FOUNDATION TO INDONESIAN LEGAL SYSTEM

Legislative System [Bicameral: two-house legislative system -> MPR : DPR + DPD]
 People’s Consultative Assembly (Majelis Permusyawaratan Rakyat (“MPR”)): responsible for
amending and enacting the Constitution and for inaugurating or dismissing the president and the
vice president in accordance with the Constitution;
 People’s Representative Council (Dewan Perwakilan Rakyat (“DPR”)): issues laws and
regulations, supervises the government and oversees and approves state budgeting;
 Regional’s Representative Council (Dewan Perwakilan Daeraeh (“DPD”)): authority is limited to
certain fields related to the regional government and can only propose, evaluate, give
consideration and advise on Bills to the DPR. 1

The Indonesian Constitution of 1945 (UUD 1945) separates the State authority into three branches:
(1) executive; (2) legislative; and (3) judicial. Each branch holds equal status and authority within the
hierarchy of the government to maintain checks and balance of its administration.

Branch Organ Purpose / Authority Form of Checks and Balance

Executive  President
 Vice President
Legislative  MPR: DPR & DPD [Ch. II,
UUD 1945]
Judicial  Constitutional Court (MK)
 Supreme Court (MA)
 General Courts (PN)
 Military Courts
 Religious Courts
 Administrative Courts
(PTUN)
 Submit bills to  No authority to disband the legislative body
DPR [Art. 7B, UUD 1945]
 Appoint Ministers  Must ask and consider advice from the
[Ch. III & IV, following branches on certain subject matters:
UUD 1945] o legislative and judicial branches for advice
or approval upon entering into: (i) war; (ii)
peace treaties; or (iii) international treaties
[Art. 11, UUD 1945]
o Supreme Court: (i) clemency and (ii)
rehabilitation [Art. 14, UUD 1945]
o DPR: (i) amnesty, and (ii) withdrawal of a
sanction against an individual [Art. 14,
UUD 1945]
 Amending and  Can dismiss executive branch for (i) violating
enacting UUD the law; (ii) treason; (iii) corruption; or (iv)
1945 bribery [Art. 7A, UUD 1945]
 Inauguration or  DPR must discuss and receive approval from
dismissal of President when issuing or enacting law [Art.
executive branch 20(2), UUD 1945]
 DPR: budgeting  DPR supervises executive power by
authority exercising right to conduct interpellation
(questioning executive of an aspect of
government policy) [Art. 20A, UUD 1945]
Constitutional Court:
Review law that is contrary to UUD 1945
Settle disputes among government inst

Hierarchy of law in Indonesia

Four principles to the hierarchy of law:
1
https://uk.practicallaw.thomsonreuters.com/w-010-7310?
transitionType=Default&contextData=(sc.Default)&firstPage=true.
 1. Lex superior derogate legi inferiori: lower level regulations cannot contradict with the higher
level regulations -> applies to contradictory, unequal regulations
2. Lex specialis derogate legi generali: more specialized laws shall supersede general laws ->
applies to equal level laws pertaining to the same subject matter
3. Lex posteriori derogate legi priori: newer regulation supersedes older regulations -> legal
certainty
4. Regulations can only be replaced with regulations having equal or higher level of hierarchy 2

Legal Basis:
The general legislative process is regulated under Law No. 12 of 2011 on Law Making, amended
twice under Law No. 15 of 2019 and Law No. 13 of 2022, and Presidential Regulation No. 87 of 2014
on Implementing Regulation of Law Making. This form of hierarchy ensures that the lower level
regulations do not contradict the higher level of regulations.

According to Article 5 of Law 12/2011, legislators must formulate rules and regulations based on the
principles of:
 Clear purpose (kejelasan tujuan)
 Appropriately formed institutions or officials (kelembagaan atau pejabat pembentuk yang tepat)
 Conformity between the type, hierarchy, and content materials of law (kesesuaian antara jenis,
hirarki, dan materi muatan)
 Can be implemented (dapat dilaksanakan)
 Usability and effectiveness (kedayagunaan dan kehasilgunaan)
 Clarity of formulation and purpose (kejelasan rumusan dan kejelasan tujuan)
 Transparency (keterbukaan)3

The content of each law and regulation must embody the following principles under Article 6 of Law
12/2011:
 Shelter (pengayoman)
 Humanity (kemanusiaan)
 Nationality (kebangsaan)
 Familial/kinship (kekeluargaan)
 Archipelago (kenusantaraan) -> applies to all regions
 Unity in Diversity (bhinneka tunggal ika)
 Justice (keadilan)
 Equal status in law and government (kesamaan kedudukan dalam hukum dan pemerintahan)
 Legal certainty and order (ketertiban dan kepastian hukum)
 Balance, harmony, and in sync (keseimbangan, keserasian, dan keselarasan)

In the context of criminal law, the principles of legality and presumption of innocence are also
assumed. Whereas in civil law context, the principles of agreement, freedom of contract (pacta sunt
servanda: agreements muts be kept -> legally binding and enforceable), and acts of good faith are
also considered.

The laws and regulations are divided into two:

1. Laws and regulations formed by the President and requiring approval of the DPR (House of
Representatives) and vice versa
2. Laws and regulations that do not require DPR approval

HIERARCHY OF LAW
Order # Form of Law Authorized By Legal Reasoning / Implication

2
https://www.hukumonline.com/klinik/a/hierarki-peraturan-perundang-undangan-di-indonesia-cl4012
3
https://pusdik.mkri.id/materi/materi_234_JENIS,%20HIRARKI,%20FUNGSI,%20DAN%20MATERI%20PUU%20Jul%202021%20revisi.pdf
 1945
1 Constitution
(UUD 1945)
MPR Decree MPR Required content materials (materi muatan):
(TAP MPR)  Art 3 UUD 1945 (original): MPR establishes the
Constitution and the Outlines of the State Policy (as
opposed to the course)
 Art 3 UUD 1945 (amended): MPR is authorized to
amend and decree the Constitution -> legal
uncertainty on hierarchy of TAP MPR

2 The placement of TAP MPR as the second highest rule

of law is to recognize the validity of active MPR
Decrees since the amendment to UUD 1945 no longer
permits MPR the authority to issue Decrees outside of
its subject matter (regeling). The MPR can only issue
Decrees that are stipulating in nature.4

Forms of TAP MPR: 1) Ketetapan (bersifat mengatur

dan penetapan), 2) keputusan, dan 3) perubahan UUD.
3 Law (Undang- Law
Undang or Formed by Dewan Required content materials (materi muatan):
“UU”) Perwakilan Rakyat / House Law
or of Representatives  To further regulate the conditions when explicitly
Government set forth in the UUD 1945 [Art. 10, Law 12/2011]
Regulation in Approved by DPR and the o Human rights (HAM)
lieu of a law President [Article 1(3), Law o Rights and obligations of a citizen
(“Perpu”) 15/2019] o Implement and enforce State sovereignty and
distribution of state and regional division
Government Regulation in o Citizenship and residents
lieu of a law o State finances
Declared by the President in
 To further regulate the basic rules in the Articles
the matter of compelling
(branches) of the UUD 1945
urgency (‘dalam hal ihwal
 To regulate: relationships between State institutions
kegentingan memaksa’) -
(hubungan antara lembaga negara), and
[Article 22, UUD 1945;
relationships between citizens/ residents.
Article 1(4), Law 15/2019]
 To decree that a law be regulated by law [Art.
10(b), Law 12/2011]
 Ratify international agreements [Art. 10(c), Law
12/2011]
 Follow up on Decrees of the Constitutional Court
[Art. 10(d), Law 12/2011]
 Fulfill the legal needs of society [Art. 10(e), Law
12/2011]

Government Regulation in lieu of a law

The contents of a Law shall apply mutatis mutandis to a
Perpu [Article 11, Law 12/2011]
The Perpu acts as a law (UU), or a Government
Regulation having the same level of authority as a law
(UU). The Perpu is then a government regulation
enacted to implement the law (UU).

