INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
SSEK Law Firm Mayapada Tower I, 14th Floor Jl. Jend. Sudirman Kav. 28 Jakarta, 12920 Indonesia Tel: +62 215 212 038 / +62 212 953 2000
Fax: +62 215 212 039 Email: ssek@ssek.com Web: www.ssek.com
1. Introductory 1.1 Forms of Corporate/Business Organisations
that within certain business sectors, entities are required to adopt specific organisational struc - tures, primarily that of a limited liability compa - ny, in order to partake in the relevant business. Additionally, pursuant to Article 5, paragraph 2 of Law No 25 of 2007 regarding Investment, as last amended by Law No 6 of 2023 regarding the Stipulation of Government Regulation in Lieu of Law No 2 of 2022 regarding Job Creations as Law (the “Job Creation Law” ) (hereinafter col - lectively referred to as the “Investment Law” ), any foreign investment in Indonesia must be undertaken by means of establishing or acquir - ing shares in a limited liability company, unless otherwise stipulated by the relevant laws and regulations. 1.2 Sources of Corporate Governance Requirements The primary legal framework for corporate gov - ernance in Indonesia is established in Law No 40 of 2007 regarding Limited Liability Companies, as last amended by the provisions of the Job Creations Law (the “Company Law” ). Gener - ally, the Company Law mandates adherence to all statutory provisions and articles of associa - tion by companies operating within Indonesia, whether they are classified as public companies or private companies.
Generally, Indonesian law acknowledges two main types of business organisation: those structured as a business entity ( badan usaha ) and those operating as a legal entity ( badan hukum ). The distinction between these two types of business organisation lies in the legal subject and liability provisions. A business entity can take the form of a: • civil/general partnership ( maatschap ); • partnership; or • limited partnership ( commanditaire ven- nootschap ). A legal entity business generally takes one of the following forms: • limited liability company;
• foundation; or • co-operative.
The most common form of business organisa - tion in Indonesia is a legal entity structured as a limited liability company. It is important to note
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