Govt Redefines Procedures for Establishing and Organizing Foundations

The Minister of Law and Human Rights (“Minister”) has issued Regulation No. 2 of 2016 on Procedures for Submitting Applications for the Validation of Legal Entities and for Approvals and Notifications for Amending the Constitutions of and Information about Foundations (“2016 Regulation”).In general, the 2016 Regulation redefines the procedures and requirements for securing approvals for names of foundations and their validation by the Minister. Additionally, the 2016 Regulation also incorporates one new provision, namely the procedures for amending a foundation’s constitution and its information.Prior to the 2016 Regulation, these matters were regulated under Ministerial Regulation No. 5 of 2014 on the Validation of Foundations (“2014 Regulation”). [1] The 2016 Regulation is of relevance to notaries who are authorized to submit applications for the validation of foundations to the Minister through the Legal Administration System (Sistem Administrasi Badan Hukum-“SABH”).Establishment of FoundationsApproval for Foundation NamesIn order to be validated, a newly established foundation must first acquire ministerial approval for its name. Only then may the establishment procedure continue to the next phase. [2] All applications for the approval of foundation names must be submitted using the electronic form available on the SABH. [3] Applications are subject to a non-refundable administration fee, and this fee must be paid in advance through an appointed bank. [4] Upon receiving an application, the Minister will assess whether the proposed name satisfies all of the requirements set out under Government Regulation No. 63 of 2008 on the Implementation of the Law on Foundations. [5] Once all of the relevant requirements have been satisfied, the Minister will issue a letter of approval outlining the following information: [6]