Cogent Social Sciences

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The need to adopt a limited liability partnership

for the legal profession in the partnership law: A
critical review from Indonesia’s perspective

Yetty Komalasari Dewi |

To cite this article: Yetty Komalasari Dewi | (2021) The need to adopt a limited liability partnership
for the legal profession in the partnership law: A critical review from Indonesia’s perspective,
Cogent Social Sciences, 7:1, 1999005, DOI: 10.1080/23311886.2021.1999005

To link to this article: https://doi.org/10.1080/23311886.2021.1999005

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Dewi, Cogent Social Sciences (2021), 7: 1999005
https://doi.org/10.1080/23311886.2021.1999005
Received: 27 January 2021
Accepted: 22 October 2021
*Corresponding author: Yetty
Komalasari Dewi, Faculty of Law,
Universitas Indonesia
E-mail: yetty_komalasaridewi@ya­
hoo.com
Reviewing editor:
Richard Meissner, Department of
Political Sciences, University of South
Africa - Muckleneuk Campus:
University of South Africa, South
Africa
Additional information is available at
the end of the article
POLITICS & INTERNATIONAL RELATIONS | RESEARCH ARTICLE
The need to adopt a limited liability partnership
for the legal profession in the partnership law: A
critical review from Indonesia’s perspective
Yetty Komalasari Dewi1*
Abstract: Traditionally, cooperation between people working within legal profes­
sions has taken the form of a partnership, under which each partner may be
personally liable to third parties for any damages caused. There have been efforts to
limit the liability of the partners in such a partnership. Several jurisdictions have
adopted the Limited Liability Partnership (LLP) form, which is derived from the
United States of America for legal professions. Other jurisdictions, such as the
Netherlands and Indonesia, continue to use the civil form (or ordinary) partnership
and the Maatschap. To date, there is a dearth of scholarship that comprehensively
examines the concept of the LLP from the perspective of Indonesian Partnership
Law. This article evaluates the idea of incorporating LLP as a new form in the Bill of
Business Entities in Indonesia, which can be used for, amongst other matters, legal
practice. The assessment offered may be useful for other civil law countries con­
sidering adopting the LLP-model. Currently, the ideal legal form for legal professions
is being discussed in Indonesia. This paper argues that although it is necessary to
revitalize the current regulations around the Indonesian Maatschap, it is not crucial
to adopt LLP as a new form of business organization.
Subjects: International Law - Law; Legal Reference; Business & Company Law; Regulation;
Socio-Legal Studies
ABOUT THE AUTHOR PUBLIC INTEREST STATEMENT
Dr. Yetty Komalasari Dewi is a full time Associate This article is written to contributing in future
Professor at Universitas Indonesia teaching, stipulations on the Bill of Business Entities or Bill of
amongst others, Commercial Law, Law of busi­ Partnership in Indonesia, considering the fact that
ness organizations and Company Law. Being legal forms and regulations for liberal profession
currently the Head of the Department of Law in in Indonesia is yet to be clear. The law on part­
Economic Activities and Technology, she is nership has been effective since 1848 and is still
responsible for developing teaching, research in effect to this day, while globalization and
and community engagement for faculty staffs. increasing competitiveness require the law to
Moreover, she also assists the Special Legal Staff adapt to changes. This begs the question if there
at the Office of the Vice President of the Republic is a need for change in its provisions, especially
of Indonesia in issues dealing with economic with regards to partnership for liberal professions.
law. She was involved as delegate in an expert
team appointed by the Ministry of Economy in
various working groups such as UNCITRAL and
G20. Dr. Yetty Komalasari Dewi has written and
published several books on Partnership Law, and
several articles dealing with company and part­
nership law that provides insights on the current
legal forms of partnerships and its regulations in
Indonesia.
© 2021 The Author(s). This open access article is distributed under a Creative Commons
Attribution (CC-BY) 4.0 license.
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Keywords: Business legal form; limited liability partnership; partnership law; LLP;
Maatschap

1. Introduction
There are various types of legal forms for conducting business1 in Indonesia, including sole
proprietorships, partnerships, and corporations. The most common type of business entity in
Indonesia is the civil partnership2 or the Maatschap, which constitutes 99,92% of the total business
units, and contributes to 60% of the country’s GDP.3 The legal basis of a civil partnership or
a Maatschap can be found in Book 3 Chapter 8 Articles 1618 to 1652 of the Indonesian Civil
Code. Commercial partnerships, such as the Vennootschap Onder Firma (FA) and the
Commanditaire Vennootschap (CV), are governed by the same provision as the Maatschap and
can be found in Book 2 Chapter 1 Articles 16 to 35 of the Indonesian Commercial Code, which has
been in force since 1847, through the principle of concordance.4 Some claim that this form of
partnership law no longer accommodates Indonesian society’s needs and have called for the
introduction of a new legal form of partnership: a Limited Liability Partnership or LLP.5

The Head of the Indonesian Advocates Association (or Perhimpunan Advokat Indonesia, PERADI)6
stated in 2015 that Indonesia should adopt provisions on the establishment of Limited Liability
Partnerships for advocates. He argued that since Indonesia has become a member of the ASEAN
Economic Community,7 the movement of legal services across the border would become easier.8
He believes that the LLP would be a better form of business organization which, he held, would
improve the competitiveness and confidence of local advocates.9 This idea was revisited when, in
October 2017, the Indonesian Government (specifically the Ministry of Law and Human Rights)
reopened the discussion on the Bill of Business Entity/Enterprise.10 One of the ideas was to include
the legal form of the LLP as an alternative business association or professional practice, particu­
larly for legal consultants and advocate firms. The Bill of Business Entity is one of three bills
prepared by the Indonesian Government of Indonesia to improve the facilitation of businesses in
Indonesia,11 and thus encourage national economic improvement.12

The overarching question is whether adopting the concept of the LLP as a new business
entity would promote competitiveness for professional practice in Indonesia, particularly in
legal services. This article argues that it is unnecessary to adopt the LLP model for the legal
profession because it has no bearing on Indonesia’s competitiveness among ASEAN member
countries. From an international perspective, this article will contribute valuable insights for
other civil law countries that may face the same problems of determining whether or not the
country ought to adopt this American-LLP model/concept for professional practice. The
Indonesian Partnership Law recognizes three forms of partnership: a Civil Partnership or
Maatschap, a General Partnership/Firma or Venootschap Onder Firma (VoF), and a Limited
Partnership or Commanditaire Vennootschap (CV).13 Some countries distinguish between civil
and commercial codes14 A Maatschap, which does not have a commercial element, is subject
to the civil code.15 Thus, a Maatschap or a civil company is different from a general partnership/
Firma because a Maatschap does not have to operate a business or commercial undertaking
(bedrijf).16 If a Maatschap is used to undertake a job or as a professional practice,17 This would
fall under the category of “liberal professions” (lawyers or advocates, accountants architects, or
medical doctors18 Yet, Maatschap could also be used as a commercial undertaking.19
Considering that Indonesia already has the Maatschap that is commonly used in/for profes­
sional practice, especially for the legal profession, the idea to adopt the LLP, which is also
intended for professional practice, needs to be carefully examined. This article evaluates the
idea of incorporating this new business form in the Bill of Business Entity/Enterprise.

The article begins with an elaboration of the concept of the LLP which originated in the USA, in
section two. This section explores the history, concept, features, and characteristics of the LLP in
the USA. The third section will then compare the LLP with the Maatschap, a concept derived from

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the Netherlands and commonly used to conduct an activity without commercial character, includ­
ing professional practice such as the operation of a law firm. The legal form and regulations
governing professional practice, particularly the legal services in the Netherlands, will be elabo­
rated since Indonesian Civil and Commercial Laws were originated from the Netherlands. This
section will discuss the preliminary draft of the Modernization of Partnership Act that was intro­
duced in early 2019 in the Netherlands. The fourth section will delve into the revision of Indonesian
Partnership Law by comparing the American-LLP and the Netherlands’ New Partnership Act.
Finally, the conclusion will show that it is not necessary for Indonesia to adopt the LLP for
professional services but will nevertheless call for some revitalizations to the Indonesian
Maatschap or Partnership rules.

2. Limited Liability Partnership (LLP) in the USA

2.1. Background of LLP incorporation

The legal form of the LLP was developed more than a decade ago and covers legal and accounting
firms.20 Some Asian countries such as Japan, India, and Singapore have adopted this LLP con­
struction in their systems.21 The introduction of the concept of the LLP is a direct consequence of
the collapse of the real estate sector and the crash in oil prices in the 1980s, which resulted in the
failure of the banking sector and credit institutions in Texas. Eventually, it led to a national banking
crisis.22 After the banking crisis, several lawsuits were filed by shareholders, members of Boards of
Directors, and chairmen of the corresponding financial institutions.23 However, the amount of
compensation successfully obtained was very little compared to the total amount of losses
suffered by the people. The people’s attention was then diverted to the lawyers, legal consultants,
and accountants who represented these financial institutions and questioned their roles in that
collapsed institutions.