4
https://media.neliti.com/media/publications/147997-ID-kedudukan-ketetapan-mpr-dalam-hierarki-p.pdf.
 The term “in the matter of compelling urgency” must be
defined clearly under law to realize a stronger
mechanism in formulating a Perpu. The lack of a clear
formulation of Perpu provides a loophole for the
President and DPR to use Perpu as a tool for political
interests.5
Government President Required content materials (materi muatan):
Regulation  To further regulate the conditions when explicitly
set forth in the Law [Article 1(5), Law 15/2019]
4
 To further regulate conditions in the regulating law
even when not explicitly mentioned.6 [Article 12,
Law 12/2011]
Presidential President Established to implement the orders of the higher
Regulation regulations or in implementing government authority
[Article 1(6), Law 15/2019]

Required content materials (materi muatan):

 Regulate to exercise power of the State Government
as an attribution to Article 4(1) UUD 1945 ->
5 ‘matters of compelling urgency’ [Article 13, Law
12/2011]
 Regulate statutory orders either expressed or
implied to be established
 Regulate conditions set forth in Law and/or
Government Regulations, either explicitly or
implicitly, to be established [Article 13, Law
12/2011]
Provincial Formed by DPRD Provinsi Required content materials (materi muatan) [Article 14,
Regulation (Dewan Perwakilan Rakyat Law 12/2011]:7
Daerah Provinsi or House of  Regulating matters relating to the regional
Representatives of the autonomy and auxiliary duties
Provincial Region)  Elaborate on higher laws and regulations by taking
6 into account the distinctive characteristics of each
Approved by DPRD and the region
Governor [Article 1(7), Law  Regulating matters that do not conflict with the
15/2019] [contents] of higher laws and regulations
 Regulating matters that have not been regulated by a
Regency or Formed by DPRD Kab/Kota higher regulation
Municipality
Regulation Approved by DPRD *the condition for provincial regulation to not contradict
7
Kab/Kota and Mayor with public order is no longer in accordance with Article
(Bupati/ Walikota) [Article 176(2) Law No. 11 of 2020 on Job Creation
1(8) Law15/2019]

Major legislation

5
https://ditjenpp.kemenkumham.go.id/index.php?option=com_content&view=article&id=3000:peraturan-pemerintah-pengganti-undang-undang-
dari-masa-ke-masa&catid=100&Itemid=180
6
https://pusdik.mkri.id/materi/materi_234_JENIS,%20HIRARKI,%20FUNGSI,%20DAN%20MATERI%20PUU%20Jul%202021%20revisi.pdf.
7
https://pusdik.mkri.id/materi/materi_234_JENIS,%20HIRARKI,%20FUNGSI,%20DAN%20MATERI%20PUU%20Jul%202021%20revisi.pdf.
 INDONESIAN CIVIL CODE / KUHPer
KEY POINTS REMARKS
Goods Article 499 KUHPer

Goods are each object and each right attached from the right to own.
Legal implication: goods = object + rights (deriving from Hak Milik)
Eigendom: hak mutlak atas suatu barang / kepunyaan / milik -> the right to own is an absolute
right attached to the goods.
Entirety of the Article 500 KUHPer
goods
Everything included in the goods because of the law of attachment, and everything the good
produces, in either natural or handcrafted forms, is a part of the good as long as they are
attached to a branch (section), or root (core), or clinging to the ground (surrounding).
Division of goods Article 503 KUHPer
Goods are divided into 1) tangible, and 2) intangible goods
Types of Goods Article 504 KUHPer
There are two types of goods: 1) immovable, and 2) immovable goods.

Article 505 KUHPer

There are movable goods that can be (a) spent (used up or utilized), and those that (b) cannot
be spent.
Movable Goods Article 509 KUHPer
Goods are movable because of its nature as goods that can move on its own, or be moved.
Pursuant to Article 513 KUHPer, the term ‘movable goods’, without any exception, includes
all goods where according to the terms of KUHPer, are deemed movable.

Article 510 KUHPer

Forms of movable goods: ships, boats, windmills, and boat-mounted hoards or loose and such
articles.

Article 511 KUHPer

Those considered movable goods because it is determined by law:
1. Usufructuary right / to use the products of the good/ (hak pakai hasil), and usufructuary
rights of movable goods
2. Right of the promised interest (hak atas bunga), either continuous or unpaid
3. Legal relationships or demands on the amount of money that can be billed or on movable
goods
4. Proof of share or share in money trading partnerships, trade partnerships, or corporate
partnerships, or corporate partnerships even if the relevant movable goods and the
company is owned by the partnership.
5. Shares in Indonesia’s sovereign debt, either those listed in the ge
 FIDUCIA GUARANTEES/ JAMINAN FIDUSIA
KEY POINTS REMARKS
Defining Fiduciary Article 1(1) Law No. 42 of 1999 on Fiducia Guarantees (Law42/1999)

Fiduciary is the transfer of ownership rights to an object on the basis of trust provided that the
object whose ownership rights are transferred remains in the control of the owner of the object.
Party A -> transfers ownership rights -> Party B BUT Party A retains control
Defining Fiduciary  Article 1(2) Law42/1999
Guarantees The security right on movable objects, both tangible and intangible, and immovable objects,
i.e., buildings that cannot be encumbered with mortgage rights (Law No. 4 of 1996 on
Mortgage Rights), which shall remain in the control of the Fiduciary Giver. The security
right will be collateral to settle certain debts, giving the Fiduciary Recipient [secured]
priority over other creditors

 Article 4 Law 42/1999

A follow-up agreement on the main agreement, creating obligations the parties must fulfil
(to do something, to (not) give something that has cash value [condition precedent –
suspensive condition of contract]).
Relevant Parties Debtor/ Fiducia Provider
Individual or corporation owning the object that will be the fiduciary guarantee [Article 1(5)
Law42/1999].

Creditor/Fiducia Recipient
Individuals or corporations that have receivables whose payments are guaranteed by fiduciary
guarantees [ Article 1(6) Law42/1999].
Multiple Creditors? A Debtor can provide a fiducia guarantee to several Creditors/ Fiducia Recipient or their proxy
for consortium payments. A proxy refers to the person acting in the interest of the Fiducia
Recipients in receiving their guarantee from the provider [Article 8 Law42/1999].
Guaranteeing the Article 17 Law42/1999
Same Fiducia
Several Times? No. A Fiducia Provider cannot guarantee the same fiducia that is already registered to the
Fiducia Registrar Book.
Transparency Article 18 Law42/1999

All remarks on the object that will be guaranteed to the Fiducia Registrar is open to the public.
Object of the Fiducia Guarantee
Outside the scope Article 3 Law42/1999
of Law42/1999
The law mainly does not apply to mortgages and pawns/gadai:
1. Mortgage rights on lands and buildings insofar that the prevailing laws require the
registration of the guarantee over such objects [if no registration is required -> mortgage
right can be a fiduciary guarantee];
2. Mortgages on registered vessels with gross contents of ≥20m 3;
3. Mortgages on airplanes; and
4. Pawns.
Types of Debts Article 7 Law42/1999
That Can Be Paid
Off Through 1. Existing Debts (incurred)
Fiducia Guarantees 2. Future debts in an agreed amount (also known as “contingent”) -> Creditor pays a loan
amounting to a debt for the Debtor in the context of implementing bank guarantees.
3. The amount of debt determined based on the execution of the main agreement, creating an
obligation for the Debtor to fulfil their performance. The debt is interest payable on the
principal loan and other costs, the total amount determined later on;
 4. Output/Product of the object of fiducia guarantee [Article 10(a) Law42/1999].
5. Insurance claims when the object is insured [Article 10(b) Law42/1999].
Shares? Article 60(1) Company Law acknowledges shares as movable goods and the right to be
pledged as a fiduciary insofar that the Articles of Association does not determine otherwise.

Article 60(3) Company Law requires all pledged shares to be listed in the Shareholder register
and special register. Rights except the voting right attached to the shares will be transferred to
the pledgee when pledging shares.

