When you hear the word “trust,” you may think of a familiar common-law structure in which one person holds assets for someone else. Indonesia has traditionally operated within a civil-law system, so the concept has not always had a direct equivalent. However, Indonesia is now creating a clearer legal foundation for commercial trusts, particularly through Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector, commonly called the PPSK Law.
In simple terms, a commercial trust allows one party to place assets under the management of another party for the benefit of a third party. The parties are usually described as the settlor, who provides the assets; the trustee, who manages them; and the beneficiary, who receives the economic benefits. In Indonesia, this structure is especially relevant to corporate transactions involving shares, investment arrangements, financing, and asset management.
The PPSK Law recognizes special-purpose vehicles and trustees as special business entities that may conduct securitization and trust-related activities. The arrangement is based on a written asset-management agreement, between the asset owner and the trustee. The trustee may receive, manage, use, or dispose of assets according to the authority given in that agreement and the applicable regulations. The law also places the trustee’s activities under the supervision and licensing framework of the Financial Services Authority, or OJK.
How Shares Fit into a Corporate Trust
The most important point is that a corporate trust involving shares must be designed around the Indonesian company-law framework. Under Law Number 40 of 2007 concerning Limited Liability Companies, as amended by the 2023 Jobs Creation Law, a limited liability company is a legal entity whose capital is divided into shares. The Company Law also treats shares as registered ownership interests, meaning the shareholder’s identity must be recorded properly in the company’s records.
Shares are not all economically identical. A company may issue different classes of shares if its articles of association provide for them. These may include ordinary shares, shares with voting rights, shares without voting rights, shares with special dividend preferences, or shares carrying special rights in relation to the appointment of directors or commissioners. The exact rights must be stated in the company’s articles of association and comply with the Company Law.
This flexibility is useful when structuring a trust. For example, ordinary voting shares could remain with the founder or strategic investor, while preference shares could be placed under a trustee for financing purposes. The preference shares might carry priority rights to dividends or repayment of capital, while the trustee manages them for the benefit of lenders or investors.
Another possibility is to use shares as security or as part of a structured investment. The trustee could hold the registered interest, receive dividends, exercise voting rights within agreed limits, and transfer the shares when specified conditions are met. The agreement could also provide that the trustee must not sell, pledge, or transfer the shares unless a defined event occurs, such as default, non-payment, or the completion of a project.
The important distinction is between a legitimate trust arrangement and an unlawful nominee arrangement. A trust should not be used to conceal the real owner of shares or to avoid Indonesian investment restrictions. Article 33 of the Investment Law prohibits an Indonesian or foreign investor from making an agreement or statement that confirms ownership of shares in a limited liability company for and on behalf of another person. Such an agreement is void by operation of law.
Therefore, if I were preparing a corporate trust involving shares, I would not describe it as “A owns the shares secretly while B appears as the shareholder.” That is precisely the language that creates nominee risk. Instead, the documentation should clearly explain the trustee’s legal role, the purpose of the arrangement, the rights of the beneficiary, and the identity of the person who ultimately owns or controls the economic interest.
The Role of the Assets Management Agreement
The assets management agreement is the operating manual of the trust. It should be precise, because vague drafting creates disputes about control, dividends, voting, liability, and termination.
At a minimum, the agreement should identify the assets being managed, including the number and class of shares. It should state whether the trustee is the registered legal owner or merely an administrator, and it should explain how the arrangement will be recorded in the company’s shareholder register and other corporate documents.
The agreement should also set out the trustee’s powers. These may include receiving dividends, attending shareholder meetings, voting on specific matters, approving a transfer, monitoring financial performance, or selling shares after a contractual trigger. The trustee’s duties should include acting within the agreed mandate, maintaining separate records, avoiding conflicts of interest, protecting confidential information, and providing reports to the settlor and beneficiaries.
The PPSK framework is built around asset separation. Assets delivered to the trustee should not become part of the trustee’s own assets. They should be recorded and reported separately. This separation matters enormously if the trustee becomes insolvent. Properly structured trust assets should not automatically become part of the trustee’s bankruptcy estate.
The agreement should also explain how beneficiaries receive value. They might receive dividends, sale proceeds, repayment of financing, or another agreed economic return. If there is more than one beneficiary, the agreement should establish the distribution waterfall and explain how competing claims are handled.
Finally, the agreement should address termination. A trust may end when the contract expires, when the settlor terminates it, when the assets are sold, or when the trustee breaches its obligations. The document should state where the shares go after termination and who must update the company’s records.
Beneficial Ownership and Transparency
Minister of Law Regulation Number 2 of 2025 concerning Verification and Supervision of Beneficial Owners of Corporations adds another important layer. It requires corporations, including limited liability companies and individual companies, to identify, verify, determine, and report their beneficial owners. It also requires annual updating, document retention, and electronic questionnaires.
For a corporate trust, this means the parties cannot rely on formal registration alone. Regulators may look at who controls the company, who can appoint or remove directors, who receives the economic benefit, and who is the actual owner of the funds or shares. The trustee structure must therefore be transparent and supported by consistent corporate records.
The practical lesson is straightforward: Indonesia now permits more sophisticated trust-style arrangements, but it does not permit secrecy disguised as sophistication. A well-designed corporate trust should use clearly defined share rights, a detailed perjanjian pengelolaan, proper OJK and corporate-law compliance, and accurate beneficial-owner reporting. If you treat the trust as a governance and asset-management tool rather than a way to hide ownership, it can become a useful structure for investment, financing, and commercial transactions in Indonesia.
My name is Wijaya, writing for Wijaya & Co. We orchestrate to assist you navigate. Thank you for reading my posts.
This essay is for general information only and is not a substitute for advice from Indonesian legal counsel.