The notion of filing a lawsuit against an advocate, a legal consultant, or an accountant on the
grounds of malpractice and/or breach of duty began to develop. One famous example was the
Dallas Law Firm.24 Dallas Law Firm is known as one of the most reputable law firms in the state of
Texas and was a general partnership firm since its establishment in 1980.25 Laurence Vineyard and
four other partners represented three associations of financial institutions. Company records
showed that Vineyard had been conducting various important jobs for Vernon and represented
parties in the Brownfield acquisition.26 In 1983, Vineyard seceded and established his law firm
together with several partners, and this law firm continued to conduct jobs for the three financial
institutions. Besides providing legal services, Vineyard also occupied a position as one of the
directors in a financial institution and had been reaping financial benefits from other financial
institutions. The three institutions were companies that did not abide by the principle of sound
financial management and gave excessive benefits and loans without collateral to the owners of
the institutions they financed. The losses resulting from the collapse of the three companies
reached more than one billion dollars. Vineyard was eventually sentenced to 2–5 years in prison,
was fired, and his license to practice law was revoked.27 Vineyard’s wealth was not enough to
cover the losses suffered by the financial institutions that he represented. As a result, the Federal
Deposit Insurance Corporation and the Federal Savings and Loan Insurance Corporation diverted
their attention towards malpractice in insurance companies and all partners in Dallas Law Firm
who represented the three companies. Among those hit by lawsuits for compensation were
partners who had retired, partners who had resigned and worked in other law offices, associates
who had become partners, those who worked as “of counsel” in Dallas Law Firm, and almost 40
partners who did not in any way represent or were involved with those various financial institu­
tions. The legal process surrounding the case of Dallas Law Firm attracted the lawyers’ and legal
consultants’ attention and eventually, this lawsuit was settled by securing insurance money for
malpractice from Dallas Law Firm.

For the first time, in 1991, the discourse to limit the personal liability of innocent partners in
Texas law firms was embodied in Bill 302 supported by a senator from Lubbock, Texas. The bill

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regulated limited liability on malpractice lawsuits specifically concerning certain professions,

which included: lawyers/legal consultants, accountants, medical doctors, engineers, architects,
and real estate brokers. The draft was supported and approved by all lawyers holding positions
as senators. However, in the next round, opinions disapproving of the bill, which was also
proposed by litigation lawyers, appeared. A tough debate took place at that time but after
important amendments were made to the initial text, the legal provisions of LLP were attached
to an omnibus bill,28 which became the legal basis of the LLP establishment in Texas. It also
resulted in important amendments to the Corporation Statute and the Partnership Statute.29
On 26 August 1991, the House of Representatives of the State of Texas officially enacted Bill
278 into legislation.30

Aside from the banking and financial institutions crisis, malpractice claims are not uncom­
mon. There are many cases in which legal and accounting firms have settled malpractice
claims for much higher amounts than those provided through insurance coverage. One such
case is that of the New York firm Kaye, Scholer, Fierman, Hayes, and Hadler, which settled for
275 million USD in a claim, but which was only covered by insurance for 41 million USD.31 The
increasing number of malpractice litigations against professional firms has prompted many
professionals to seek out limited liability as a defense against these types of settlements.32
Within one year of the enactment of Bill 278 nearly 1200 law offices in Texas chose the LLP
construction.33 Based on statistical data from the Texas Secretary of State, since 1996,
approximately 1600 partnerships have changed their status to the LLP based on the legislation
of the state of Texas. Most of these registrations have been conducted by law offices.34
Besides, after the LLP Statute was enacted, three big accounting firms in the United States
of America, including Coopers & Lybrand, Ernst & Young, and Price Waterhouse (now
PricewaterhouseCoopers), simultaneously decided to change their legal form of business to
the LLP based on the Delaware LLP Statute that adopts narrow non-liability. Three large
accounting firms, including Arthur Anderson & Company, Deloitte & Touche, and KPMG Peat
Marwick, simultaneously considered changing their legal form of business into an LLP.35 These
six accounting firms often referred to as the “The Big Six”, were the largest partnership in the
world consisting of hundreds or thousands of general partners. Before the LLP statute, account­
ing firms, as well as law firms, were obligated by state law to establish a general partnership.
The liability provision in general partnership states that each partner in “The Big Six”, which are
in a general partnership, is in principle personally liable for all obligations and company liability
without looking at the mistake or involvement of each partner. As a result, every partner may
be liable for negligence conducted by other partners in other cities or countries that are not
known to him. It may even be the case that the name of the partner accused of the wrong-
doing(s) is not mentioned in a lawsuit by a third party.36 The liability of a partner was in effect
in the case involving the seventh-largest accounting firm in the United States of America,
Laventhol & Horwarth, which was liquidated in 1990 and the wealth of the firm proved to be
insufficient to cover its obligations. This resulted in each partner (including the retired partner)
being obligated to cover the deficit from their personal wealth.37

2.2. Characteristics and types of LLPs

In the majority of American states, an LLP has been preferred by various types of firms,38 most
common law and accounting firms, because of the various benefits they offer professional
partnerships.39 While an LLP is founded largely by a general partnership, it has special character­
istics that a corporation has. These characteristics are as follows:

(1) Unlike a general or limited partnership, an LLP has a separate legal personality and thus may
own property under its name. Another effect of the separate legal personality is that it is not
easily dissolved when there are changes in partners. However, despite it being a legal entity,
no tax is imposed on the entity level (pass-through taxation).40 There is no double taxation
as taxes are only imposed on partners.

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(2) Limited liability. While partners in a general partnership are jointly and equally liable for any
debts, obligations, or claims by third parties, those in an LLP are provided with limited
liability having two types of protection: narrow and broad non-liability statutes.

In general, to establish or form an LLP, a general partnership has to file a registration state­
ment to the state office and submit a name to be used for the LLP. Furthermore, in the
majority of the states, the partnership must also own wealth or cash assets in a certain
amount, or cover malpractice insurance in a certain amount, or be able to provide security
to a third party that the company is capable of executing its obligations, as stipulated in the
relevant LLP Statute.41 During the process of registration, the founder is charged a fee, the
amount of which depends on the number of partners. Registration of LLPs and an annual fee
has become a source of income for several states.42 The essence of LLPs is the protection given
to partners who are not personally liable for the wrong-doing(s) of other partners in the firm
and usually refers to what is understood as the “shield of limited liability”. In other words, as
has been mentioned above, the background of the LLP establishment is to limit a partner’s
personal liability against certain obligations in a partnership. LLPs in the United States of
America fall under one of two types: narrow non-liability statutes and broad non-liability
statutes.

2.3. Narrow non-liability statutes

The concept of not being personally liable in a narrow sense is the original version of LLP
development, and this concept is adopted in the state law of several states, including Texas
and Delaware. The concept of not being personally liable in a narrow sense protects the
“innocent”43 partners from liability that arise due to errors, omissions, negligence, incompetence,
or malpractice conducted by other partners or by employees who are under the supervision of
that other partner. In such a case, the innocent partner is not liable; the partner who committed
wrongdoing and the partnership itself carries full liability. In other words, all partners in the LLP
have the same rights, obligations, and legal liability which is similar to partners in a general
partnership. The protection given by this type of LLP is often depicted as offering “peace of mind”
assurance to innocent partners because this protection is created to avoid a partner’s concern
that his wealth (assets) will diminish due to the negligence or malpractice conducted by a partner
not under his/her control or supervision, or even by someone that he/she may not even know. On
the other hand, the partner who conducts the malpractice or fails to supervise their employee
conducting malpractice is personally liable for all obligations of the partnership based on
Section 15–306 (c) and (d) of Chapter 15, Delaware Revised Uniform Partnership Act.44
Therefore, the LLP statute is a modification of the general partnership statute that stipulates
every partner is personally liable for all obligations of the partnership if the obligation is larger
than the partnership’s assets.

