Literally, a share means a sum of money invested by the investor as a shareholder into a legal entity, a limited liability company, whereby in return to such investment the shareholder rights and share of profit from the limited liability company.  Furthermore, shares also have a feature of a private asset that can be transferred by its owner in a manner stipulated by law and regulations including by sales and purchase or by a grant scheme.  You may need to know that the value of shares may rise according to valuation of assets owned by the limited liability company.

Regarding the value of shares is regulated in Article 49 of Law Number 40 of 2007 Concerning Limited Liability Company, i.e.:

  1. The nominal value of the shares must be stipulated on or over such share;
  2. The nominal value of shares must be stipulated over such share in “rupiah currency”.

Therefore, it is fathomable that any issued share by the company will have the nominal value of share be stipulated over the share and, this nominal value of share is usually in line with the shareholders subscription.

Besides the nominal value of the share, there is also a market value of which can be assessed by an appraisal or consultant. The market value is:

  1. Share prices traded in open markets; and
  2. The fair value in accordance with the conditions of the company.

The market value is based on the valuation of the company, meaning that if the company is experiencing many problems, then the share market price might be below the par value of the shares, and otherwise if the conditions of the company is having a good prospect, then its market price of its shares can be above the par value of the shares.

However, we corroborate that the market value of shares has no relevancy with the nominal value of the shares. This due a market value is determined based on the consideration of “net asset value” of the company and investors’ expectations of future profit, which this may also be forecasted by appraisals or consultants.

Hence, it is fathomable even further that the value of shares can be differentiated into: (i) the value of shares; and (ii) the market value of shares.

We take an example of shares sales and purchase transactions we usually handle, the parties sometimes agree upon a sales and purchase of shares not based on the nominal value of the shares as stipulated in the Company’s Articles of Association.  The Parties then agreed to conduct a sales and purchase of shares based on the market value of the shares, and to waive the nominal value of the shares stipulated in the Articles of Associations of the target company.

As explained above, to assess the market value of a share, you may seek assistance from an appraisal that also make an assessment on the company’s assets at a time. The calculation on the company’s asset value may be conducted by accumulating the company’s equity with its liability.  Means, if the accumulation between the company’s equity and liability resulting in a balanced liability or the liability is less than the equity, this shown that the company is in a good financial condition, vice versa.


To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.

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