Article 60(4) Company Law regulates the voting rights on shares that are pledged with
fiduciary guarantees to remain with the shareholders. This provision reaffirms the legal
principle that does not allow the transfer of voting rights regardless of ownership of shares.
Meanwhile, other rights other than voting rights can be agreed upon in accordance with the
agreement between shareholders and collateral holders. 8

Article 1 (5) of Law Number 8 of 1995 concerning the Capital Market states shares as a type of
securities (efek).
Form of Article 5 Law 42/1999
encumbered
Fiducia Guarantee Encumbering a fiducia guarantee is executed in a notarial deed in Indonesian Language ->
Deed of Fiducia Guarantee, where the fee is governed in Government Regulation.
When the Article 9 Law42/1999
Guarantee can be
given A Fiducia Guarantee can be given to one or more objects, including receivables, that are
available when the guarantee is given and when retrieved. No individual fiducia agreement is
needed.
Fiducia Registrar Office
Principal/ first Article 12(2)-(3) Law42/1999
Fiducia Registrar
The Fiducia Registrar falls under the authority of the Department of Justice/ Departemen
Kehakiman [12(3)], established in Jakarta and responsible for fiducia guarantees over the entire
territory of the Republic of Indonesia.
Secondary Fiducia Article 12(4) Law42/1999
Registrars
Establishing secondary registrar offices must be done through Presidential Decree. The
secondary registrars will be domiciled within the capital city provinces [Elucidation 12(4)].
Deed and Certificate of Fiducia Guarantee
Deed of Fiducia Article 6 Law42/1999
Guarantee
The Deed of Fiducia Guarantee shall at minimum contain the 5 matters:
 Identity of the Fiducia Giver and Recipient
 Data on the main agreement guaranteeing the fiducia (form of agreement and loan value)
 The object to be guaranteed, i.e., proof of ownership, specifications and quality of object.
 Value of the guarantee and the object itself.
Fiducia Guarantee Article 14(2) Law42/1999
Certificate
The certificate reflects the matters and notes contained in the Fiducia Register Book [13(2)
Law42/1999], and must contain the term “FOR JUSTICE BASED ON THE ALMIGHTY
GOD" [15(1)].
Enactment of Article 14(1) Law42/1999
Fiducia Guarantee
Certificate The Fiducia Registrar enacts and provides the Fiducia Guarantee Certificate to the Fiducia
Recipient on the same date as the date of receipt of the registration application.
8
https://www.hukumonline.com/klinik/a/bisakah-saham-dijadikan-jaminan-fidusia-lt5cac03c865063#_ftn6.
Amendment to Article 16(1)-(2) Law42/1999
Fiducia Guarantee
Certificate The Fiducia Recipient shall apply for any amendment made to the Fiducia Guarantee
Certificate at the Fiducia Registrar. The Fiducia Registrar shall note the amendment within the
Fiducia Register Book on the same date as the date of application, which will be an inseparable
part of the Certificate [16(2)].
Enforceability of Article 15(2) Law42/1999
Fiducia Guarantee
Certificate The Fiduciary Guarantee Certificate has the same executorial power as a court decision that
has obtained permanent legal force.

Constitutional Court Decision No. 18/PUU-XVII/2019 interprets Article 15(2) where the
fiducia security grantee (or creditor) must apply for a Civil Court’s assistance to possess and
sell the fiducia security object if there is no agreement on the occurrence of default and the
fiducia security grantor refuses to surrender the fiducia security object voluntarily to the fiducia
security grantee (or creditor).

Legal implication - executory title is enforceable only to the extent that: (i) there is a mutual
agreement between the fiducia security grantor and fiducia security grantee on the occurrence
of default; and (ii) the fiducia security grantor willingly surrenders the fiducia security object to
the fiducia security grantee. [If the above conditions are not fulfilled, the fiducia security
grantee is banned from enforcing its executory title granted under the fiducia certificate].
Recipient right to Article 15(3) Law42/1999
sell
In the event of the debtor breaching their contractual obligations, the Fiducia Recipient
reserves the right to sell the object of Fiducia Guarantee on their own accord / power [no proxy
or representative]

Constitutional Court Decision No. 18/PUU-XVII/2019 interprets Article 15(3) where the
creditor cannot determine the debtor’s default unilaterally, instead the occurrence of default
must be based on the parties’ agreement or pursuant to a certain legal action.

Legal implication of “default” ruling: either a mutual agreement between the creditor and the
debtor or the commencement of legal proceedings (upaya hukum) is required to determine the
occurrence of the debtor’s default.9
Registering the Fiducia Guarantee
Registry Article 11 Law42/1999
requirement
All objects encumbered with a fiducia guarantee that are within and outside the territory of
Indonesia must be registered at the Fiducia Registrar [12(1)] within the legal domicile of the
Fiducia Giver.
Implication of Elucidation to Article 11 Law42/1999
registry Legal certainty for other creditors on objects encumbered with fiducia guarantee.
Applicant Fiducia Recipient or proxy/representatives [Article 13(1) Law42/1999]
Requirements Article 13(2) Law42/1999

The applicant must register the fiducia guarantee, attaching the registry statement entailing:
a. Identity of the Fiducia Giver and Recipient;
b. Date, number of Fiducia Deed, name and domicile of notary;
c. Data of the main agreement guaranteeing the fiducia;
d. Object that will be guaranteed;
e. Value of the guarantee and individual object.
Date of Validity Indirectly, the fiducia guarantee is valid retroactively since the date of receipt of the fiducia
9
https://www.zicolaw.com/resources/alerts/constitutional-courts-interpretation-on-the-execution-of-fiducia-security/.
 application.

Article 13(3) Law42/1999

The Fiducia Registrar enacts the Fiducia Guarantee in its Fiducia Registrar Book on the date of
the receipt of the fiducia application.

Article 14(3) Law42/1999

The Fiduciary Guarantee is born on the same date as the date the Fiduciary Guarantee is
recorded in the Fiduciary Register Book.
Assignment of Fiducia Guarantee
Transfer of all Article 19(1) Law42/1999
R&O
The transfer of rights to receivables that are pledged as fiduciary results in the transfer by law
of all rights and obligations of the Fiduciary Recipient to new creditors.
Registration of Article 19(2) Law42/1999
Transfer
That the new creditor must register the transfer to the Fiducia Registrar.
Attachment of Article 20 Law42/1999
Object to the
Transfer The Fiducia Guarantee remains attached to the object in whoever hands such Object may be in,
unless the object transferred is an inventory object -> every object except inventory transferred,
transfers the rights.
Assignment of Article 21(1) Law42/1999
Inventory Objects
[Waiver of Fiducia The transfer of inventory objects must follow the method and common procedures in any trade
Guarantee] business unless there is a breach of contract by the debtor and of the Fiduciary Provider third
party [21(2)].
Legal implication: the transfer of an encumbered inventory object indicates that the Fiducia
Provider and/or Fiducia Recipient waive the fiducia guarantee over such object.

Exception to waiver [Article 23(1) Law42/1999]

That the Fiducia Recipient’s agreement to transfer the object does not lose the guarantee status
if the Fiducia Recipient agrees:
 That the Fiducia Provider may utilize, merge, combine, or transfer the encumbered object
or its output; or,
 To collect or compromise the receivables (piutang).
Replacing the Article 21(3) Law42/1999
transferred
encumbered Where the Fiducia Provider shall replace the object transferred with an equivalent object ->
Inventory Object maintains the interest of the Fiducia Recipient
Consequence of Article 21(4) Law42/1999
Debtor breaching
contract In the event that the Fiduciary Provider is in breach of contract, the proceeds of the transfer and
or claims arising from the transfer shall by law become the object of the Fiduciary Guarantee in
lieu of the transferred object.
Non-Liability Article 22 Law42/1999
Claim of Buyer
The buyer of the Object encumbered with a Fiducia Guarantee, being aware of the encumbered
status when purchasing, is free from any claim made by another on the condition that they
have paid for the object in full, in accordance with market value.
Legal implication: if object is not paid in full, or not paid in accordance with market value,
then the buyer of the object can be sued (filed a claim against).
Prohibition of Article 23(2) Law42/1999
Transfer, Mortgage,
or Leasing Non- The Fiducia Provider is forbidden from (i) transferring, (ii) mortgaging, or (iii) renting out to
Inventory Objects another party, encumbered objects that are not of inventory, unless there is the prior written
approval from the Fiduciary Recipient.