2.4. Broad non-liability statutes

The second type of LLP is based on the “concept of not being personally liable in broad
definition” which was first adopted by the state of Minnesota in 1994.45 Broad non-liability
statutes also concern liability due to malpractice, however, this version provides additional
protection to all partners against the majority of the other personal liability. The party liable is
the partnership itself and thus the creditor of the partnership can only claim for wealth/assets
owned by the partnership. Meanwhile, the client who was harmed because of the malpractice
can claim for the wealth of the partnership or of the specific partner who conducted the
malpractice. This type of LLP protects the same form of liability as that found in a limited
liability company (LLC),46 however, the difference is that an LLP does not have the continuity
nature that an LLC is known to have. If changes in narrow non-liability statutes (partial shield)
are deemed as something important concerning the principle or general conception of partner­
ship law, then the changes in broad non-liability statutes (full shield) can be deemed as
revolutionary.47 The American Bar Association’s version of the LLP Statute and several amend­
ment provisions on Uniform Partnership Act (UPA) 1994 approved by the National Conference

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of Commissioners on Uniform State Laws (NCCUSL) in 1996, both follow and adopt the concept
of broad non-liability statutes. The enactment of the Revised Uniform Partnership Act (RUPA) in
1994, which is the first comprehensive revision by NCCUSL, substantiates various amendments
of partnership law in general. The success of LLPs has led to the stipulation of LLP provisions in
RUPA in 1997.48

3. Legal forms for professional practice in the Netherlands: the modernization of

partnership law

3.1. Current law of the Netherlands partnership

The Netherlands recognizes three types of legal forms for business, including a sole proprietorship,
a partnership, and a company/corporation.49 The difference between the three legal forms pertains
to the status of having a legal personality, which is something usually granted only to
corporations.50 The Dutch Law on Partnerships is regulated by Book 7a of the Burgerlijk Wetboek
(The Dutch Civil Code) and the Wetboek van Koophandel. There are four types of partnerships
recognized under the Civil Code. Firstly, there is a silent partnership in which a business or
professionals act together, but not under a single name of a partnership. Secondly, there is
a general partnership, in which a business acts under a separate partnership name. Thirdly,
there is a limited partnership which has a common partnership name but contains two types of
partners, the general partner who is personally liable towards the partnership and has managerial
tasks, and the silent partner, who is not personally liable, and does not partake in any managerial
position within the partnership. Lastly, there is the type of partnership commonly used by profes­
sionals, such as lawyers, doctors, dentists, architects, and accountants, which is called
a Maatschap or a “Professional Partnership”.51 In a Maatschap for professionals, the partners join
together to conduct a common profession to make a profit under a common partnership name.52

Law practitioners in the Netherlands in many cases use the legal form of a Maatschap. However,
other forms such as the B.V. and N.V. are also sometimes used by legal practitioners, though these
forms are less common than the Maatschap. Each form comes with its own different benefits and
disadvantages. Upon contacting the Netherlands Business Contact Centre, it was confirmed that
professionals are indeed not obliged to undertake the Maatschap form. Article 7A:1655 of the
Dutch Civil Code states that a Maatschap may be for professional and business practice, but there
is also no regulation obliging professional practices to be regulated exclusively under the
Maatschap. A partnership, including a Maatschap, is formed by concluding a partnership
agreement.53 However, there is no obligation for the contract to be in written form.
Nevertheless, a written contract would certainly be more practical. A general written professional
partnership agreement would include specifying the names of the partners along with their
respective contributions towards the partnership, how profits will be shared between the partners
(if there is no specification regarding the sharing of profits, it would be done based on the
contribution of each partner),54 and the provision of specific tasks or authorizations between the
partners. The main differentiating aspect between a Maatschap and an LLP is the liability of its
partners.

The provisions regarding the liability of partners in a Maatschap are contained in Section 7A:
1679–1682of the Dutch Civil Code, and such provisions apply to professional partnerships.55 The
provision regarding liability states that a partner may not be individually liable for the entire debts
of the partnership.56 The recognition of liability and the amount to be procured by a creditor for the
wrongdoing of a partner is extended to all other acting partners who have provided a power of
attorney or mandate.57 If the other acting partners have not provided a power of attorney or
mandate, then they will be shielded from liability and damages.58 These provisions, therefore,
provide a degree of protection towards partners in the case that one partner conducts an
irresponsible juridical act that results in losses. Such a measure, requiring additional steps to
attaining an attorney or mandate power, allows each partner to be informed about potential
acts affecting the partnership and reduces the risk of acts being conducted without consultation

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and input from each partner. This aspect of liability in the Maatschap, in which each partner is
equally liable for juridical acts on behalf of the partnership, may be considered as a disadvantage
of the Maatschap in comparison to the LLP where partners who have not wronged will not be held
liable. However, as was mentioned above, the requirement to obtain a power of attorney from
each partner in the case that one partner is to act on behalf of the partnership can be regarded as
a preventive measure that would reduce arbitrary juridical acts. The “equal liability” in the
Maatschap is also an advantage over the Dutch general partnership, in which partners share
liability. If the Maatschap’s juridical act does indeed result in losses, it would still not be possible
for a single partner to bear the entire burden of the loss(es), unless determined otherwise within
the partnership’s agreement.

If this aspect of liability were to be an issue when a Dutch legal practitioner was to start their
practice, they may also resort to another legal form, called the Besloten Venootschap (BV) or
Private Limited Liability Company which, to a certain extent, contains similarities with the common
law LLP. Despite there also being a clear fundamental difference with the LLP, as the nature of the
BV is as a company whereas an LLP is a partnership, it is not uncommon for Dutch law firms to be
incorporated under the BV form. The reason for this is because of the limited liability nature, in
which the shareholders are not held personally liable. This reduces risks that would normally be
borne by a partner’s personal assets in a Maatschap. Another reason behind the use of the BV to
form a business partnership is the recent relaxation of the BV regulations. The now flexible
requirements have made it substantially easier to form a BV, with requirements that are not
very different from the requirements to form a Maatschap. This Act on the simplification of law
applicable to private companies with limited liability, which took effect on October 1st, 2012,
allowed for several changes. One such change is that there is no longer any minimum capital
required, which incentivizes small partnerships to shift to the BV form.59

When it comes to the dissolution of a Maatschap, such an event would occur when it has
reached the expiration date as pre-determined in the agreement. Another reason for dissolution
would be if a partner were to leave the partnership or die. However, it is also possible to prevent
the partnership from directly dissolving in such an event if a “survivorship” or takeover clause is
included in the forming agreement. Such a clause would entail the possibility for the remaining
partners to continue the partnership.60 It is also possible for a partner to file for the termination of
the partnership in court if there are specific reasons behind such a request for dissolution.61
Despite recent changes to regulations regarding the BV, there remain substantial differences
between the BV and the Maatschap, particularly about taxes. One of the reasons why Maatschap
remains the most popular form for legal practitioners is because the tax terms are more lucrative.
Taxation will not be applied to the partnership. The partners in a Maatschap are to be regarded as
“entrepreneurs”, and therefore taxation is imposed individually upon the partners.62 Having the
status of an entrepreneur also allows the partners to be subject to certain tax benefits and
different taxation requirements from practitioners working under a BV, who may be required to
pay corporate income tax instead and are not subject to tax benefits.63 The tax is lower for
partners under the status of entrepreneurship. For entrepreneurs, the Value Added Tax (VAT)
may either be 6 or 21% depending on the type of product or service provided. However, for the
Maatschap, a tax benefit through the “small-size entrepreneurs” regulation may apply. Through
this regulation, a Maatschap would be subject to even less VAT than the previously mentioned
percentages, and possibly at all, depending on the amount of income. To maintain such a taxation
benefit, the entrepreneur must however fulfill several VAT requirements.64 If legal practitioners
were to form a BV instead, higher tax rates would apply. For corporations, the tax rate may either
be 20% or 25% of the corporation’s annual profit including deductible losses. If the profit were to
be less than €200,000, then 20% would apply. If the corporation’s profit exceeded €200,000,
a 25% tax rate would apply instead. This tax rate would be imposed on the corporation’s income,
and not the incomes of individuals working under the BV. An additional personal income tax would
then apply depending on the size of the individual’s income.

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3.2. Background of the modernization of partnerships law

The law regulating partnership in the Netherlands, like in Indonesia, is the Civil Code. The Civil Code
dates back to 1838 and does not always reflect the current social views. For example, the view that
civil and commercial law requires separate regulation has been abandoned. Yet, the business
entity’s popularity remains: there are approximately 231,000 partnerships in the Netherlands. As
a consequence, there is a need to modernize the laws to provide trade security and offer creditors
sufficient protection,65 thus contributing to the attractiveness and competitiveness of the Dutch
economy.66 There have been two attempts to modernize the Partnerships Law, which primarily
aimed at abolishing the distinction between civil and commercial partnerships,67 but ultimately
failed. The last draft was withdrawn by the Minister of Justice in 2011.68

3.3. Characteristics of the new partnership for professions

The preliminary draft brings together a Maatschap and a VoF (firm), creating two new forms of
“partnership”. These include a partnership (vennootschap) and a limited partnership (commandi­
taire vennootschap).69 Either type may be used for professional and business activities. There is no
need for a notarial deed or starting capital to establish a partnership, providing easy entry, and
thus making it an attractive legal form for entrepreneurs and professionals. Partners must be
registered in the trade register, and this is how a partnership obtains legal personality. This
preliminary draft also says that all partnerships will acquire legal personality. As a result, assets
can be registered in the name of the partnership. This also means that the withdrawal of a partner
does not lead to the dissolution of the partnership. In contrast, the current regulations accom­
modate partnerships with no legal personality, and as a result, the partnership dissolves when
a partner enters or leaves.

