital role in social, religious, and humanitarian efforts in Indonesia. As legal entities, they embody the separation of assets by founders to achieve specific goals, distinct from for-profit entities. This article explores the definition of foundations, the legal framework governing them, and the step-by-step process for their establishment.
What is a Foundation?
A foundation is a legal entity established by separating a portion of the founder’s assets to pursue objectives in social, religious, or humanitarian fields. Unlike other legal entities, foundations do not have members but are governed by three key organs: the Supervisory Board (Pembina), the Management Board (Pengurus), and the Advisory Board (Pengawas).
According to Law No. 16 of 2001 on Foundations (amended by Law No. 28 of 2004), a foundation must operate with a purpose that does not prioritize profit. However, foundations are permitted to engage in business activities to support their goals by establishing or participating in business entities. Importantly, any profits derived from these activities cannot be distributed to the foundation’s boards but must be reinvested to further the foundation’s objectives.
The scope of business activities undertaken by foundations can vary widely, including areas such as human rights, arts and culture, sports, consumer protection, education, environmental protection, health, and scientific research.
Naming a Foundation
The name of a foundation must comply with legal and ethical standards. A foundation’s name:
- Must not conflict with public order or decency.
- Cannot duplicate names already legally used by another foundation.
- Must begin with the word “Yayasan.”
Failure to comply with these naming conventions can result in legal challenges or refusal of registration.
Steps to Establish a Foundation
Establishing a foundation in Indonesia involves three primary stages:
A government-issued fee applies for the publication process.
Incorporation
A foundation can be established by one or more individuals or legal entities by separating a portion of personal assets as initial capital. This can take the form of money or other valuables.
The minimum initial capital is IDR 10 million for Indonesian founders and IDR 100 million for foreign founders or joint ventures.
The incorporation process must be conducted through a notarial deed in Bahasa Indonesia, detailing the foundation’s articles of association. This document must include:
Foundation name and location.
Purpose and objectives.
Duration of establishment.
Initial assets separated by the founder.
Governance procedures (appointment, replacement, and dismissal of board members).
Rights and obligations of each board member.
Procedures for board meetings and decision-making.
Provisions for amendments to the articles of association.
Rules on merger, dissolution, and liquidation.
Distribution of remaining assets upon dissolution.
Additional personal information about the founder(s) and board members (such as name, address, and nationality) must also be provided.
Legalization by the Ministry of Law and Human Rights
A foundation acquires legal status only after its articles of association are approved by the Ministry of Law and Human Rights.
Applications for approval are submitted by the notary who prepared the deed within 10 days of signing.
The Ministry must respond to the application within 30 days, either granting approval or issuing a rejection with a written explanation.
If rejected, the foundation can revise and resubmit the application to meet legal requirements.
Until legalization is obtained, the board members bear personal liability for any actions taken on behalf of the foundation.
Official Announcement
Once legalized, the foundation’s status is published in the State Gazette of the Republic of Indonesia within 14 days of approval.
Additional Methods of Establishment
Foundations can also be established through wills (surat wasiat) executed before a notary. In this case:
The executor of the will acts on behalf of the testator to formalize the foundation in compliance with existing legal requirements.
The will must clearly stipulate the intent to form a foundation, including the articles of association.
Legal Responsibilities Before Legalization
It is important to note that any legal actions taken by the board before the foundation is officially recognized are the personal responsibility of the individuals involved. This underscores the importance of completing the legalization process promptly to avoid unnecessary liabilities.
Conclusion
Establishing a foundation in Indonesia involves meticulous attention to legal requirements and procedures. From asset separation and drafting the articles of association to obtaining formal recognition and publication, each step plays a critical role in ensuring the foundation’s legality and long-term sustainability.
By following the outlined procedures, founders can ensure their initiatives operate within the framework of Indonesian law, contributing to societal development while protecting the foundation’s legal standing.
Legal References:
- Civil Code (KUH Perdata)
- Law No. 16 of 2001 on Foundations
- Law No. 28 of 2004 (Amendments to Law No. 16 of 2001)
- Government Regulation No. 63 of 2008 on Foundations
- Government Regulation No. 2 of 2013 (Amendments to Regulation No. 63 of 2008)
- Ministerial Regulation No. M.HH-02.OT.01.01 of 2011 on Legal Naming Adjustments
