Corporate Law Series - Part 1
The Mechanism of Company Law in Indonesia
In the practice of corporate law in Indonesia, a company can be divided into two types, which are the Legal Entity Businesses and Non-Legal Entity Businesses (or commonly known as Business Entity).
A legal entity recognises the separation of assets between its founders and the established entity, while a business entity does not. Establishing a legal entity requires the approval from several government bodies/agencies, while establishing a business entity are less bureaucratic procedures.
In the Indonesian economic system the most commonly used as business vehicles is a business entity in the form of a small business or an individual business entity.
Regulations governing the business entity in the form of a small business or an individual business entity can be found in the Code of Commerce (Kitab Undang-Undang Hukum Dagang/KUHD Wetboek van Koophandel/WvK) and the Civil Code (Kitab Undang-Undang Hukum Perdata/KUHPerdata Burgerlijk Wetboek/BW) inherited from Dutch colonialism, which are applied in Indonesia based on the principle of Concordance and most of its legal provisions still prevail.
Disclaimer
"This Article was produced by DHP Lawyers for understanding Indonesian law only and does not constitute an official translation published by the Indonesian Government.
This article was not intended to be used as advice and/or opinions and/or legal references, and no action should be taken as regards the reliability of any of the information contained herein without first seeking guidance from professional services.
We have made every effort to ensure the accuracy and completeness of the information that is contained within this Memorandum, however, we are not responsible for any errors, omissions and/or mistakes that occur in the source text.
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30 Mei 2019