Furthermore, if the legal personality is granted, then in the event of a change of partner, the
transfer of assets will be settled financially without having to liquidate the assets first and thus
creating more costs. Another feature in the draft is that the partnership can be dissolved through
court at the request of the interested party or the public prosecution. About liability, partners
jointly share liability for the debts of the partnership, if the other party can prove that the
partnership cannot fulfill its obligations. As a result, the other party will have to first seek liability
from the partnership itself, i.e. from the partnership’s assets. In addition, when the other party has
assigned obligations to a specific partner, the partner will fully be liable for failure in the perfor­
mance of the agreement. Third parties are also able to claim from both the partnership and the
partners insofar as it can be proven that the partnership will not pay the debt. This bears
similarities to the American-LLP type of broad liability statute.

4. Revising the Indonesian partnership law

4.1. Existing rules on Indonesian Maatschap

As has been previously mentioned, there have been demands in Indonesia to establish American-
style LLP as a new business entity, with the expectation that it will encourage the competitiveness
of the legal services. Thus, before addressing the question of whether Indonesia should or should
not adopt the American-LLP, it is important to first elaborate on the legal form commonly used or
chosen for professional practice, especially for legal practice in Indonesia. In contrast to the
emergence of the LLP in the United States of America which tends to govern certain professions,
the LLP is not recognized in Indonesia. In Indonesia, the most common legal form for professional
conduct, such as lawyers, legal consultants, accountants, and medical doctors, is the Maatschap
(civil company/partnership).70 This is subject to Article 1623 of the Indonesian Civil Code that
governs the special Maatschap, a partnership that is limited in nature to the provision of certain
goods or activities/projects, and certain professions and occupations.71 With regards to registra­
tion, however, since August 2018 the Minister of Law and Human Rights Regulation applies.72

However, in practice, there are also law offices, legal consultants, and accounting firms that
have adopted the form of partnership with firms (vennootschap onder firma, general partnership)

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as regulated under the Indonesian Commercial Code. This was found in studies conducted to
collect deeds of establishment and articles of association. Never before had a study been con­
ducted on the reasons for the law offices to choose the legal form of a “Firma” instead of
a “Maatschap”. However, the research suggests that there maybe be at least two reasons for
this practice. First, Article 1623 of the Indonesian Civil Code which regulates a special partnership
and is the legal basis for carrying out the profession may have been misunderstood. Second, there
may be a misunderstanding in the language, where the word “firm”, which is commonly referred to
in the context of law “firms” in English, has been directly translated into “firma” in Indonesia. This
creates the mistaken view that the law office is in the form of a “Firm” in the meaning of “Firma
or VoF”.

According to Article 16 of the Indonesian Commercial Code, a Firma is a partnership in which two
or more persons enter for trading under a common name.73 As a consequence, other than the
differences which will be explained further, provisions and explanations regarding the Maatschap
also apply to the Firma. The significant differences between a Maatschap and a Firma are the
provisions about external affairs, i.e. liability. While a partner in a Maatschap is liable for actions
that s/he committed without the authorization of the other partners, in a Firma, each partner,
unless they are specifically excluded from doing so, is entitled to act and engage with third parties
in the name of the partnership.74 If there is a claim from a third party with regards to a certain act
committed by a partner, each partner will be held individually responsible for the whole,75 that is,
they are jointly and severally liable. This means that once one of the partners has paid for
compensation, the obligations of other partners to pay will disappear.

In Indonesia, the recognition of a Maatschap is specifically designated as a profession governed

by Article 1623 of the Indonesian Civil Code.76 Maatschap is often translated as “civil union/
company” (perserikatan perdata) or “civil partnership” (persekutuan perdata), however their defi­
nitions differ. In the scope of commercial law, a “civil partnership” refers to an association of
people whose interests are alike on a certain enterprise, and the “partners” refers to the members
of an enterprise. Therefore, a partnership is an association of people who are members of a certain
enterprise. If the business entity does not run an enterprise, it is not a partnership, but a “civil
union/company”, while the people managing the business entity are called “members”, and not
“partners”.77 A Maatschap is considered as an enterprise if it fulfills the following elements: (1) the
business form is either operated by a natural person or a legal person; (2) there is a consistent
continuation of activities; and (3) the purpose is generating profit. The definition of a civil partner­
ship is slightly different from a civil company/union (perserikatan perdata). The definition of
a Maatschap as stipulated in Article 1618 in conjunction with Article 1619 paragraph (2) of the
Indonesian Civil Code, emphasizes “agreement”. Comprehensively, a Maatschap is: “an agreement
by which two or more individuals bind themselves to contribute money, other goods or skills into
the partnership, with the intent of sharing the proceeds therefrom among one another.”

A civil partnership is a civil company/union running enterprise as regulated under Article 1618 in
conjunction with Article 1623 of the Indonesian Civil Code. A civil company/union does not run an
enterprise.78 Thus, based on Article 1623 of the Indonesian Civil Code, a “civil union/company” may
transform into a “civil partnership” if it runs an enterprise, a special Maatschap (civil partnership).
In other words, a “civil union/company” does not run an enterprise, while a “civil partnership” does
run an enterprise. Hence, a “civil union/company” is a business entity included in the scope of
general civil/private law, while a “civil partnership” is a business entity included in the scope of
commercial law because it runs an enterprise.79

Meanwhile, as has previously been mentioned, a Firma is a partnership into which two or more
persons enter for trading under a common name.80 This means that a Firma is essentially
a Maatschap used for commercial purposes only. According to its history, the Maatschap, Firma,
and CV must own what is called “affectio societatis” which is the intention of parties to cooperate
as partners. Furthermore, it must also possess “intuitu personae” which is a personal closeness

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between the partners and fraternity.81 This becomes the basis on which the Maatschap has
a “personal” nature which points to the closeness between each of the partners. This nature
distinguishes the Maatschap, Firma, and CV from the Perseroan Terbatas (Limited Liability
Company/Corporation). In a partnership,82 the association of the partners is the main priority
whereas, in a Limited Liability Company, the association of the capital is the main priority. As
a result, “partnership” often refers to a partnership or association of people whereas a “Limited
Liability Company” refers to a partnership or association of capital.83 Maatschap partnerships are
governed by Book III Chapter 8 of the Indonesian Civil Code,84 while Firma partnerships are
governed by Book I Chapter 3 of the Indonesian Commercial Code.

Maatschap between members of certain professions is governed by provisions in the Indonesian

Civil Code beginning from Article 1618 to Article 1652. In the United States of America, since the
difference between civil law and commercial law is not recognized, an association of members of
a profession is subject to regulations on the partnership,85 which is a business entity or business
organization.

The establishment of a Maatschap does not require to be in writing, bearing in mind that
Article 1624 of the Indonesian Civil Code stipulates that a Maatschap is established once
consent or agreement on its establishment is achieved. In other words, it is sufficient to
establish a Maatschap with verbal agreement or consent so long as it meets the requirements
for a valid agreement as stipulated under Article 1320 of the Indonesian Civil Code.86 However,
with the development of the business sphere, it is uncommon to establish a Maatschap without
a deed of establishment/partnership agreement. If the legal form is a Firma, then the establish­
ment procedure may be governed by Articles 22–28 of the Indonesian Commercial Code. The
main difference here is the function of the deed of establishment or the partnership agreement
of a Firma that will be used as evidence by a third party in comparison to the function of the
deed of partnership in a Maatschap. This is because, in Firma, the partners have the right to
deviate from default provisions as regulated both in the Civil and Commercial Codes. Indonesia
does not recognize the legal personality of partnerships.87 This is derived from an aggregate
theory of partnership which states: “a partnership does not have a separate legal existence (as
does a corporation), but rather is only the totality of the partners who make it up.”88 In other
words, a partnership is considered as an agreement (aggregate theory).89 A partnership
involves ties of cooperation created by those who are involved through a joint action that
establishes an enterprise. As a result, all legal relationships arising from the enterprise are
considered as consequences of the partnership’s agreement (establishment). Currently, there is
a change in establishing the three forms of partnership since in 2018 Minister of Law and
Human Rights has issued regulation specifically on the Registration of Maatschap, FA, and CV.90
Under the regulation, partnerships must be registered to the government in order for business
entities to obtain business licenses and other related licenses.91

