May
14
2019

Definitions of Business Entities in Indonesia

There are several different business entities recognized in Indonesia. These entities differ due to their legal status, composition, purpose, financing, and even membership. To discover what types of business entities exist in Indonesia and to aid you in choosing one which will best serve your needs, here is a short description of various business entities in Indonesia.

PT (limited liability company): a legal entity established under an agreement, which conducts business activities with a capital based entirely of shares.[Article 1(1) of Law No. 1 of 1995]. The wealth of a PT is separated from the wealth of its owners, and the latter holds limited liability; only as much as the stock holds. Profits will be divided among shareholders by means of a dividend depending upon the amount of profit the PT earns.

CV: Commanditaire vennootschap; a partnership created by an individual or several individuals who trust money or goods upon another individuals or other individuals who run an enterprise and act as the leader. It is formed by means of an authentic deed, which is subject to be registered to the Clerk of a State Court where the firm is located and then the deed of establishment must be published in the Additional Official News of the RI. Despite being a business entity, a CV is not a legal entity for lacking in formal acknowledgement from the State in the form of laws.

Koperasi: An enterprise comprised of individuals or a legal entity, basing its activities upon the principles of cooperation as well as a manifestation of the people’s economic movement which is based upon the principle of familial. [Art. 1(1) of Law No. 25 of 1992]. A koperasi is operated based upon the Pancasila and the 1945 Indonesian constitution, and aims to achieve the prosperity of its members, first and foremost, and the society in general. A Koperasi is comprised of a minimum of 20 individuals, and its membership is open and voluntary. It is run democratically, providing a limited reward for investment, and its members are rewarded with the Koperasi’s profit with a share which commensurates with the amount of each of their own contribution.

Foundation: A legal entity encompassing wealth which is separable and is intended to achieve a certain goal in social, religious, and humanitarian areas, which do not have members.[Art 1(1) of Law No. 16 of 2001]. A foundation is comprised of Trustees, Managers, and Supervisors, and it erect a business entity or join one to raise funds for its cause, but the trustees, managers, and supervisors may not monetarily benefit from it.

Firm: a partnership held to run a company under a joint name. [Article 16 of the KUHD]. Not unlike a CV, it is formed by means of an authentic deed, which is subject to be registered to the Clerk of a State Court where the firm is located and then the deed of establishment must be published in the Tambahan Berita Negara RI. The sharing of profit is usually stipulated in its establishment agreement, but one party may not born the entire benefits or losses. If the division of profits and losses has not been agreed upon in advance, then the division is based on the balance of revenues in a fair and balanced manner and allies who contribute by labor only will be equalized with allies who put in the least amount of money or goods.

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