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Company Law Post Job Creation Law

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Company Law Post Job Creation Law

After the promulgation of Law No. 11 of 2020 on Job Creation (“Job Creation Law”), there are several laws that have been amended. One of them is Law No. 40 of 2007 on Limited Liability Company (“Company Law”). The following is the changes on the Company Law:

  1. Exception for Two Shareholders

    Normally, the limited liability company will have to be established by two legal subjects based on an agreement. Under the Job Creation Law, the limited liability company includes an individual legal entity (badan hukum perorangan) if it fulfills the criteria of micro and small business. Accordingly, it means that an individual can establish a limited liability company and holds that shares individually to the extent that it is for micro and small business. 1 Further, the amended Company Law also stipulates that the exception of two shareholders is applicable for enterprise fully-owned by the state, regional-owned enterprise, village-owned enterprise, company managing the stock exchange and other institution in accordance with capital market law, and micro and small business enterprise.

  2. Legal Entity Status

    Prior to amendment, a limited liability company obtains its legal entity status on the date of issuance of the Minister’s decision. This provision has currently been amended where the company obtains its legal entity status after it is registered to the Minister and obtains a proof of registration.2

  3. Amount of Authorized Capital

    The provision on authorized capital has also been amended under the Job Creation Law. Previously the authorized capital must be at least for IDR 50 million. Currently, the amount of the company’s authorized capital is determined based on the decision of the company’s founder.3

  4. Government’s Expense on Company’s Administration

    The expenses related to the government’s administration on limited liability company was previously referred to a government regulation, but after amendment, it refers to the laws and regulations in the field of non-tax state revenue.4

  5. Company that Fulfills the Criteria of Micro and Small Business

    The Job Creation Law adds 10 new articles with regards to the micro and small business. A company that fulfills the criteria of micro and small business can be established by one person.5 Its establishment was based on a statement of establishment in Indonesian language6 and registered electronically to the Minister.7 There will also be a fee waiver for establishment of a legal entity company for Micro and Small Business.8

    The board of director of company for micro and small business conducts management in accordance with the purpose of its company.9 The board of director must make a financial report in order to achieve a good corporate governance.10 Furthermore, the founder of company for micro and small business can only establish one company in one year.11 For micro and small business, the shareholder must be an individual.12 Such shareholder is not personally liable for engagements made in the name of company and is not liable for loss in excess of his or her shares.13 These provisions apply as long as: (a) the company’s requirements as a legal entity have been fulfilled; (b) shareholder does not act in bad faith (directly or indirectly) to use the company for personal gain; (c) shareholder does not commit an unlawful act; and (d) shareholder does not unlawfully use the company’s wealth so that the company’s wealth becomes insufficient to settle company’s debts.14

    The dissolution of the company for micro and small business is carried out by the general meeting of shareholder as outlined in the dissolution statement and notified electronically to the Minister.15 If a company for micro and small business no longer fulfills the criteria as micro and small business, the company must change its status to the regular company as regulated by applicable laws and regulations.16


Alya Batrisiya

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  1. Article 109 point 1 of Job Creation Law stipulates that “Limited Liability Company, hereinafter referred to as the Company, is a legal entity that forms a partnership of capital, established by an agreement, performs business activity with all of its authorized capital divided into shares or individual legal entity that fulfill the criteria of Micro and Small Business as stipulated under the laws and regulations regarding Micro and Small Business.” (emphasis added)
  2. Article 7 paragraph (4) of Company Law as amended by Job Creation Law
  3. Article 32 paragraph (2) of Company Law as amended by Job Creation Law
  4. Article 153 of Company Law as amended by Job Creation Law
  5. Article 153A paragraph (1) of Company Law as amended by Job Creation Law
  6. Article 153A paragraph (2) of Company Law as amended by Job Creation Law
  7. Article 153B paragraph (1) of Company Law as amended by Job Creation Law
  8. Article 153I paragraph (1) of Company Law as amended by Job Creation Law
  9. Article 153D paragraph (1) of Company Law as amended by Job Creation Law
  10. Article 153F paragraph (1) of Company Law as amended by Job Creation Law
  11. Article 153E paragraph (2) of Company Law as amended by Job Creation Law
  12. Article 153E paragraph (1) of Company Law as amended by Job Creation Law
  13. Article 153J paragraph (1) of Company Law as amended by Job Creation Law
  14. Article 153J paragraph (2) of Company Law as amended by Job Creation Law
  15. Article 153G paragraph (1) of Company Law as amended by Job Creation Law
  16. Article 153H paragraph (1) of Company Law as amended by Job Creation Law