Due to the influence of aggregate theory, which provides that a partnership is not a legal
entity, all partners are joint owners of the partnership that is not a separate entity from its
partners.92 This has led to the creation of common interests over a partnership’s properties,
called a “tenancy of partnership”. This means that every partner has joint ownership over the
partnership’s properties. This “tenancy of partnership” is also known as “free co-ownership”
(“mede-eigendom”) which means that one or more persons have the right over a joint property.
In the case of a partnership, this form of co-ownership is called “gebonden mede-eigendom”, or
“bound co-ownership”.93 The properties or assets (vermogen) in a Maatschap are joint proper­
ties of the partners and are regulated by provisions on joint ownership (joint ownership right)
and thus one does not necessarily personally own property.94 Properties that are required to
perform partnership activities are owned jointly by the partners. The properties or assets of
a civil company (persekutuan perdata) are not solely derived from the contribution of the
partners and the properties obtained by the partnership, but also include losses incurred
from properties or assets of the partnership, for instance, insurance or compensation.95

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According to Article 1619 paragraph (2) of the Civil Code, the contribution of partners in
a partnership can be in the form of money, property/good, rights, or labor/skill.

Article 1646 of the Indonesian Civil Code uses the word “Maatschap eindigt” which means
“termination of partnership” instead of the word “dissolve”. The word terminate is not always
clear because there needs to be a liquidation before a partnership can end. The use of the word
“terminated” suggests that no further legal action is required to end a partnership. The dissolution
or end of a partnership means that the agreement that established the partnership can no longer
be implemented. However, debts, accounts receivable, enterprise affairs (immovable goods, mova­
ble goods, and non-goods, which as a whole are within the area of the enterprise) continue to exist
and must be settled before the Maatschap can be fully terminated. In other words, a dissolved
Maatschap must be followed by the legal action of “liquidation”, an action to determine assets
(accounts receivable) and losses (obligations) of the partnership. Therefore, the order is the
dissolution of a Maatschap, followed by “liquidation”, which leads to the termination of the
Maatschap.96 There are several reasons which may lead to a Maatschap being dissolved,
including97:

(1) expiration of the period for which the partnership was established;
(2) destruction of assets or the accomplishment of the object for which the partnership was
established;
(3) according to the intent of one or several of the partners;
(4) the death of a partner, a partner’s detention, or the declaration of bankruptcy or insolvency
of a partner.

In principle, the death of a partner leads to the dissolution of a Maatschap, except when stipulated
otherwise by the deed of establishment. If the Maatschap is not dissolved upon the death of the
partner, it does not necessarily follow that the successor of the deceased automatically acquires
the status of “partner”.

Based on the basic principle which holds that in a Maatschap, no partner has the authority to
act in the name of another partner or the partnership as a whole, the partner who acts without
authority will be held liable for the acts he/she committed.98 The form of the partner’s liability
in a Maatschap reaches the partner’s assets or property. However, if the said obligation is
conducted by two or more partners and everyone has given the mandate to one of the
partners, the liability for the said legal action will become that of the partner who creates
the obligation as well as the partner(s) who gave the mandate. In this case, there is a joint
liability among the partners, whether equally or proportionally.99 There are at least three forms
of liability: first, the partners are jointly and severally liable; second, the partners are liable up
to their own proportion in the partnership; and third, partners are liable for the debt of the
partnership equally. Indonesia and the Netherlands have adopted the second concept in which
partners are liable according to their proportion in the partnership. In the Netherlands,
“Proportional Liability” is defined according to the number of partners.100 However, in the
draft of the recent Dutch BW, it was proposed that all partners would be jointly and severally
liable if the debt cannot be shared. In the Bill of Indonesian Business Entity Without Legal
Personality (Badan Usaha Bukan Badan Hukum), provisions on the liability of partners in
a Maatschap stay the same as is governed by the Indonesian Civil Code, and likewise, the
liability of the partners in a Firma under Indonesian Commercial Code remains.

4.2. Comparing the American-LLP to Maatschap

Now, we turn to examine and compare the American-LLP with the Maatschap. From the explana­
tion of both the LLP and the Maatschap above, a table of comparison could be made.

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Criteria LLP Maatschap

(1) Legal nature An LLP is a hybrid form of business
entity: it is neither a partnership
nor a company. Like a company, it
has a separate legal personality
and thus is its own legal entity. But
like a partnership, the relationship
is governed by a private
agreement.101
A Maatschap is a civil partnership
and thus is not a legal entity by
itself. Article 1618 of the
Indonesian Civil Code stipulates
that it is “an agreement by which
two or more persons cooperate for
a shared profit”.

(2) Partner’s liability
All partners have limited liability. Based on Article 1644 of the
This can be seen in Section 306 (c) Indonesian Civil Code,102 a partner
of RUPA which states: “A debt, who acts on account of the
obligation, or other liability of partnership without authorization
partnership incurred while the or mandate from others will be
partnership is a limited liability liable for that act alone, excluding
partnership is solely the debt, other parties. This will reach the
obligation or other liability of the partner’s assets, thus partners
limited liability partnership. have personal liability.
A partner is not personally liable,
directly or indirectly, by way of
contribution or otherwise, for
a debt, obligation, or other liability
of the limited liability partnership
solely because of being or acting as
a partner.”

(3) Property of LLP/Maatschap Considering that this business All partners are considered joint
entity is its own legal person, it has owners of the assets.
its own assets separated from the
partners’ assets.

As has been previously elaborated, one important feature of a Maatschap is the fact that it is
established by an agreement under the law of obligations of the Indonesian Civil Code. The establish­
ment of a contract is based on the principle of freedom of contract, in which as long as parties agree
to the terms and fulfill the requirements, it will become law to them.103 As a consequence, partners
are flexible in determining how the partnership should run, including liability. There is a law firm in
Indonesia in the form of a Maatschap which includes the characteristics of the LLP in its Article of
Association.104 Although the partners do not have limited liability in the sense that their liability
reaches to their personal assets, it follows the characteristics of an LLP in the sense that in case of
malpractice, only the partner who is responsible for it shall be liable, not other partners. This is the
main idea behind the establishment of an LLP too. Article 1644 of the Indonesian Civil Code has
provided similar consequences. If a partner acts alone without the consent of other partners and is
not authorized to do so, s/he will be personally liable for the loss(es) caused by the act. In addition,
based on Article 22 of the Indonesian Commercial Code, every Firma has to be established with an
authentic deed. The absence of the authentic deed cannot be used to harm third parties.105 Once an
authentic deed is created, it has to be registered.106 The registration provides details such as the
identities of the partners, the name and nature of the firm, and the beginning and ending period of
the partnership.107 Upon registration, the partners are also obligated to provide an announcement
and the deed to be published in the State Gazette.108 The consequence of following these procedures
of the authentic deed, registration, and announcement, is that the partnership now has the power to
bind external third parties. However, if it is not registered and announced, then it will be the same as
an establishment without a deed, and as a result, does not bind third parties.

4.3. Revision or modernization of the Indonesian Maatschap

As has been alluded to above, the Indonesian Partnership Law, which originates from the Dutch
Civil Code, is outdated, and thus might not accommodate society’s current needs. This is also the
main reason behind the attempts and introduction of the Dutch Preliminary Draft to modernize its
partnership law. After the successful revision of the BV law in the Netherlands, which focused on

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making the legal form more flexible and deleting unnecessary and obstructive regulations rather
than on introducing a new legal form, the Netherlands has adopted the same approach with
partnerships. Rather than adding another type of partnership, such as the LLP, the Netherlands
intended to reform the legal nature of the already currently existing types of partnership, by
adding that partnerships have legal personality and by making their establishment and dissolution
easier. However as to the liability, according to the proposal, all partners are fully liable. The limited
liability for the partners is only applicable to partners who have been entrusted with the perfor­
mance of a task on behalf of the partnership and does not extend to other partners who are not
involved.109 Considering the background of the establishment of LLPs in the USA, which is appeal­
ing for the limited liability of the partners, the inclusion of the LLP form to the currently existing
types of partnership in the Dutch context is not necessary.

Likewise, in the current debate in Indonesia, one could consider that it is not necessary to add
the LLP as a new type of partnership. The current types of partnership are flexible enough to
accommodate liability for the partners, thus able to adopt the limited liability feature of LLP,
without requiring adopting LLP as a new form of partnership altogether. With that said, the
partnership law in Indonesia does need revitalization which could entail the modernization of
familiar forms of partnership.

