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§ Corporate Law

Indonesian Corporate Law

Company law is a legal basis for all types of companies and business, and it sets out what is required to conduct any type of business that is permanent, continuous, operational, and located in the territory of the Indonesian state for profit. Company law is related to Law No. 40 of 2007 on Limited Liability Companies, Law No. 25 of 2007 on Investment, Commercial Law (Wetboek Vankoophandel), Law No. 13 of 2003 on Employees and other laws.

Based on New Investment Law No. 25/2007, foreign investment in Indonesia is defined as the investment activity of a foreign investor in conducting a business in Indonesia. The PT PMA is the legal entity through which a foreign person, company, or government agency may conduct business in Indonesia (i.e., generate revenue and income).

The establishment of a PT PMA is regulated in Law No. 40/2007 on companies with limited liability (company law). Such a company can either be 100 percent foreign or partially foreign-owned, depending on the level of investment and the nature of the company.

A private company is a company that belongs to a non-governmental organization or a small group of shareholders or company members who do not offer or trade the company's shares on the stock exchange, but these company shares can be traded, offered and privately owned. Another term for private companies is unlisted companies and unregistered companies.

Although less well known than public companies, private companies still play a big role. These types of companies can operate in all areas of the economy (trade, finance, industry and services).
Below are the four most common legal forms of private companies in Indonesia.

1. Individual Companies (UD)

An individual company is a company or business that belongs to a single owner and can be set up with little effort and without certain qualifications from the owner. The establishment and dissolution of this form of business is easy and does not require the consent of other parties.

2. Firm (FA)

A firm is a form of partnership in accordance with Article 16 of the Commercial Code to conduct business between two or more people using a common name. The owner of the company is made up of several allies, and each member of the alliance surrenders his or her personal assets, as stated in the company's deed.

3. Limited Partnership (CV)

A limited partnership (Commanditaire Vennootschap or CV) is a partnership founded by one or more people who bring money or goods into the company, and a CV can be run by the founders or managers and is very common in Indonesia. The limited partnership is always founded with a deed and must be registered. However, this alliance is not a legal person (like a company) and therefore does not have its own property but the owners are liable with their private assets. This type of company is reserved for Indonesian citizens only.

4. Limited Liability Company (PT)

The limited liability company is a legal entity consisting of a company with capital from capital contributions in which the owners own as many as the percentage stake. The foundation must be notarized, entered in the commercial register and founded by at least two people.

Please note that the material on our website is for informational purposes only and should not be construed as a legal opinion or legal advice.

How we can help you...

    • ESTABLISHING THE LEGAL BASIS FOR A COMPANY: We accompany you from the start when starting a company, select the right company form and take care of all the necessary legal preparation.

    • DRAFT CONTRACTS: For every business establishment, firm and complete contracts are essential, which we prepare for each type of business, check and implement with our notary.

    • DISPUTES: When disputes arise between employer and employee as well as other legal persons/parties, we represent out of court or in court.

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