If there are several shareholders in such PT Company, there must firstly be a Shareholders Meeting called by the Board of Directors for a meeting with the agenda to request the shareholders to give such Shareholders Loan to the PT Company, where Minutes of the General Shareholders Meeting will be the legal basis for the Shareholders and the PT Company to enter into a Shareholder Agreement. As we understand under the Indonesian Limited Liability Company Law, the PT and its respective Shareholders are being treated respectively as an independent Law Subject in front of the Law. Thus if the shareholder agreed to provide such Shareholder Loan, such Shareholder who are providing such Shareholder Loan has the right to demand for the repayment of the Shareholder Loan against the PT Company. S corporation shareholder loans: a cautionary tale.: An article from: The Tax Adviser
This Shareholder Loan has the level of subordinate Loan against Loan From a Bank made to such PT Limited Liability Company, meaning that if there is cash-in received by such PT from its business, the repayment has to be firstly made by the PT to the Bank and if there is remaining amount after being deducted for the operations of the PT Company such monies is allocated for the repayment to such Shareholder providing such Shareholder Loan to such PT Company.
This repayment to the Shareholder is also made first before dividend are distributed to the Shareholders. This all depends upon the agreement between the shareholders of the PT Company and the Shareholder who is providing such Loan. It is really interesting for a Business Lawyer to draft this Shareholder Loan Agreement since there are legal aspects of Civil Law regulating loan, and there are Corporation PT Law regulating the corporation aspects of such PT, which have to be observed by the Business Lawyer in drafting the Shareholder Loan Agreement.