The Indonesian Maatschap and the American-LLP originate from and operate in two different
legal systems, namely civil and common law. Replacing a Maatschap with an LLP for the legal
profession does not reflect the comparative development of the Maatschap in civil law countries,
including the Netherlands. The current law on Maatschap itself has provided flexibility in regulat­
ing limited liability, and thus requires mere revitalization, like what the Netherlands has pro­
posed. Replacing a law with another which originates from a completely different legal system is
not only costly but is also less strategic in a plural society such as Indonesia. The Maatschap has
been in place for more than a hundred years and has become part of the Indonesian legal
system and not easily replaceable.110 Thus, it is advisable to amend the Indonesian Civil Code on
partnerships by enacting a new law on the partnership to accommodate society’s needs, i.e. by
adopting the special characteristics of the American-LLP into the current ones, rather than trying
to establish a completely new form of business organization. The revised partnership law should
address the following issues:

4.4. The definition

The Indonesian Civil Code defines a Maatschap as a profit-driven business entity. Lawyers form
a Maatschap despite being fee-earners and not profit-makers. The revised partnership law should
define a Maatschap based on its rationale, namely its common objective or commerce. Law
partnerships have a common objective, specifically a shared profession, and not profits. While
one could argue that there are lawyers who work for profit,111 profit is not the main objective of
the provision of legal services.112

4.5. The scope

The new partnership law shall establish its scope. The scope includes the type of professions that
qualify as a Maatschap. This includes law and accounting firms. The elucidation shall provide
examples with or without limitation to the scope.

4.6. The legal personality

A Maatschap will have a similar status to other types of legal entities. The objective remains
different from those of companies, foundations, and associations. This status differentiates the
personal assets of the partner and the partnership assets. However, unlike the Netherlands where
all partnerships are legal entities, Indonesia should continue to make choices specifically for civil
partnerships to be able to opt for not having a legal personality status.

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4.7. The limited liability

Although the limited liability feature may be accommodated in Article 1644 of the Indonesian Civil
Code, it only extends to tortious claims. The Netherlands’ proposal on limited liability can also
apply to debts. This feature can also be added to the existing forms of partnership. As a result, the
partnership will have special characteristics similar to that of the LLP of a broad non-liability
statute, approximating the protection given to a limited liability company.

5. Conclusion
Globalization in business has put existing legal forms of businesses under pressure, including that of
the partnership (Maatschap), which is the form currently used for the legal profession in Indonesia. As
I have shown, this law is, in many ways, inadequate for the way that it allocates personal liability for
each partner. As an emerging market, Indonesia has to adapt to the ever-growing business demands
and expansions by providing laws that address the needs of society, facilitate entrepreneurship,
provide legal certainty related to business transactions, and provide legal protection for parties in
their legal relationships. To achieve such goals, the state does not always have to enact or implement
new concepts but can better focus on revitalizing the current law so that it will be able to respond to
the market demands. Therefore, Indonesia does not have to adopt the concept of the American-LLP
as a new form of business entity, particularly in legal services, for several reasons. First, the legal form
that is often used or chosen by the professional offices is the Maatschap or partnership with the firm
(vennootschap onder firma).113 Indonesian law firms remain competitive without an LLP form. The
Indonesian Civil Code and the Commercial Code on partnership are complementary because
a partnership is an agreement and contracting parties have freedom of contract. As a result, partners
have the freedom to determine “rules of the game” in the partnership so long it is agreed upon in the
partnership agreement. Second, considering what the Netherlands has done in focusing on moder­
nizing and improving current regulations upon partnerships, for Indonesia it would be more effective
to focus on how to improve its competitiveness. In the Netherlands, most professionals conduct
business through a Maatschap, rather than a BV or an NV, because it is subject to a transparent tax
which will be taxed when the partner receives income. Finally, the legal personality status embedded
in the LLP may also be granted to a Maatschap or a Firma. This feature could be created by granting
a legal personality status to the Maatschap, separating the assets of the partners from the assets of
the partnership.

Funding 2. The term civil partnership is also termed as civil

The author received no direct funding for this research.
Author details
Yetty Komalasari Dewi1
E-mail: yetty_komalasaridewi@yahoo.com
ORCID ID: http://orcid.org/0000-0003-1901-4405
1
Faculty of Law, Universitas Indonesia, Indonesia.
Citation information
Cite this article as: The need to adopt a limited liability
partnership for the legal profession in the partnership law:
A critical review from Indonesia’s perspective, Yetty
Komalasari Dewi, Cogent Social Sciences (2021), 7:
1999005.
Notes
1. In this article, business entities, business associa­
tions, business forms, and business organizations
will be usedinterchangeably. They refer to any type
of business form or company whether having a
legal personalitystatus ornot. See Law No. 3 of
1982 on Mandatory Companies Registration and
Law No. 8 of 1997 on Companies Documents. Based
on these laws, there are business entities or com­
panies which have a legal personality status such
as Limited Liability Company and Cooperatives, and
which do not have a legal personality status such
as sole ownership or sole trader and partnership.
companies.
3. See “Forms of Business Entities,” UKM Indonesia,
available at https://www.ukmindonesia.id/baca-izin
/1194,accessed 24 June 2019. Also see “Startup
and SMEs Needs to be in the Form of Business
Entities to Improve Business Scales,” HukumOnline,
22 March 2018, available at https://www.huku
monline.com/berita/baca/lt5ab38ff91084f/startup-
dan-ukm-perlu-berbentuk-badan-usaha-untuk-
menaikkan-skala-bisnis/, accessed 24 June 2019.
4. See Erie Hariyanto (2009), p. 151. The principle of
concordance was adhered to in Indonesia during
the Dutch occupation which stated that, under
Article 131 (2a) and (2b) of Indische Staatsregeling,
the positive law in the Netherlands was made
applicable to the Native Indonesians upon volun­
tary submission, the European and the Foreign
Orientals in the Dutch East Indies. See Dedi
Soemardi, Introduction to the Indonesian Legal
System (Jakarta: Ind-Hill-Co, 1992).
5. See Policy on Foreign Lawyers is on Progress, avail­
able at http://en.hukumonline.com/pages/
lt50add0bc33c22/policy-on-foreign-lawyers-is-on-
progress, accessed 5 July 2019.
6. PERADI is an Indonesian Advocates Association
which was established based on Law No. 18/2003
on Advocates. It aims to improve the quality of the
profession of advocates in the country.

