A firma is only recognized as a form of business entity, specifically a special civil partnership, without separate legal personality from its partners.
Read the details in this article.
Legal Status of a Firma in Indonesia
According to the Indonesian Commercial Code (KUHD), a firma is a partnership established to conduct business under a common name. However, a firma does not have independent legal standing like a Limited Liability Company (PT). The legal subjects remain the partners who establish and operate the business.
Legal Basis of a Firma
Some regulations governing a firma include:
- KUHD Articles 16–35
- Indonesian Civil Code Articles 1618–1652
- Ministry of Law and Human Rights Regulation No. 17 of 2018 on the Registration of Limited Partnerships (CV), Firmas, and Civil Partnerships
These regulations confirm that a firma is a non-legal entity business form.
Read also: Legal Basis of a Firma in Indonesia: A Complete Guide
Characteristics of a Firma
- No separation of assets – The assets of the firma are merged with the partners’ personal assets.
- Unlimited liability – Partners are fully liable, even with their personal assets, if the firma cannot meet its obligations.
- Partners as legal subjects – A firma cannot act independently; legally, only its partners are recognized.
Read also: Characteristics of a Firma in Indonesia
Differences Between a Firma and a Legal Entity (PT)
| Aspect | Firma | PT (Legal Entity) |
|---|---|---|
| Legal status | Not a legal entity | Full legal entity |
| Assets | Merged with partners | Separate from founders |
| Liability | Personal and unlimited | Limited to capital |
| Establishment | Notarial deed + registration | Notarial deed + approval from the Ministry of Law and Human Rights |
Legal Consequences for a Firma
Since it is not a legal entity, a firma has several consequences:
- Cannot sue or be sued in the name of the firma.
- All partners bear joint and several liability.
- High risk of personal assets being seized if the firma goes bankrupt.
- No formal supervisory structure like a PT.
A firma is a legitimate business entity in Indonesia but does not have legal entity status. It differs from PTs, cooperatives, or foundations, which possess independent legal personality. As a result, partners are fully liable for all obligations of the firma.
Read also: How to Establish a Firma in Indonesia
Practical Solutions for Establishing a Firma
Although a firma is not a legal entity, many entrepreneurs choose this form because the process is relatively simple. If you want to establish a firma legally, efficiently, and with access to modern facilities, vOffice offers firma establishment services complete with a bonus virtual office at strategic locations. This solution helps your business appear professional from the start.
Contact us now for a FREE consultation!
FAQ about Firmas
Is a firma considered a legal entity in Indonesia?
No, a firma is not a legal entity. It is only a special form of civil partnership.
What are the main risks of establishing a firma?
Partners have personal and unlimited liability, meaning personal assets can be seized if the firma goes bankrupt.
What is the legal basis for establishing a firma?
The KUHD, Indonesian Civil Code, and Ministry of Law and Human Rights Regulation No. 17 of 2018.
Can a firma own assets independently?
No, because the assets of the firma are merged with the partners’ personal assets.
How can I establish a formal firma?
By preparing a notarial deed and registering it according to regulations. You can use professional services such as vOffice for convenience.
