New Obligations for Corporations in Beneficial Ownership Reporting

Ministerial Regulation of Law and Human Rights No. 2 of 2025: New Obligations for Corporations in Beneficial Ownership Reporting

The government has issued Ministerial Regulation of Law and Human Rights No. 2 of 2025 concerning the Verification and Oversight of Corporate Beneficial Owners, replacing the previous regulation (Ministerial Regulation No. 21 of 2019). Effective as of 4 February 2025, this regulation mandates corporations to enhance compliance in beneficial ownership reporting to improve business transparency.

Under Article 3 (1) of Ministerial Regulation 2/2025, every corporation is required to disclose its beneficial owners by submitting complete and accurate information to the Minister of Law and Human Rights. This information must be updated annually to ensure data validity.

Additionally, Article 22 (3) stipulates that if a corporation fails to fulfill its reporting obligations, the Minister may impose administrative sanctions, including:

• Written warnings issued via AHU Online notifications or email.
• Blacklisting, publicly announced on the official website of the Directorate General of General Legal Administration.
• Blocking access to AHU Online, restricting the corporation’s ability to conduct online legal administrative activities.

Regulatory Background

Previously, beneficial ownership disclosure was governed by Ministerial Regulation 21/2019, which focused on enforcing the Know-Your-Beneficial-Owner (KYBO) principle. However, its effectiveness faced challenges, particularly regarding data accuracy and corporate compliance.

As an improvement, the government issued Ministerial Regulation 2/2025, expanding the scope of entities required to disclose beneficial owners and introducing stricter oversight mechanisms. Key changes include broadening the definition of limited liability companies to new cover partnership-based and individually owned companies. Civil partnerships are also newly included as entities obligated to report beneficial ownership.

Corporate Obligations in Beneficial Ownership Disclosure

The new regulation requires corporations to:

1. Update Beneficial Ownership Data – Corporations must refresh beneficial owner information annually to maintain accuracy.

• Maintain Beneficial Ownership Documentation – All related information and documents must be properly recorded.

• Complete Beneficial Ownership Questionnaires – Corporations must fill out a dedicated form to support data validation by authorities.

• Conduct Identification and Verification – This process involves determining beneficial owners based on valid supporting documents.

To ensure transparency and data accuracy, beneficial owner verification is now based on risk assessments (e.g., money laundering and terrorism financing risks) conducted by:

• Corporations themselves – Validating beneficial owner information during establishment or data changes.
• Notaries – Facilitating verification per applicable legal provisions.
• The Minister of Law and Human Rights – Reviewing corporate submissions and evaluating questionnaires.
• Other Government Agencies – Performing additional verification within their authority.

Strengthened Oversight Mechanisms

Ministerial Regulation 2/2025 introduces significant changes to oversight, including new obligations such as:

• Monitoring corporate compliance in identifying and verifying beneficial owners.
• Submitting beneficial ownership information to the Minister as part of compliance requirements.
• Aligning documentation and reporting of beneficial owner changes with current regulations.

The Minister of Law and Human Rights now has the authority to designate beneficial owners based on verification and data analysis. If discrepancies arise between corporate reports and analysis results, authorities may determine the actual beneficial owners of a business entity.

Sanctions for Non-Compliant Corporations

Ministerial Regulation 2/2025 imposes administrative sanctions on corporations that fail to report beneficial owners or provide inaccurate information, including:

1. Administrative warnings – Delivered via AHU Online or official email.
2. Blacklisting – Corporate names will be publicly disclosed on government websites.
3. Suspension of AHU Online access – Non-compliant corporations may lose access to licensing and legal administrative systems.

Compared to the previous regulation, the new rules introduce a warning mechanism before escalating sanctions, giving corporations an opportunity to rectify non-compliance before facing stricter penalties.

Conclusion

With the enactment of Ministerial Regulation 2/2025, corporations are expected to improve transparency in disclosing beneficial owners. This regulation emphasizes compliance in reporting, verification, and data updates while introducing stricter oversight.

As part of efforts to foster a healthy and accountable business climate, corporations in Indonesia must promptly adapt to these new rules to avoid sanctions and ensure uninterrupted operations.

For legal assistance from SW Counselors at Law, please contact:

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