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7. The ASEAN Economic Community (AEC) was estab­
lished in 2015 to enhance regional economic inte­
gration within ASEAN, by aiming to create a single
market in the trade in goods and services, as well
as better mobility in investment, skilled labor busi­
ness individuals, and capital. See “ASEAN Economic
Community”, available at https://asean.org/asean-
economic-community/, accessed 6 July 2019, and
“ASEAN Community Vision 2025,” available at
https://www.asean.org/wp-content/uploads/
images/2015/November/aec-page/ASEAN-
Community-Vision-2025.pdf, accessed 6 July 2019.
8. Despite the intended integration of services, includ­
ing legal services, Indonesia has been reluctant to
open up toward the regional market of legal pro­
fessions. Based on the Services Trade Restriction
Index by the World Bank, Indonesia is one of the
members which maintains high restrictions for
foreign law firms and legal services. See “Services
Sector Development in Indonesia and the
Implementation of AEC Measures in Services,”
available at https://www.csis.or.id/uploaded_file/
publications/services_sector_development_in_
Indonesia_and_the_implementation_of_aec_mea
sures_in_services.pdf, accessed 6 July 2019. Also
see “Liberalizing Trade in Legal Services under Asia-
Pacific FTAs: The ASEAN Case,” Journal of
International Economic Law 18, p.166.
9. See “Preparing Indonesian Advocates in Facing AEC
by Dr. Ricardo Simanjuntak, SH, LLM,” Hukum
Online, 26 August 2015, available at http://www.
hukumonline.com/berita/baca/lt55dd2ffe102e5/
mempersiapkan-advokat-Indonesia-dalam-men
ghadapi-mea-br-oleh–dr-ricardo-simanjuntak–sh–
llm-anziifcip, accessed 5 July 2019.
10. Focus Group Discussion on the Bill of Business
Entity, Rancamaya Hotel, Bogor,
7-9 September 2017, Ministry of Justice & Human
Rights, Republic of Indonesia. In 2007, the
Government already had the Bill of Partnership.
However, until now, there has been no progress
regarding the bill. See: The socialization of the bill
on Sole Trader and Business Entity without Legal
Personality (Badan Usaha Bukan Badan Hukum),
24 October 2010, http://ditjenpp.kemenkumham.
go.id/harmonisasi-peraturan-lainnya/43-
sosialisasi/782-sosialisasi-rancangan-undang-
undang-tentang-usaha-perseorangan-dan-badan
-usaha-bukan-badan-hukum.html, accessed
5 July 2019. This bill was then replaced by the bill
on Business Entity Non-Limited Liability Company
(PT) and Cooperative (Koperasi), 25 July 2012,
http://www.hukumonline.com, accessed
5 July 2019. Now, the Government is starting to
prepare the Bill of Business Entity/Enterprise as
an umbrella law. Thus, this Bill of Business Entity/
Enterprise seems to be replacing the Bill of
Business Entity of Non-LLC and Cooperative (Bill
of Partnership) because it will cover all forms of
partnership.
11. The other two bills are the Bill of Fiducia and the Bill of
Bankruptcy. See “MoLHR to cooperate with Experts
from Leiden to Discuss the Bill of Business Entity,”
available at https://www.gatra.com/detail/news/
295245-kemenkumham-gandeng-pakar-dari-leiden-
bahas-ruu-badan-usaha, accessed 5 July 2019.
12. See “MoLHR to prepare an integrated Bill of
Business Enterprise,” available at https://www.
jpnn.com/news/kemenkumham-siapkan-ruu-
badan-usaha-yang-terintegrasi, accessed
5 July 2019.
13. HMN Purwosutjipto (1987), p. 40–53.
14.. Enrique Lalaguna Dominguez, The Interaction of
Civil Law and Commercial Law, 42 Louisiana Law
Review 5 (1982), 1636.
15. www.britannica.com/print/article/86277, accessed
5 July 2019.
16. See Pitlo 459 in Alfred Conard & Detlev Vagst, ibid.,
p. 75.
17. See Article 1623 (fourth sentence) of the
Indonesian Civil Code.
18. (Lutter (1998, p. 76–78).
19. See Article 1623 (third sentence) of the Indonesian
Civil Code.
20. See Miller (2007).
21. Limited liability partnership in Japan was estab­
lished with its Act which entered into force in
2005. See http://www.japaneselawtranslation.go.
jp/law/detail_main?re=&vm=2&id=140, accessed
6 July 2019. In India, it is established in 2008
through the enactment of the Limited Liability
Partnership Act. See http://www.mca.gov.in/
Ministry/actsbills/pdf/LLP_27oct2008.pdf, accessed
6 July 2019. Meanwhile, in Singapore, a limited
liability partnership is introduced by the country’s
Company Legislation and Regulatory Framework
Committee in 2002 and then established through
the Limited Liability Partnership Act in 2005. See
https://sso.agc.gov.sg/Act/LLPA2005#pr6-,
accessed 6 July 2019.
22. See Hamilton (1996), p. 150.
23. Financial institutions refer to depository institutions or
banks.
24. See Hamilton (1996), p. 151.
25. Currently Dallas Law Firm is a professional cor­
poration. In Indonesia, General Partnership is
equivalent to a partnership with a firm (perseku­
tuan dengan firma, Vennootschap Onder Firma)
because all partners are involved in the manage­
ment of the partnership and are jointly and sev­
erally liable. Compare Article 16 and 18 of
Commercial Code with the definition of General
Partnership as stipulated in the Uniform
Partnership Law:“ A partnership is an association
of two or more persons to carry on as co-owners
a business for profit”. [Art. 3, section 33-41-210].
“All partners are jointly and severally liable for
everything chargeable to the partnership”. [Art. 5,
section 33-41-370-b].
26. Vernon and Brownfield were savings and loans
associations.
27. See Hamilton (1996), p. 151.
28. An omnibus bill is defined as: “A draft law before
a legislature which contains more than one substan­
tive matter, or several minor matters which have been
combined into one bill, ostensibly for the sake of con­
venience”. http://www.duhaime.org/LegalDictionary/
O/OmnibusBill.aspx, accessed 5 July 2019.
29. The original version of the LLP Statute is added as
an amendment of subchapter 15 of the Texas
Uniform Partnership Act, Vernon’s Ann. Civ. St. art.
613b, subchapter 15 (2).
30. The enactment of this legislation was not signed by
the Governor Ann Richard of Texas at the time.
Governor Richard allowed the legislation to come
into effect without her signature. The original leg­
islation was codified in Vernon’s Ann Civ. St art.
613b, sub chap 15. Vernon’s Texas Statutes
Annotated and Vernon’s Texas Codes Annotated,
known as Vernon’s is a compilation of law in Texas
that is updated every year. https://tlc.Texas.gov/,
accessed 5 July 2019.
Page 15 of 19
Dewi, Cogent Social Sciences (2021), 7: 1999005
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31. See Fortney (1995), p. 329.
32. See Naylor (1999).
33. See Hamilton (1996), p. 146.
34. In Texas at that time, law offices were permitted to
choose a professional corporation or a limited liability
as a form of business organization.
35. This was triggered by the enactment of the
New York LLP Statute which adopts a broad non-
liability statute that provides limited liability for LLP
established based on the state law. The legislation
took effect on 1 October 1994 and changes in the
status of accountant companies to LLP also took
effect on that date. Interestingly, accountant
companies tend to choose narrow protection as
adopted in Delaware LLP Statute rather than broad
protection adopted in New York LLP Statute.
36. See UPA 1914 and UPA 1994, subchapter 4.14.
37. Macey and Kennedy, Partnership Bankruptcy and
Reorganization: Proposals for Reform, 50. Business
Law Review. 879 (Macey and Kennedy, 1995).
38. The company law in the United States of America
defines “business” for trade, occupation, and pro­
fession. “Business” includes every trade, occupa­
tion, and profession”. See Art. 1, Sec. 101(a).
39. This is different from New York which limits the use
of LLP to professional partnerships only; and
defines LLP as: “a partnership without limited part­
ners each of whose partners is a professional
authorized by law to render a professional service
within this state”. The definition of “profession”
does not only encompass “an attorney and coun­
selor-at-law or a licensed physician” but also
includes all professions recognized in Title VIII of
Education Law of the United States of America.
40. See Naylor (1999).
41. Texas LLP Statute obligates every LLP to own mal­
practice loss insurance of at least US$100.000.
Vernon’s Ann. Civ. St. Art. 6132b-3.08 (1995 Supp).
While Delaware LLP Statute obligates malpractice
loss insurance of at least US$ 1.000.000. Del. Code.
Ann. Subchapter 1546.
42. In Texas, in 1991 the fee per partner is US$ 200, while
in Delaware the fee is US$ 100. See Hamilton (1996),
p. 155.
43. The understanding of “innocent” varies from state
to state, but in principle refers to all partners who
(i) do not conduct malpractice; (ii)do not have
responsibility for supervising people conducting
malpractice (superintendent of malpractice perpe­
trator); or (iii) realizes there is malpractice and do
not take action to ameliorate it.
44. Section 15-306 (c): An obligation of a partnership
incurred while the partnership is a limited liability
partnership, whether arising in contract, tort, or
otherwise, is solely the obligation of the partner­
ship. A partner is not personally liable, directly or
indirectly, by way of indemnification, contribu­
