Trust

Establishing a trust in Indonesia requires more than transferring assets and appointing a manager. It requires careful coordination between financial-sector regulation, corporate law, inheritance law, taxation, and family governance. Wijaya & Co can add value by designing a structure that reflects the commercial purpose of a trust while remaining consistent with Indonesia’s legal framework, particularly Law No. 4 of 2023 on Financial Sector Development and Strengthening, commonly known as the P2SK Law.

The P2SK Law is important because it strengthens the legal foundation for trust arrangements in Indonesia. It recognises the concept of a trustee, including the separation between legal ownership and beneficial interests. The law also provides a basis for assets administered under a trust arrangement to be treated separately from the trustee’s own assets. This is significant for asset protection, continuity, and beneficiary protection. However, the practical use of a trust still depends on the applicable implementing regulations, licensing requirements, tax treatment, reporting obligations, and the status of the proposed trustee. The legal framework is therefore promising but technically complex.

For many family businesses in Indonesia, a practical alternative is to use a Perseroan Terbatas, or PT, to perform selected trust-like functions. The PT can hold operating assets, receive dividends, manage investments, employ professional managers, and distribute approved benefits to family members. It can also act as a central governance vehicle for the family business. This approach is workable because the PT is a recognised Indonesian legal entity with established organs, including the General Meeting of Shareholders, Board of Directors, and Board of Commissioners.

The first building block is a carefully drafted management agreement. The agreement can define who manages the company, the scope of authority, investment restrictions, reporting requirements, remuneration, conflict-of-interest rules, approval thresholds, and procedures for replacing managers. It can also require the management team to follow an investment policy and make distributions according to agreed family objectives. However, the agreement must respect the statutory authority and fiduciary duties of the Board of Directors. It cannot eliminate the directors’ responsibility to act in the company’s interests, nor can it replace decisions that legally require shareholder approval.

The second building block is the use of different share classes. Indonesian company law permits a PT’s articles of association to establish different classes of shares with different rights, including voting rights, dividend priorities, nomination rights, or liquidation preferences. Wijaya & Co can advise on a structure in which founder or control shares preserve strategic decision-making, while ordinary or economic shares provide dividend rights to family members. Any enhanced rights should be clearly stated in the articles of association and aligned with mandatory corporate-law requirements. Share classes should not be used as a disguised method of avoiding inheritance rights, foreign-ownership restrictions, creditor claims, or tax obligations.

The third building block is succession planning. A proper plan should identify future directors, define eligibility for management roles, establish training and performance requirements, and regulate what happens when a shareholder dies, becomes incapacitated, retires, or wishes to exit. The family may also adopt a family constitution covering values, employment rules, dividend policy, share transfers, dispute resolution, and the role of a family council. These arrangements should be supported by enforceable corporate documents, wills, shareholder agreements, and notarial instruments where appropriate.

Wijaya & Co’s strongest contribution is integration. The firm can connect the family’s commercial goals with the PT’s articles, management agreement, share structure, succession documents, and any regulated trust arrangement. The result is not a substitute for a statutory trust, but a disciplined Indonesian structure that can preserve control, protect business continuity, and reduce inheritance disputes.

The P2SK Law creates new opportunities, but it does not remove the need for careful legal design. Wijaya & Co should therefore be engaged to conduct a full legal, tax, regulatory, and family-governance review before assets are transferred or rights are promised.