Non-Inventory Encumbered Objects [Elucidation to Article 23(2) Law 42/1999] means

production machines, personal vehicles, or personal homes.

Legal implication:
 Fiducia Provider can transfer, mortgage, or rent out encumbered inventory objects
(machine/ personal vehicle/ home).
 Fiducia Provider can transfer, mortgage, or rent out encumbered non-inventory objects if
the Fiducia Recipient provides a written prior approval.
Free from Liability Article 24 Law42/1999

The Fiduciary Recipient does not bear any liability for the consequences of the Fiduciary
Giver's actions or omissions, whether arising from a contractual relationship or arising from
unlawful acts in connection with the use and transfer of encumbered Objects.
Legal implication:
 The approval [23(2)] of the Fiducia Recipient does not imply their accountability in
transferring the encumbered object.
 The Fiducia Provider and other third parties relevant to the use and/or transfer of the
encumbered objects are accountable should a court proceeding arise.
Removing/Revoking the Fiducia Guarantee
Reasons for FG Article 25(1) Law42/1999
removal
There are 3 reasons a Fiducia Guarantee can be removed:
a. write-off of debts guaranteed by fiduciary [paid off];
b. Fiduciary Recipient relinquishes their right to the Fiduciary Guarantee; or
c. the destruction of the encumbered object.
Retention of Article 25(2) Law42/1999
insurance claim
over insured, The destruction of the encumbered object does not remove the insurance claims over the
encumbered object insured object [10(b)].
Consequence of Article 25(3) Law42/1999
removal
The Fiducia Recipient must inform the Office Registrar regarding the removal of the Fiducia
Guarantee, attaching a statement on the write-off debt, relinquishment of the rights, or
destruction of the encumbered object.
Abolition/Write- Elucidation to Article 25(1) Law42/1999
Off of Encumbered
Object “Write-off debt” is a result of the debtor settling its debts, evinced by the creditor’s statement
letter of such write-off.
Legal implication: statement letter is sufficient to be evidence of write-off.
Automatic Elucidation to Article 25(1) Law42/1999
Cancellation of a
written-off the If the receivable is written off due to the write-off of the debt or due to disposal, then the
Object Fiduciary Guarantee concerned will automatically be cancelled [bearing in mind the Fiducia
Guarantee depends on the debtor paying off the receivable]
Consequence of Article 26(1)-(2) Law42/1999
Informing Office
Registrar The Office Registrar will cross out the Fiducia Guarantee from the Fiducia Guarantee Book ->
The Fiduciary Registration Office issues a statement letter declaring that the relevant Fiduciary
Guarantee Certificate is no longer valid.
Priority Rights
Absolute Right Article 27(2) Law42/1999
The priority right is the right of the Fiduciary Recipient to take payment of his/her receivables
in having to execute the encumbered object.

Article 27(1) Law42/1999

The Fiducia Recipient has priority right over any other creditor [superseding since the
application date of the object to the Fiducia Registrar].
Bankruptcy/ Article 27(3) Law42/1999
Liquidation cases
The priority right is still valid [and not nullified] in cases of bankruptcy or liquidation of the
Fiduciary Giver. In fact, the priority right is considered as a collateral right on property in
settling the debt, but remains outside the scope of bankruptcy or liquidation.
Legal implication: how can the Fiduciary Recipient retrieve their owed settlement?.
Priority Right over Article 28 Law 42/1999
One Encumbered
Object in Multiple The priority right over the same encumbered object given in several agreements is determined
Agreements based on the date of the first ever application made to the Fiducia Registrar.
EXECUTING FIDUCIA GUARANTEES
3 ways to execute Article 29(1) Law 42/1999
the FG in the event
of a breached The Fiducia Recipient has three ways to execute the Fiducia Guarantee in the event of the
contract debtor’s breach of contract:
a. Implement the executorial title [15(2)];
b. Hold a public auction to sell the object and settle the receivables owed to the Fiducia
Recipient (on their own authority -> no proxy or representative)
c. underhand sales made based on an agreement between the Giver and the Fiduciary
Recipient if in this way the highest price mutually benefiting the parties, is achieved.
Time Limit to sell Article 29(2) Law42/1999
under the table
The under the table sale can only be done after one month since the Fiducia Provider/ Recipient
(i) gave a written notification to relevant parties, and (ii) announced in at least two newsletter
gazettes in the relevant locations.
Legal implication: the parties must complete these two obligations before committing an under
the table sale.
Shift of Physical Article 30 Law42/1999
Object [and
ownership] The Fiducia Provider must surrender the encumbered object in executing the Fiducia
Guarantee. Failing to surrender the encumbered object entitles the Fiducia Recipient to take the
object and can request for assistance from the district court [Annotation from Constitutional
Decision No. 71/PUU-XIX/2021]
Legal implication:
 the object remains in the hands / presence of the Fiducia Provider or wherever it first
remains
 The district court can oversee / assist the surrender of the encumbered object.
Applicable Law in Article 31 Law42/1999
the Sale of Traded
Objects or The parties shall refer to prevailing rules and regulations over encumbered objects that are
Securities trading objects or securities that can be sold on the market or on the stock exchange.
Null and Void By The following promises are null and void by law:
Law  Article 32 Law42/1999: Every promise to carry out the execution of the object that is the
object of the Fiduciary Security in a manner that is contrary to the provisions as referred to
in Article 29 [mode of execution] and Article 31 [stock/security];
 Article 33 Law42/1999: Every promise that authorizes the Fiduciary Giver to own the
Encumbered Object when the Debtor is in breach of contract.
 Legal implication:
 The parties must execute the encumbered object in either three ways, or under relevant
rules for stocks and securities
 Fiducia Provider will never retain ownership of object after breaching the contract
Returning the Article 34(1) Law42/1999
Excess of Loan
Value The Fiducia Recipient must return the excess owed if the result of the execution received
exceeds the value of the guarantee.
Remaining Article 34(2) Law42/1999
Outstanding debt
If the results of the execution are not sufficient to pay off the debt, the debtor is still responsible
for the outstanding debt.
Criminal Sanctions
Falsifying, Article 35 Law42/1999
Altering,
Abolishing, or Any person who (i) intentionally (ii) (a) falsifies, changes, eliminates or (b) in any way
Misleading provides misleading information, (iii) (a) which if it is known by one of the parties (b) does not
result in a Fiduciary Guarantee agreement.
Charges: (min) 1-5 (max) year imprisonment and (min) Rp.10jt – Rp. 100jt (max) fine.

Legal implication: lawyers must prove/ disprove t

hese 3 elements and 2 respective sub-elements to charge the perpetrator with the crime.
Unlawful transfer, Article 36 Law42/1999
pledge/mortgage,
or lease The Fiduciary Provider who (i) transfers, pledges, or rents out the encumbered Objects (ii)
without prior written approval from the Fiduciary Recipient.
Charges: (max) 2 year imprisonment and Rp. 50jt (max) fine.
 BANKING LAW / UU PERBANKAN
KEY POINTS REMARKS
Definition Article 1(1) Law No. 42 of 1999 on Fiducia Guarantees (Law42/1999)

Fiduciary is the transfer of ownership rights to an object on the basis of trust provided that the
object whose ownership rights are transferred remains in the control of the owner of the object.
Party A -> transfers ownership rights -> Party B BUT Party A retains control
Types of Debts Article 7 Law No. 42 of 1999 on Fiducia Guarantees
That Can Be Paid
Off Through 1. Existing Debts (incurred)
Fiducia Guarantees 2. Future debts in an agreed amount (also known as “contingent”) -> Creditor pays a loan
amounting to a debt for the Debtor in the context of implementing bank guarantees.
3. The amount of debt determined based on the execution of the main agreement, creating an
obligation for the Debtor to fulfil their performance. The debt is interest payable on the
principal loan and other costs, the total amount determined lateron.
Relevant Parties Debtor/ Fiducia Provider
Individual or corporation owning the object that will be the fiduciary guarantee [Article 1(5)
Law42/1999].