tion, assessment, or otherwise, for such an obli­
gation solely for being acting as a partner.
Section 15-306 (d): Subsection (c) of this section
shall not affect the liability of a partner in
a limited liability partnership for such partner’s
negligence or willful misconduct.
45. See 1994 Minn. Laws, ch. 539, subchapter. 12.
46. In LLC, the member who conducts or participates
in tort is personally liable.
47. See Rhodes-Martin et al. (2014).
48. See McCahery (2001).
49. See Netherlands Chamber of Commerce, “Legal
Structures of business: an overview”, available at
https://business.gov.nl/starting-your-business
/choosing-a-business-structure/legal-business-
structures-an-overview/, accessed 5 July 2019.
50. Meinema (2002).
51. Ibid.
52. See “Book 7A Particular Contracts”, http://www.
dutchcivillaw.com/legislation/dcctitle7a7a99.htm,
accessed on 5 July 2019.
53. Article 7A:1661 Dutch Civil Code.
54. Article 7A: 1670 Dutch Civil Code.
55. “Section 7A.9.3: Obligations of the Partners
Towards Third Persons”, available at http://www.
dutchcivillaw.com/legislation/dcctitle7a7a99.htm.,
accessed on 5 July 2019.
56. Article 7A:1679 Dutch Civil Code.
57. Article 7A:1680 Dutch Civil Code.
58. Article 7A:1681 Dutch Civil Code.
59. See Paul Goedvolk (2012) “Flex B.V.
Implementation of a more flexible corporate law
applicable to Dutch B.V.’s”, available at https://
www.eversheds-sutherland.com/global/en/what/
articles/index.page?ArticleID=en/global/
Netherlands/en/flex-bv-implementation-of
-a-more-flexible-corporate-law-applicable-to-
dutch-bvs, accessed on 5 July 2019.
60. Netherlands Chamber of Commerce, “Professional
Partnership”, available at https://business.gov.nl/start
ing-your-business/choosing-a-legal-structure/profes
sional-partnership/, accessed on 5 July 2019.
61. Article 7A:1684 Dutch Civil Code.
62. “Income From a Dutch Partnership”, https://www.tax-
consultants-international.com/read/income-from
-a-dutch-partnership?submenu=13177&sublist=
13176&subsublist=13169, accessed on 5 July 2019.
63. Netherlands Chamber of Commerce, “Paying Taxes
in the Netherlands”, available at https://business.
gov.nl/getting-ready-for-doing-business/most-
common-taxes/paying-taxes-in-the-Netherlands/,
accessed on 5 July 2019.
64. “Doing Your Taxes As A Self-employed Entrepreneur
in the Netherlands”, available at https://www.expa
tica.com/nl/finance/Doing-your-taxes-as-a-self-
employed-entrepreneur-in-the-
Netherlands_105638.html, accessed 5 on July 2019.
65. See “Draft Bill Modernizing Dutch Partnerships,”
BurenLegal, 13 March 2019, https://www.burenle
gal.com/en/news/draft-bill-modernizing-dutch-
partnerships, accessed 24 June 2019.
66. See McCahery, Raaijmakers, and Vermeulen, ed,
(McCahery et al., 2004), p.17.
67. McCahery, Raaijmakers, and Vermeulen, ed,
(McCahery et al., 2004), p.17.
68. “Bill on the Modernization of Partnerships: third
time lucky?” Meijburg & Co, https://meijburg.com/
news/bill-on-the-modernization-of-partnerships-
third-time-lucky, accessed 24 June 2019.
69. See “Draft Bill Modernizing Dutch Partnerships,”
BurenLegal, 13 March 2019, https://www.burenle
gal.com/en/news/draft-bill-modernizing-dutch-
partnerships, accessed on 24 June 2019.
70. It refers to silent partnership in the Dutch
Partnership Law.
71. See Article 1623 of the Indonesian Civil Code stipu­
lates as follows: “Civil partnership which Is limited
in nature is only related to certain goods, its usage
as well as results obtained from them, regarding
certain business or providence of an enterprise or
fixed profession.”
72. See footnote 97, <https://peraturan.bpk.go.id/
Home/Details/133158/permenkumham-no-17-
tahun-2018>, accessed in 10 January 2019.
73. See Article 16 of the Indonesian Commercial Code.
Page 16 of 19
Dewi, Cogent Social Sciences (2021), 7: 1999005
https://doi.org/10.1080/23311886.2021.1999005
74. See Article 17 of the Indonesian Commercial Code.
75. See Article 18 of the Indonesian Commercial Code.
76. See Subekti and Tjitrosudibio (2007), p. 426–427,
Article 1623.
77. See Purwosutjipto, Ibid.
78. The author opts to use the term civil partnership
because it refers to a civil company as an enter­
prise. Compare also with Jean-Charles who distin­
guishes between “societies civiles” and “societies
commerciales”. See HMN. Purwosutjipto,
Pengertian Pokok Hukum Dagang Indonesia:
Pengetahuan Dasar Hukum Dagang. (Jakarta:
Djambatan, 1987), h. 17; See also: Loes Lennarts,
“A Dutch View on the Need for Hybrid Legal
Forms,” unpublished paper Faculty of Law, Utrecht
University, Netherlands (October 2007), p. 7.
Maatschap (civil partnership/union) is regulated
under Indonesian Civil Code Book Three, Chapter
Eight, from Article 1618 until Article 1652.
79. See Purwosutjipto (2007), p. 17. See also FN 59.
80. Article 16 of the Indonesian Commercial Code.
81. In J.B. Huizink (2009), p. 43, Huizink explains affec­
tion societatis as “de wil vanpartijen om als com­
pagnon of vennoot samen te werken.”
82. Refer to all types of partnership: civil partnership
(Maatschap) and commercial partnership (Firma
dan CV).
83. See Purwosutjipto, Op. Cit, p. 19. In Netherlands,
the provisions are contained in Boek 7 Titel 13
Nieuw Burgelijke Wetboek (NBW).
84. See Theo Raaijmakers, “The Governance of Close
Corporations and Partnership: US and European
Perspectives”, ed. Josep A. Mc. Cahery, et.al., in
Yetty Komalasari Dewi (2011), p. 188.
85. See Crane & Bromberg, No. 34 A in Conard A and
Vagst D, eds., (Conard & Vagst, 2006), p. 78.
86. See Soekardono (1983), p. 43.
87. See Adenas and Wooldridge (2009), p. 159.
88. See Gardner, ed. (Gardner, 2001), p. 238. The
aggregate theory is often mentioned as “the con­
tract or partnership theory whereby groups became
legal entities by a voluntary and consensual under­
taking of their members”. See Ron Harris (b), loc.
cit., p. 1424.
89. See Theo Raaijmakers, “The Reform Agenda for
Partnership Law,” p. 404.
90. This Ministerial Decree is enacted since
1 August 2018 and aims to simplify the procedure
and ease of obtaining business licenses for busi­
ness entities so as to enable every business entities
including partnership in global competitiveness.
<https://peraturan.bpk.go.id/Home/Details/133158/
permenkumham-no-17-tahun-2018>, accessed
10 January 2019.
91. Minister of Law and Human Rights Regulations on
Registration of Limited Partnership, General
Partnership, and Maatschap, Minister of Law and
Human Rights Regulation Number 17 Year 2018.
Ibid.
92. See Hager (1989), p. 575, and 579–580. Mark
H. Hager argues that aggregate or the contract
theory is perceived as a limited liability company
(corporation) as a “partnership of individual
members”.
93. See W.M. Kleijn et al. (2006), p. 112. See also: Sjef
van Erp, “From ‘classical’ to modern European
property law?”, Paper presented in Workshops in
Bremen (Centre of European Law and Politics) and
Hamburg (Max Planck Institute for comparative and
international private law), Maastricht University,
2006, ≤http://papers.ssrn.com/pape.tar?≥, down­
loaded on 6 July 2019.
94. See W.M. Kleijn, et al., ibid.
95. See Sjef van Erp, “From ‘classical’ to modern
European property law?”, the paper was delivered
in Workshops in Bremen (Centre of European Law
and Politics) and Hamburg (Max Planck Institute for
comparative and international private law),
Maastricht University, 2006, ≤http://papers.ssrn.
com/pape.tar?≥, downloaded 6 July 2019.
96. See Purwosutjipto, Op. Cit., p. 38-39.
97. See Indonesian Civil Code Article 1646.
98. See Indonesian Civil Code Article 1644.
99. See Art. 1680 of Dutch BW; compare to Meijers’s
proposal in the current Dutch BW.
100. For example, two means each for 50%, or 3 three
means each for 33%).
101. “Limited Liability Partnership,” Thomson Reuters
Practical Law, https://uk.practicallaw.thomsonreu
ters.com/2-107-6762?transitionType=
Default&contextData=(sc.Default)&firstPage=
true&bhcp=1, accessed 6 July 2019.
102. Article 1644 of the Indonesian Civil Code states the
following: “Any condition that a deal has been made
on account of the partnership shall commit only the
partner who has made it, but not the others, unless
the latter has given him power thereto, or if the deal
rendered profit to the partnership.”
103. See Article 1338 of the Indonesian Civil Code.
104. “Advocates Office in Indonesia Needs to Adopt the
LLP Concept,” Hukumonline, 16 April 2015, http://
www.hukumonline.com/berita/baca/lt552f64ca
da06c/kantor-advokat-Indonesia-perlu-adopsi-
konsep-llp, accessed 6 July 2019.
105. Article 22 of the Indonesian Commercial Code.
106. Article 23 of the Indonesian Commercial Code.
107. Article 26 of the Indonesian Commercial Code.
108. Article 28 of the Indonesian Commercial Code.
109. Article 809 paragraph 2 of the Dutch New
Partnership Law.
110. The 1945 Indonesian Constitution, Transitional
Provision I. See also: Gautama (2006)), p. 10.
111. See Barney and Kirby Sheila Natural (2004), p. 77.
112. Ibid, p. 73.
113. This form also refers to a general partnership,
a commercial partnership who all the partners
manage the partnership and liable to all partner­
ship obligations jointly and severally.
Disclosure statement
No potential conflict of interest was reported by the
author(s).
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