Business Licenses: Permit Documents That Must Be Verified in Due Diligence – In the world of business and investment, conducting due diligence is a crucial step before deciding to proceed with partnerships, acquisitions, or investments. One of the essential aspects of this process is verifying the legitimacy of the business licenses. Ensuring that the target company holds complete and valid permits not only protects investors from legal and operational risks but also guarantees the sustainability of the business in the future.

Understanding Due Diligence and Its Role in Business

Due diligence is an in-depth investigation into a company or project to confirm its legal, financial, operational, and risk status. Its primary goal is to identify potential risks and assess the feasibility of an investment or business collaboration. In the context of business licensing, due diligence helps ensure that the company complies with all applicable laws and regulations in Indonesia.

The Importance of Verifying Business Licenses

A business license is a legal document issued by authorized government agencies and serves as the primary requirement for operational activities. Missing or invalid licenses can jeopardize the company’s legality and ongoing operations. When investors or third parties conduct due diligence, verifying the authenticity and validity of business licenses is a critical step to avoid future legal, financial, or operational issues.

Types of Business Licenses to Verify

Below are some key business documents that must be verified during due diligence in Indonesia:

1. Business Trading License (SIUP)
   Issued by the local Trade Office, the SIUP is a fundamental license required for trading activities. Verifying its authenticity and validity period ensures the business operates legally and according to regulations.
2. Company Registration Certificate (TDP)
   TDP proves that the company is officially registered with the government. Authenticity checks are necessary to confirm that the company is not suspended or revoked.
3. Taxpayer Identification Number (NPWP)
   The NPWP serves as the company’s tax identification. Verification confirms that the company is registered and compliant with tax obligations.
4. Principal Permit and Location Permit
   Necessary especially for companies in industrial, construction, or property sectors, these permits ensure the company operates within the designated area and complies with spatial planning regulations.
5. Special Business Permits (IUK)
   For specific sectors such as mining, pharmaceuticals, or telecommunications, companies must obtain sector-specific permits from relevant ministries. Verifying these permits is vital to avoid legal complications.
6. Environmental Permits (AMDAL / UKL-UPL)
   Businesses that potentially impact the environment must hold the proper environmental permits. Verification ensures compliance with environmental standards and sustainability practices.

Verification Procedures for Business Licenses during Due Diligence

Verifying business licenses involves more than just reviewing photocopies or scanned documents. Recommended steps include:

• Direct verification with relevant government agencies such as the Trade Office, Investment and One-Stop Integrated Service Office (OSS), and related ministries.
• Checking the validity through official online systems, such as the OSS platform.
• Consulting with experienced legal experts or due diligence consultants to confirm authenticity and understand the legal implications.

Risks of Inadequate Verification of Business Licenses

Neglecting thorough verification can have serious consequences for both companies and investors. Some potential risks include:

• Legal sanctions and fines from authorities for operating without proper licenses or violating regulations.
• Business suspension or revocation by relevant agencies.
• Damage to reputation and trust among customers, partners, and stakeholders.
• Financial losses and litigation risks resulting from unprotected investments or legal disputes.

Therefore, meticulous and professional verification of business licenses should be an integral part of the due diligence process.

The Importance of Professional Support in Due Diligence

Conducting due diligence, especially verifying business licenses, requires deep knowledge of local regulations and extensive experience. Many companies prefer to work with seasoned due diligence consultants to ensure this process is efficient and accurate.

Siema Konsultan: Trusted Solution for Due Diligence and Risk Management

As a consulting firm founded and managed by multilingual Indonesian professionals with broad knowledge and experience, Siema Konsultan offers trusted solutions for Indonesian companies. Siema provides comprehensive due diligence services, including risk assessment, safety and security risk management, and business continuity solutions.

Supported by international advisors and contributors, Siema combines global capabilities with local expertise to deliver practical solutions tailored to your needs. With a comprehensive approach, Siema ensures all aspects of license verification and risk management are executed accurately and efficiently.

If you require consultation related to due diligence, risk assessment, or safety and security risk management, do not hesitate to contact Siema Konsultan at WhatsApp/Phone 0813 1114 2228. With Siema, your business continuity and success in Indonesia are professionally safeguarded.

Verifying business licenses is an essential part of the due diligence process that should not be overlooked. Through this process, companies can confirm operational legality, avoid legal risks, and safeguard their reputation. With professional support and extensive experience, this process can be carried out effectively and efficiently. Siema Konsultan is your trusted partner committed to helping Indonesian companies manage risks and ensure sustainable business operations amid today’s dynamic business environment.

For more information

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