Creditor/Fiducia Recipient
Individuals or corporations that have receivables whose payments are guaranteed by fiduciary
guarantees [ Article 1(6) Law42/1999].
Multiple Creditors? A Debtor can provide a fiducia guarantee to several Creditors/ Fiducia Recipient or their proxy
for consortium payments. A proxy refers to the person acting in the interest of the Fiducia
Recipients in receiving their guarantee from the provider [Article 8 Law42/1999].
Guaranteeing the No. A Fiducia Provider cannot guarantee the same fiducia that is already registered to the […]
Same Fiducia registry.
Several Times?
 CAPITAL MARKET LAW / UU PASAR MODAL
KEY POINTS REMARKS
Definition Article 1(1) Law No. 8 of 1995 as amended by Government Regulation in Lieu of Law No. 1
of 2017 on Capital Market (Law 8/1995)

Public Company Article 1(22) Law8/1995

Public companies are companies whose (i) shares are held by at least 300 shareholders, having
a (ii) minimum paid-up capital of Rp.3B; or, (iii) any share or capital regulated under
Government Regulation.
Types of Debts Article 7 Law No. 42 of 1999 on Fiducia Guarantees
That Can Be Paid
Off Through 4. Existing Debts (incurred)
Fiducia Guarantees 5. Future debts in an agreed amount (also known as “contingent”) -> Creditor pays a loan
amounting to a debt for the Debtor in the context of implementing bank guarantees.
6. The amount of debt determined based on the execution of the main agreement, creating an
obligation for the Debtor to fulfil their performance. The debt is interest payable on the
principal loan and other costs, the total amount determined lateron.
Relevant Parties Debtor/ Fiducia Provider
Individual or corporation owning the object that will be the fiduciary guarantee [Article 1(5)
Law42/1999].

Creditor/Fiducia Recipient
Individuals or corporations that have receivables whose payments are guaranteed by fiduciary
guarantees [ Article 1(6) Law42/1999].
Multiple Creditors? A Debtor can provide a fiducia guarantee to several Creditors/ Fiducia Recipient or their proxy
for consortium payments. A proxy refers to the person acting in the interest of the Fiducia
Recipients in receiving their guarantee from the provider [Article 8 Law42/1999].
Guaranteeing the No. A Fiducia Provider cannot guarantee the same fiducia that is already registered to the […]
Same Fiducia registry.
Several Times?
 UU PERSEROAN TERBATAS / COMPANY LAW
KEY POINTS REMARKS
Definition Article 1(1) Law No. 40 of 2007 as amended by Law No. 11 of 2020 (Company Law)

A company is a Legal entity constituting (a) a capital association, (b) established by virtue of an
agreement, (c) conducting business activities (d) with authorized capital entirely divided into
shares and (e) complying with requirements of this Law and implementing regulations.
Company Article 1(2) Company Law
Organs (CO)
General Meeting of Shareholders (GMS) + Board of Directors (BOD) + Board of
Commissioners (BOC).
BOD Article 1(5) Company Law

A BOD is an organ responsible for:

 Supervising the company in general;
 Supervising in accordance with the Articles of Association (AoA)
 Advise the BOD on day-to-day operations.
BOC Article 1(6) Company Law

A BOC is an organ responsible for:

 management of company;
 for company interests
Publicly-owned Article 1(7) Company Law
Company (Tbk)
An organ carrying out public shares offering in accordance with capital market laws and
regulations.
Public CO Article 1(8) Company Law
(Perseroan
Publik) An organ that meets criteria on shareholder number and paid-up capital in accordance with
capital market laws and regulations.
Company Info Article 5 Company Law

 The company’s name and legal domicile [address] must be in Indonesia, in accordance with
its Deed of Establishment.
 Correspondence, announcements, printed materials, and deeds to which CO is a party ->
must state CO name and full address.
Validity Period Article 6 Company Law

The Company is established for an unlimited or limited time, as specified in the AoA.
Liability - Article 3 Company Law
Principle of
Separate Legal Shareholders are not personally liable for any legal actions taken for and on behalf of the
Entity (Salomon Company, nor for any Company losses exceeding the shares owned.
Principle)
Exclusion of liability:
 Requirements of a company to be a legal entity are not met
 The shareholders directly and indirectly acted in bad faith by utilizing the company for their
personal benefits.
 The shareholder is involved in a tortious act conducted by the Company
 The shareholders directly and indirectly acted in contrary to law by utilizing the company’s
assets, causing the company’s funds to be insufficient to pay off its debts.
Acquit Et De To discharge a Director from their duties (Black’s Law Dictionary defines it as relieving them
Charge from criminal charges). An acquit et de charge only applies to legal actions reported in the
annual report the GMS receives. The discharged director shall only be personally liable for legal
actions taken on behalf of the company that are not reported in the annual report. In this case, the
GMS commits to relinquishing liability for the director’s good work ethics.

Note: this only applies to civil actions. The discharged director will still be personally liable for
criminal actions taken on behalf of the company. Such criminal actions will not be binding on
the company.

Legal consequences:
1. Director cannot be held liable for his actions if he meets Article 97, 100, 101, 66-69 of
Company Law and does not violate the company’s Articles of Associations
2. Director prosecuted for their actions and discharged by the GMS for harming the Company if
they do not complete Article 97, 100, 101, 66-69 of Company Law

Article 66-69
 The BOD delivers the BOC approved annual report within six months since the ending of the
financial year [66].
 The annual report must be signed by all members of the BOD and BOC; any member failing
to sign and for not disclosing their reasons are assumed to approve the annual report
[67(1)&(3)].
 The BOD must have the public accountant audit the annual report because [a] the company’s
business activities concerns public funding; [b] the company is a public company; [c] the
company is a persero; [d] the company has more than Rp. 50M assets; or [e] is legally
required to. The GMS will not ratify annual reports failing to comply with this obligation
[68(2)].
 The GMS approval of the annual report includes ratifying the financial report and the report
of the BOC supervisory duties [69(1)], pursuant to the Articles of Association.
 Any inaccuracy or incorrectness in the financial statement shall render the BOD jointly or
severally liable to the inflicted party [69(3)].
Article 97:
 BOD is responsible to manage the company in good faith and full responsibility [1-2].
 Each member of the BOD shall be fully and personally liable for losses incurred from any
negligent or faulty action taken [3]. The BOD members will be jointly and severally liable if
there are more than 2 members [4].
 The BOD member is not liable if [a] the loss is not from fault or negligence; [b] they have
performed their duties in good faith and in the company interest; [c] there is no conflict of
interest resulting from the loss; and [d] the member has taken precautionary measures to
prevent the loss.
 The GMS can file a claim to the District Court against the BOD member causing the
Company loss due to fault or negligence if it is approved by 1/10 of total shareholders [6].
 BOD and BOC reserve the right to file a claim on behalf of the Company.
Article 100:
 BOD is obliged to [a] establish and maintain [special] registry of shareholders, minutes of
GMS and minutes of BOD meeting; [b] prepare an annual report and financial documents;
[c] maintain lists, minutes, and documents of the company.
 All such documents must be kept in the domicile of the Company [2]
 The BOD must permit the shareholders to examine all such documents when requested [3]
 This shall not override the law on capital market [4]
Article 101:
 BOD members are obliged to submit a report of company shares and ownership of each
person, to be registered in the special register [1].
 Any BOD member failing to do so will be personally liable [2].
CHAPTER II - ESTABLISHMENT, ARTICLES OF ASSOCIATION (AA) AND AMENDMENTS TO AA,
REGISTER OF COS AND ANNOUNCEMENT
Establishment Article 7 Company Law

 Established by 2 or more people with a Notary Deed in Indonesian language

 Each founder must subscribe its shares at the time of establishment (unless dissolved)
 Company obtains status as a legal entity once registering the company to the Ministry of Law
and Human Rights, evinced with proof of registry

Exclusion of > 2 person requirement [Art. 7(7) Company Law]:

 Wholly Stated Owned Entity;
 BUMD & BUMN;
 Companies managing stock exchanges, clearing and guarantee institutions, storage and
settlement institutions, in accordance with the Law on Capital Market;
 Micro and Small Enterprises (MSEs).
Subsequent Article 7(5)&(6) Company Law
Actions to Take
if Company < 2 If the Company has less than 2 founders within 6 months since obtaining its legal status, then the
founders -> shareholders must:
 Transfer part of its shares to another person; or
 The company must issue new shares to another person.

