Entities In Indonesia Vol. II: A General Overview Of Business Entities In Indonesia - Non-Legal Business Entities

• Published date: 29 March 2024
• Subject Matter: Corporate/Commercial Law, Contracts and Commercial Law
• Law Firm: Nusantara Legal Partnership
• Author: Ms Audria Putri and M. Irfan Yusuf

In continuance to our earlier article on General Overview of Business Entities in Indonesia (link: Vol. 1), we provide the second volume of the series, with the summary and general overview of non-legal business entities in Indonesia.

Forms of non-legal business entities acknowledged in Indonesia's jurisdiction include civil partnership (maatschap), commanditaire vennootschap (CV), firm, and sole proprietorship. In contrast to legal business entities, these ones are classified as non-legal entities as there limitation between the personal assets of its founders or member with the entity's assets. These types of entities are generally regulated under the Indonesian Commercial Code ("Commercial Code") and the Indonesian Civil Code ("Civil Code"), except the ones established under a sole proprietorship, which are not specifically regulated under the statutory regulations. However, Regulation of the Minister of Law and Human Rights Number 17 of 2018 ("MoLHR Regulation 17/2018") stipulates that the establishment of a maatschap, CV, or firm must be drawn in the form of a notarial deed and registered to the Ministry of Law and Human Right. MoLHR Regulation 17/2018 also stipulates the procedures for the dissolution of these non-legal entities.

Please refer to the points below for the summary of: (a) Civil Partnership, (b) CV, and (c) Firm.

A. Civil Partnership (Maatschap)

The term civil partnership is translated from Dutch, maatschap. Article 1618 of the Civil Code defines a civil partnership as an agreement between two or more individuals who bind themselves to jointly contribute into the entity's operation with the intention of sharing the proceeds. The contributions (inbreng), in this matter, can be in various forms including cash, goods, or labor (Article 1619 of the Civil Code). Based on Article 1626 of the Civil Code, failure to make such contribution, will result in the partner to be considered as ipso jure liable for debt interest on that amount of contribution, calculated from the day on which this amount should have been contributed. Profit sharing can be stipulated in the agreement. Nevertheless, in the absence of such agreement, the profit sharing is determined by the amount of each partner's contribution (pro rata), as stipulated in Article 1633 of the Civil Code.

A civil partnership can be classified into:

a. General Civil Partnership (algehele maatschap), a partnership in which the partners contribute all of their assets or their equal portions...