Knowledge

The Incorporation of a limited liability company is governed by the Company Law No. 40 of 2007 (the "Company Law").

 

Under the Company Law shareholders of an Indonesian company have limited liability in respect of the liabilities of the company once the Deed of Establishment (which contains the Articles of Association) of the company has been approved by the Minister of Justice and Human Rights ("MOJ").

 

Upon signing the Deed of Establishment before a notary public, a company is considered to be established and can trade in its own name. However, in the period between signing the Deed of Establishment and the receipt of MOJ approval for the Articles Of Association, the company is considered to be a kind of unlimited liability company whose founders (shareholders) have

unlimited personal liability for the actions and liabilities of the company.

 

This personal liability is extinguished once the MOJ approval is obtained and a general meeting of shareholders is held to approve, ratify and adopt all prior actions and liabilities undertaken in the company's name. Directors also have personal liability during this "company in formation" period. Their personal liability remains longer, namely until the new company is registered in the Company Register maintained by the Department of Industry and Trade and published in the State Gazette.