Attachment of Personal Liability & Right to request CO Dissolution

If the Company’s condition exceeds the 6 month period, then:
 The shareholders are personally liable for any commitment or losses the Company
undertakes; and,
 The District Court can dissolve the Company based on the request of the relevant parties.
Deed of Article 8(1) Company Law
Establishment
The Deed of Establishment encompasses the Article of Association and other relevant remarks
relating to the establishment of the company. Relevant remarks include:
a. Full name, address, birthdate, occupation, citizenship. Or date of Ministerial Decree on the
enactment of the legal entity status;
b. Full name, birthdate and place, occupation, and citizenship of the appointed Board of
Directors and Board of Commissioners;
c. Name of the shareholder who has subscribed to the shares, details of the number of shares,
and the nominal value of the shares that have been issued and paid up.
Power of Article 8(3) Company Law
Attorney
The founder can be represented through proxy based on the Power of Attorney in drafting the
AoA.
Amendment to
Deed of
Establishments
Company Registry and Announcement
Formal Article 9(1) Company Law
Registration
Requirements To obtain Minister’s Decree on legalization of a CO’s entity status (Article 7.4), founders shall
(online) jointly submit an application to the Minister by means of information technology services (ITS)
of the administration of legal entities, completing the DATA FORM that must contain CO
information, at least:
a. name and place of domicile;
b. term of establishment;
c. purposes and objectives;
 d. amount of authorized capital, issued capital, and paid-up capital;
e. full address
Company Name Article 9(2) Company Law
Approval
Completion of data form must be preceded by submission of CO name.
Notarial Article 9(3) Company Law
Application
Application for legalization status and company name may be done by the founders through a
POA to a notary.
Procedure for Article 10(1) Company Law
Application to
Obtain The founders must submit the application for Minister’s Decree of the establishment of the
Minister’s company within 60 days since executing the DOE, attaching information on the supporting
Decree on Legal documents:
Status a. Name and place of domicile.
b. Term of the establishment.
c. Purposes and objectives.
d. Amount of authorized capital issued capital, and paid-up capital.
e. Full address.
Time Limit Article 10(1) Company Law
The Application must be made within 60 days since executing the DOE.

Article 10(10) Company Law

Sixty (60) day time limit is also applicable for resubmitting applications.
Legal Article 10(9) Company Law
consequence of
failure to file If application to obtain Minister’s Decree is not submitted within 60-day time limit, the AA will
application with become void as of lapse of time limit, and a CO that has not yet obtained legal entity status will
time period be dissolved by law and its resolution will be performed by the founders.
Electronic Article 10(3) Company Law
Statement of
“No Objection” The Minister will immediately state “no objection” on relevant application by electronic means,
to Application if the DATA FORM and supporting documents are deemed to conform to prevailing laws and
regulations (next step)
Rejection of Article 10(4) Company Law
Application
Alternative, if the DATA FORM and information about supporting documents are non-
conforming, the Minister will immediately convey its rejection and the reasons for it to the
applicant by electronic means.
Physical Article 10(5) Company Law
Submission of At latest 30 (thirty) days as of date of statement of no objection [10.3]), applicant must
Application physically submit application letter with supporting documents.
Documents,
Rejection if Article 10(7) Company Law
incomplete, If requirements on time limit and completeness of supporting documents are not met, the
Resubmission of Minister will notify applicant by electronic means, and “statement of no objection” [10.3] will
Application become void.

Article 10(8) Company Law

If “statement of no objection” becomes void, Applicant may resubmit the application anew to
obtain the Minister’s Decree.
Issuance of Article 10(6) Company Law
Legalization
Decree Within 14 (fourteen) days from physical documents, the Minister will issue a decree on the
 legalization of the CO as a legal entity, signed electronically.
Authentic DOE (AA + supporting documents)
Legal Acts and Article 12(1) Company Law
Consequence of Legal acts related to ownership and payment of shares by the founders before the CO is
Failure to State established must be stated in the DOE.
them in AA
Article 12(2) Company Law
In case legal acts are not stated in an authentic deed, the said deed must be attached to the DOE -
> addendum.

Article 12(3) Company Law

If stated in an authentic deed, the number, date, name and place of domicile of the notary who
drew up the authentic deed must be stated in the CO’s DOE.

Article 12(4) Company Law

In event foregoing formal requirements are not complied with, the legal acts will not create any
rights or obligations and will not bind the CO.
GMS Adoption Article 13(1) Company Law
of Pre-
Legalization Legal acts performed by founders in the interest of a CO that is yet to been established, will bind
Acts the CO after it becomes a legal entity.
Condition: first GMS expressly states that it accepts or takes over all rights and obligations
arising from the legal acts performed by the founders-to-be or their attorneys.

Article 13(5) Company Law

Approval of GMS [13.2] is not required if legal acts are performed or approved in writing by all
founders prior to the establishment of the CO.
First GMS and Article 13(3) Company Law
Unanimous
Approval The GMS resolutions are valid if the GMS is attended by shareholders representing all shares
with valid voting rights and the resolution is unanimously approved.
First GSM Article 13(2) Company Law

The first GMS [13.1] must be held at latest 60 (sixty) days after CO obtains legal entity status.
Personal Article 13(4) Company Law
liability of
Founders for If first GMS is not held timely or it is unable to adopt resolutions, each founder who performed
non-conduct of the respective legal act will be held personally liable
GSM or failure for any consequence that arises from it.
to adopt
resolution
Pre-Incorporation Acts and Liability
Solidary Article 14(1) Company Law
performance
and liability Legal act performed on behalf of a CO which has not obtained legal entity status,
may only be performed by all members of the BOD, jointly with all founders and BOC
members, and all of them will be jointly and severally held liable for that legal act.
Sole Article 14(2) Company Law
performance by
founder In event that a legal act [14.1] is performed by a founder on behalf of a CO that has not obtained
legal entity status, that legal act will become the liability of the relevant founder and will not
bind the CO.
Assumption of Article 14(3) Company Law
liability of CO The legal act [14.1] will by law become a liability of the CO after it becomes a legal entity.
Approval by Article 14(1) Company Law
GMS The legal act [14.1] only binds, and becomes the liability of CO after legal act is approved by all
shareholders in a GMS attended by all shareholders of the CO.

