Client Alert – January 2025
Legal Mechanism for Managing Absent Property Owners Under the Indonesian Civil Code
In business, we often face legal challenges, one of which arises when we need to take legal action against a property or asset whose owner is absent and whose whereabouts are unknown. This presents a significant hurdle, as the absence of the owner can impede the resolution of legal matters regarding the property or assets.
However, there is a solution embedded within the Indonesian Civil Code (“ICC”). Under Article 463 of ICC, the Afwezigheid Application offers a legal pathway to address such issues, ensuring that property or asset matters can be resolved even in the absence of the owner.
In practice, an Afwezigheid Application can be submitted to the relevant district court if there is a party with a legitimate interest in the property or asset of an owner who is absent and whose whereabouts are unknown. Once the application is processed and the court proceedings are concluded, the district court may issue a ruling allowing for the property or assets to be managed, safeguarded, and administered by an authorized government body, known as the Heritage Office (Balai Harta Peninggalan).
The Heritage Office, a technical unit under the Directorate General of the General Legal Administration (Direktorat Jenderal Administrasi Hukum Umum) of the Ministry of Law, is responsible for managing the assets that are deemed “abandoned” following a court declaration of absence (Afwezigheid Decree).
According to Article 2 of the Ministry of Law and Human Rights Regulation No. 7/2021, the Heritage Office manages and represents the interests of absent owners—this includes assets like properties, shares, and other valuables. Importantly, while the Heritage Office does not legally own the assets, it acts as an administrator or custodian, ensuring that the interests of the absent owner are represented. This may include managing, preserving, or even selling the property or assets, in accordance with court orders.
The Heritage Office’s management and representation of interests over assets, including shares, has been recognized by the court in several notable cases. For example, in the Surabaya District Court’s Decree No. 123/Pdt.P/2021/PN.Sby. (dated 19 April 2021) and the Brebes District Court’s Decree No. 45/PDT.P/2021/PN.Bbs. (dated 10 January 2022), the Heritage Office was authorized to manage assets, providing clarity and legal support in cases of absent owners.
One of the most significant applications of the Afwezigheid Application was in solving a critical roadblock during the Go-Private Process in Indonesia. This legal mechanism helped a public company successfully transition to a private company by addressing challenges with the absent and unreachable shareholders.
In a groundbreaking precedent, the District Court of South Jakarta recognized the management and representation of publicly-listed shares by the Heritage Office in its Decree No. 263/Pdt.P/2022/PN.Jkt (dated 14 July 2022) (“Decree”). This precedent involved PT Bentoel Internasional Investama, Tbk. (“Bentoel”), which filed an Afwezigheid Application to manage and administer the shares of 1,438 absent and unreachable shareholders during its Voluntary Tender Offer process. The goal was to consolidate the shares into the hands of a single shareholder, the Heritage Office of Jakarta, thereby resolving the ownership issue and enabling Bentoel to meet the necessary shareholder threshold for its Go-Private process. The District Court granted Bentoel’s application, and once the Decree was fully implemented, it effectively squeezed out the absent and unreachable shareholders, clearing a major obstacle and allowing Bentoel to transition to a private company.
Concluding Remarks
In conclusion, the Afwezigheid Application offers an effective legal solution for managing assets when the property owner is absent and their whereabouts are unknown. By utilizing this application, interested parties can ensure that an authorized body, the Heritage Office (Balai Harta Peninggalan), steps in to safeguard and manage the property, protecting the interests of both the absent owner and any parties involved. This process streamlines the resolution of property or asset matters, ensuring continued management and legal action while remaining fully compliant with the Indonesian Civil Code. Whether preserving, selling, or administering assets, the Heritage Office ensures that the absent owner’s rights are upheld, providing a clear, reliable path for resolving complex legal issues in business.
Please contact Damar Ariotomo (ariotomod@rexadvisor.com), Rahdityanto Regowo (rregowo@rexadvisor.com), Rexy Hutabarat (rhutabarat@rexadvisor.com), or Rizki Imral Rakhim (rimral@rexadvisor.com) for further information.
Disclaimer:
The information provided is of general nature and should not be treated as legal advice, and/or be relied upon by any party for any circumstance. Specific legal advice should be sought.
