Limited Liability Company (Company) as a Legal Entity

It is made ​​for Company become special if compared to other business entities. If the cooperative association (Comanditaire Venootschap/CV), Firm, Trading Enterprises (Usaha Dagang/UD) only be regarded as a business entity. but Company be regarded as Legal Entity. It means that the Company is also the subject of law that can stand on its own, prosecuted and make lawsuit in court, of course, to be represented by competent organs.

Beginning of the question that, if the Company’s is a legal entity, then when the predicate was gained?. We know, if two or more people to set up Limited Liability Company, it would draw up all plans, and make the Deed of Establishment including Articles of Association, and running the company's operations even though there has been no determination from Minister of Justice and Human Right (Menkumham) related to their status to become as Limited Liability Company.

In Article 7 (4) Law 40 of 2007 says “A Company obtains legal entity status on the date of the issuance of the Minister’s Decree  regarding the legalization of the Company as a legal entity”. To obtain the status of legal entity, first must be preceded by the filing of the company name, then apply to the Minister for approval of the incorporation of legal entity of the company with done together by the founders or give authority to the notary, and done by electronically through the System Information of Legal Entity (Sisminbakum).[1]

Status of legal actions undertaken by companies is not have obtain legal status to become a legal entity can be viewed from several aspects based on Company Law. If legal action on behalf of the Company, who have not obtained legal status, should only be done by all members of the Board of Directors, together with all founders and all members of the Board of Commissioners. And all of them are responsible by jointly liability for the legal actions undertaken by companies.[2]  Furthermore, the legal act is performed together will be the responsibility of the company after the company obtained legal status as a legal entity.[3]

But if the legal act performed by a founder on behalf of the Company that has not gained the status of a legal entity, the legal action become responsibility of the respective founders and does not bind the Company.[4] And this legal act is only binding and become the responsibility of the Company after the legal action was approved by the shareholders at the general meeting of shareholders, which was attended by all the shareholders of the Company. The general meeting of shareholders is meant the first general meeting of shareholders is held no later than 60 days after the company obtained decree as a legal entity.[5]

It is different if the Company has obtained the status of a legal entity. The company automatically becomes the subject of law. So, if the actions performed by the organ of the company, it’s become the responsibility of the company as long as not conflict with applicable laws and regulations. Likewise with the shareholders. Shareholders are not personally responsible for all actions is performed ​​on behalf of the Company and any damages beyond the shares held in the company's.[6] Except:[7]

  1. the requirements for the Company to be a legal entity have not been or are not met;
  2. the shareholders concerned directly or indirectly have in bad faith misused the Company for their own personal interests;
  3. the shareholders concerned are involved in unlawful acts committed by the Company; or
  4. the shareholders concerned directly or indirectly have unlawfully used the Company’s assets, which has caused the Company’s assets to become insufficient for the settlement of the Company’s liabilities.


[1] Article 9, Law No. 40 of 2007 Regarding Limited Liability Companies.
[2] Ibid, Article 14 (1).
[3] Ibid, Article 14 (3).
[4] Ibid, Article 14 (2).
[5] Ibid, Article 14 (4 and 5).
[6] Ibid, Article 3 (1).
[7] Ibid, Article 3 (2).

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