Article 14(1) Company Law

GMS [14.4] refers to first GMS which must be convened at latest 60 (sixty) days after the CO
obtains legal entity status -> Article 13(2) Company Law.
Articles of Association (AA)
Contents of AA Article 15 Company Law

(1) The AA as referred to in Article 8 paragraph (1) shall contain at least:

a. name and place of domicile;
b. object, purpose, and business activities;
c. validity period;
d. the amount of authorized capital, issued capital and paid-up capital;
e. the number of shares, the share classifications, if any, and the number of shares
for each classification, the rights attached to each share, and the nominal value of
each share;
f. the titles and numbers of members of the BOD and BOC;
g. the provision on the place to convene and the procedure for holding a GMS;
h. the procedure for the appointment, replacement and discharge of BOD & BOC members
i. the procedure for profit utilization and the distribution of dividends.
(2) the AA may contain other provisions that do not contravene this Law.
(3) The AA may not contain:
a. provision on receipt of fixed interest on shares; or
b. provision on the granting of personal benefits to the founders or other parties.
Company name Article 16(1) Company Law

A company must not use a name which:

a. has been lawfully used by another company or is similar to the name of another company
b. contravenes public order and/or decency;
c. is identical or similar to the name of a state agency, government agency, or international
agency, except with their approval;
d. does not conform to purposes and objectives and business activities of company, or only
designates the purposes and objectives of the company without having its own name;
e. consists of numbers, a set of figures, a letter or a set of letters that do not form any
words; or
f. means a company, a legal entity, or a civil enterprise (persekutuan perdata).
PT requirement Article 16(2) Company Law

A company’s name must be preceded by phrase “Perseroan Terbatas” or abbreviated “PT”.

Public Company Article 16(3) Company Law
Name
The abbreviation Tbk must be added at the end of a public company’s name -> PT XXX, Tbk
Legal Domicile Article 17(1) Company Law
as Head Office A company must have its place of domicile in area of city or regency within Indonesia, as
specified in its AA.

Article 17(2) Company Law

The company’s place of domicile must also be its head office.
Purpose and Article 18 Company Law
Objective
A CO must have purposes and objectives and business activities provided in AA in accordance
with prevailing laws and regulations.
CHAPTER III – CAPITAL AND SHARES
Authorized Article 31(1) Company Law
Capital and Authorized capital of a CO consists of whole nominal value of the shares.
Nominal Value
Article 31(2) Company Law
Rule on nominal value does not preclude the possibility of capital markets legislation providing
that authorized capital of a company consists of shares without a nominal value.
Minimum Article (1)-(2) Company Law
Authorized
Capital (Modal Each company must have their own capital, where the nominal is decided based on the Decree of
Dasar) the company founders -> Peraturan Pemerintah (Government Regulation).

Legal Implication: compared to previous Company law requiring that the authorized capital
should be min. 50jt, companies are now able to input whatever nominal they deem fit.

CHAPTER VIII - MERGERS, CONSOLIDATION, ACQUISITION, AND SEGREGATION (MCAS)

Merger Legal act by one or more COs of joining together with an existing CO resulting in the transfer of
their assets and liabilities to the latter as Absorbing CO, subsequently extinguishing their status
as a legal entity. (1.9)
Acquisition Legal act performed by two or more COs of joining together by means of establishing a new CO,
and transferring their assets and liabilities to the latter, resulting in the extinguishment of their
legal entity status. (1.10)
Merger and 122.1 A Merger and Consolidation shall result in the merging or consolidating
Consolidation – COs being wound-up by the operation of law.
Article 122
122.2 The winding up of the COs [122.1] shall take place without a prior liquidation process.

122.3 In the event that CO is wound-up [122.2] -

a. assets and liabilities of merging or consolidating CO shall be transferred by law to the
surviving CO or to the CO established as a result of the Consolidation;
b. shareholders of merging or consolidating CO, by law shall become shareholders of the
surviving CO or the CO established as a result of the Consolidation; and
c. merging or consolidating CO shall be wound-up by law as of the date the Merger or the
Consolidation comes into effect.

Merger Plan – 123.1 BODs of the merging CO and the surviving CO must draw up a plan for the Merger.
Article 123
123.2 Such merger plan must contain at least the following:
a. name and place of domicile of each CO planning to conduct Merger;
b. reasons for and an explanation from BOD of each CO planning to conduct Merger and
requirements for the Merger;
c. procedure for valuation and conversion of merging CO’s shares into the shares of the
surviving CO;
d. draft of the amendments to the AA of the surviving CO, if any;
e. financial report [66.2.a]. covering the last 3 financial years of each CO intending to conduct
the Merger;
f. plan for continuing or winding up business activities of the COs planning to conduct the
Merger;
g. pro forma balance sheet of the surviving CO following accounting principles generally
accepted in Indonesia;
h. settlement procedures for status, rights and obligations of members of BOD, BOC and
employees of each of the COs planning to conduct the Merger;
i. procedure for settlement of rights and obligations of the merging CO in relation to third
parties;
j. procedure for settlement of rights of shareholders who do not approve the Merger of the COs;
k. names of BOD and BOC members, and their salaries, honoraria, and allowances in the
surviving CO;
1. estimated time period for conducting the Merger;
m. report on the condition, development, and results achieved by each CO that plans to conduct
the Merger;
n. main activities of each CO that plans to conduct the Merger and changes made during the
current financial year;
o. details of any problems which have arisen during the current financial year
affecting the activities of each CO conducting the Merger;

123.3 After obtaining approval from the BOC of each CO, the Merger plan [123,2] must be
submitted to the respective GMS for approval.

123.4 In addition, certain COs planning to conduct a Merger must obtain prior approval from the
relevant authorities in accordance with the prevailing laws and regulations.

123.5 Provisions in 123.1-4 also apply to Publicly Owned COs unless otherwise stipulated in the
capital markets legislation.
Consolidation Article 123 shall apply mutatis mutandis to COs planning to consolidate.
Plan – Article
124
Acquisition – 125.1 Acquisition shall be carried out by way of acquiring the CO’s issued and/or to
Article 125 be issued shares, through the BOD of the CO or directly from the shareholders.

125.2 Acquisition may be carried out by a legal entity or by an individual.

125.3 Acquisition means an acquisition of shares that results in the transfer of control over the
CO.

125.4 If the acquisition is conducted by a legal entity in the form of a LLC, the BOD must have
as a basis a GMS resolution which meets quorum and provisions on requirements for adopting
resolutions in the GMS [89], before performing the legal act of acquisition.

125.5 If Acquisition is conducted through the BOD, the acquiring party must convey its intention
to conduct the Acquisition to the BOD of the acquired CO.
Acquisition Plan 125.6 With approvals from the respective BOC, BOD of the acquired CO and the acquiring CO
must draw up an Acquisition Plan containing at least:
a. names and places of domicile of the acquiring CO and acquired CO;
b. reasons for and an explanation from BOD of acquiring CO and BOD of acquired CO;
c. financial report [66.2.a] for the last financial year of acquiring CO and acquired CO;
d. procedure for valuation and conversion of acquired CO’s shares against exchanging shares, if
the payment of the Acquisition is made in the form of shares;
e. number of shares acquired;
f. availability of funds;
g. pro forma consolidated balance sheet of the acquiring CO after Acquisition, prepared pursuant
to the accounting standards generally accepted in Indonesia;
h. settlement procedure for rights of shareholders who do not approve the Acquisition;
i. settlement of status, rights and obligations of BOD members, BOC and employees of acquired
CO;
j. estimated time period needed for carrying out the Acquisition, including term of power of
attorney to transfer shares from the shareholders to BOD;
k. draft amendments to AA due to the Acquisition, if any.

125.7 If shares are acquired directly from shareholders, no need for acquisition plan [125.6] and
BOD approval [125.5].

125.8 Direct acquisition of shares [125.7] must be subject to provisions of AA of acquired CO

with regard to transfer of rights over shares and agreements entered into by the CO with other
parties.
MCAS 126.1 Legal act of MCAS must be made with due consideration of the best interests of:
Considerations a. CO, minority shareholders, employees of CO;
– Article 126 b. creditors and other business partners of CO; and
c. public and fair business competition.

126.2 Shareholders who do not approve the GMS resolution in respect of a MCAS may only
exercise their rights as provided in Article 62.

126.3 Exercise of objection rights [126.2] shall not delay the MCAS process.

Formal 127.1 GMS resolutions on MCAS shall be valid if adopted in accordance with Articles 87.1 and
Requisites of 89.
MCAS – Article
127 127.2 BOD of a CO planning to conduct a MCAS must publish their brief plan in at least 1 (one)
Newspaper and announce it in writing to employees of the CO at least 30 (thirty) days prior to
the summons to the GMS.

