Legal Literacy - Practice nominee between Indonesian citizens and foreign citizens is still widely practiced in Indonesia, even though it constitutes legal circumvention and violates the provisions of the Law. This article discusses the prohibition of nominee practices on land ownership and investment in statutory regulations. Let's take a look at the discussion of nominee practices below.
Nominee Agreement between Indonesian Citizens and Foreign Citizens
A nominee agreement (representation or name-lending) based on a statement or power of attorney made by both parties, namely a Foreign Citizen (WNA) borrowing the name of an Indonesian Citizen (WNI) to have their name listed as the land owner on the certificate, so that the Foreign Citizen can perform legal actions on the land they own. A nominee agreement is also used to borrow someone's name as a shareholder in a company, made in writing and signed by both parties in a notarial deed before a notary.
In this case, the foreign national (WNA) is the original owner who provided the funds for the purchase of land or shares in the name of an Indonesian citizen (WNI), and the authority or power to manage and utilize the land is carried out or represented by the foreign national. Generally, foreign nationals who control land through nominee agreements or name-lending arrangements utilize the land for business and tourism activities.
This nominee practice is carried out because ownership rights in the name of an Indonesian citizen can last for a long time or indefinitely as long as the party whose name is listed on the certificate is still alive and can be passed down to heirs. If the certificate in question is passed down to heirs, the foreign national can still renew the nominee agreement by including the names of the heirs.
Elements of a Nominee Agreement
A nominee agreement consists of a master agreement, such as a land ownership agreement (land agreement) and a power of attorney, lease agreement, power of attorney to sell, option agreement, will, and heir statement.
A nominee agreement is similar in nature to a reciprocal agreement, in which the parties are obligated to fulfill the achievements of each party as agreed upon in the agreement, and this agreement is an application of the principle of freedom of contract. This is because nominee agreements are not explicitly regulated in laws and regulations.
The elements of a nominee agreement, as with agreements in general, are:
- elements of legal principles, both written and unwritten legal principles of agreement;
- elements of legal subjects, namely the parties who have an interest in the agreement;
- elements of legal objects, namely the subject matter of performance in the agreement;
- consensus, which is the conformity of the expression of will of the parties regarding the content and object of the agreement;
- the rights and obligations of the parties as a legal consequence arising from the agreement.
Then, implicitly, a nominee agreement has the following elements:
- The existence of a power of attorney agreement by Beneficial Owner as the grantor to Nominee as the recipient of power based on trust from Beneficial Owner to Nominee;
- The power granted is specific with a limited type of legal action;
- The nominee acts as if (as if) as a representative of Beneficial Owner before the law.
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