127.3 Foregoing announcement must also contain a notice that interested parties may obtain
MCAS Plan from the CO’s office from the date of the announcement until the date the GMS is
held.

127.4 Creditors may submit an objection to the CO within at the latest 14 days after the
announcement of the MCAS plan.

127.5 If creditors do not file any objection within the 14-day period, they will be deemed to have
approved the MCAS.

127.6 If creditors’ objection cannot be satisfied by the BOD by date of the GMS, the objection
must be conveyed to the GMS for settlement.

127.7 If a settlement [127.6] cannot be achieved, the MCAS cannot proceed.

 127.8 Provisions in 127.2, (4), (5), (6) and (7) apply mutatis mutandis to the announcement of
Acquisition of shares which is conducted directly from shareholders of the CO [125].
MCAS Deed – 128.1 A MCAS plan which has been approved by the GMS must be drawn up in a Deed of
Article 128 MCAS, before a notary in Bahasa Indonesia.

128.2 The deed of acquisition of shares acquired directly from shareholders must be restated in a
notarial deed in Bahasa Indonesia.

128.3 The deed of Consolidation [128.1] shall be the basis for drawing up the DOE of the CO
resulting from the Consolidation.

Merger Deed as 129.1 A copy of the CO’s deed of merger shall be attached to:
Attachment to a. request for approval from Minister [21.1]; or
Request for b. notification letter addressed to Minister with regard to AA amendment [21.3]
Approval –
Article 129 129.2 If a Merger of COs is not followed by an AA amendment, a copy of the deed of Merger
must be provided to the Minister to be recorded in the register of COs.

Consolidation A copy of the deed of Consolidation must be attached to the application for Ministerial
Deed to form Decree on legalization of legal entity status of the CO resulting from the Consolidation. [7.4]
new company –
Article 130
Attachment of 131.1 A copy of deed of Acquisition must be attached to notification provided to the Minister
Deed of regarding AA amendments. [21.3]
Acquisition to
Notification of 131.2 If Acquisition of shares is carried out directly from shareholders, a copy of the
AA deed of transfer of rights over shares must be attached to notification provided to the
Amendment- Minister on the amendments to the composition of shareholders.
Article 131
Applicability of Articles 29 and 30 also apply to MCAS.
Article 29 and
30 to MCAS –
Article 132
Publication of 133.1 BOD of surviving CO or BOD of CO resulting from Consolidation must publish result of
Merger or Merger or Consolidation in 1 (one) or more Newspaper, within at the latest in 30 (thirty) days as
Consolation of the effective date of the Merger or Consolidation.
Result– Article
133 133.2 Such publication shall also apply to the BOD of the CO the shares of which are acquired.
Further MCAS Further provisions on MCAS will be regulated by Government Regulations.
Regulations –
Article 134
Segregation – 135.1 A Segregation may be carried out by way of:
Article 135 a. Pure Segregation; or
b. Non-pure Segregation (spinoff).

135.2 Pure Segregation results in the transfer by law of all the CO’s assets and liabilities to 2
(two) or more other COs, receiving the transfer and the segregated CO is dissolved by the
operation of law.

135.3 Non-pure Segregation (spinoff) results in the transfer by law of some part of the CO’s
assets and liabilities to 1 (one) or more other COs receiving the transfer and the segregated CO
continues in existence.
 136. Further provisions on Segregation will be regulated by Government Regulations.

Applicability of The provisions as set out in Chapter VIII will also apply to Publicly Owned COs, unless
Chapter VIII to stipulated otherwise by prevailing capital markets legislation.
Public COs –
Article 137
CHAPTER XI – COSTS
Costs as a legal Article 153 Company Law
entity
Costs for the company to be a legal entity shall be paid in accordance with relevant rules on non-
taxable state revenues (PNBP)
CHAPTER X – Company MSMEs
MSMEs Article 153A Company Law

Paragraph (1) - Companies meeting MSME requirements can be founded by 1 person

Paragraph (2) - Its establishment must be done based on a Establishment Statement Letter done
in Indonesian language
Statement Letter Article 153B Company Law; Article 7, Government Regulation No. 8 of 2021 on the
of Authorized Capital and Registration for Establishment, Enactment, and the Dissolution of
Establishment Companies meeting the MSME Requirement (GR8/2021)

The statement letter must be registered electronic to the MOLHR with the application form, and
at minimum must contain the following contents:
 Name, legal domicile, and address of company [7(2)(a)&(f)]
 Validity of company enactment [7(2)(b)]
 Object and purpose
 Business activities
 Authorized capital, issued and paid up capital [7(2)(d)]
 Value and number of shares [7(2)(e)]
 Data on the founders and shareholders [7(2)(g)]
 Other remarks relating to the establishment of the company
Amendments to Article 153C Company Law
the Statement
Letter Any amendments made to the Statement Letter of Establishment must be determined by the
GMS and informed electronically to the MOLHR.
BOD MSME Article 153D Company Law
authority The BOD is responsible to run the company’s day-to-day operations in accordance with the
company object and purpose. The BOD must make decisions and policies deemed appropriate
within the boundaries of the Company Law, and/or the Statement Letter.

Article 153F Company Law

The BOD must make its financial reports -> indicating their good corporate governance
(Government Regulation)
Shareholders of Article 153E(1) Company Law
MSMEs
The company MSME shareholder is the founder.
Limited number Article 153E(2) Company Law
of MSMEs per
year The founder of the company can only establish 1 MSME within 1 year.
Authorized Article 4, GR8/2021
Capital/ Modal
Dasar  Authorized capital must be issued and fully paid up to 25%, evinced by valid proof of
 deposit [4(1)]
 The valid proof of deposit must be electronically submitted to the MOLHR within 60 days
since (i) the deed of establishment; or (ii) filing the statement for Establishment for
Individual Companies [4(2)]
Obligation for Article 10(1) GR8/2021
Financial Report
The company is required to make a financial report to be submitted to the MOLHR within 6
months since the last operating accounting period [10(2)]. The submission must entail [10(3)]:
 statement of Financial position;
 Income statement; and
 Notes of current year’s financial statements;.
Dissolution Article 153G Company Law

The GMS must approve of the Company MSME dissolution reflected in the Letter of
Dissolution and to electronically inform the MOLHR. There are 6 reasons why a company
MSME dissolves:
a. Based on GMS Decree;
b. Ending of the validity period stated in Statement Letter
c. Court Decree;
d. Insolvent company is unable to pay their insolvency fees;
e. Part of insolvent company assets in accordance with Bankruptcy Laws;
f. Revoked business licenses thus requiring the Company to undergo liquidation.
Consequence of Article 153H Company Law
no longer
meeting MSME The MSME Company must revert its status back as a mere company if they no longer meet the
criteria MSME criteria.
Waiver of Article 153I Company Law
MSME
Establishment Companies MSMEs are granted a fee waiver related to the establishment of a legal entity, in
Fee accordance with the relevant rules on non-taxable state revenues (PNBP).
Release of Article 153J Company Law
Personal
Liability for Shareholders are not personally liable for legal commitments made on behalf of the company,
Shareholders nor for the company losses exceeding personal shares owned.

Exception of released personal liability [Article 153J(2) Company Law]:

a. Company requirements as a legal status are (have not) been met;
b. Relevant shareholder, indirectly or directly, abused the company for personal interest;
c. The shareholder is involved in a tortious act by the company; or
d. The shareholder, directly or indirectly, illegally used company assets causing such company
assets to be insufficient to cover company debts.
CHAPTER XI – MISCELLANEOUS PROVISIONS
Relevant Article 154 Company law
prevailing
regulations for For a Public Company, the provisions of this Law shall apply if it is not regulated otherwise in
Public Capital Market laws and regulations. The laws and regulations in the capital market sector which
Companies exclude the provisions of this Law may not conflict with the legal principles of the Company in
this Law.