A partnership is one of the most common business entities in Indonesia due to its relatively simple and flexible establishment process. However, it is important to understand the legal foundation governing partnerships to ensure the business operates lawfully. According to the KUHD, the Civil Code (KUHPerdata), and the latest regulations of the Ministry of Law and Human Rights, a partnership must be established through a notarial deed and officially registered.
Main Legal Foundations of Partnerships
There are three main legal pillars regulating partnerships:
Commercial Code (KUHD)
Articles 16–35 of the KUHD serve as the main legal framework. Article 16 defines a partnership as an association conducting business activities under a common name. Article 18 emphasizes joint and several liability among partners, while Articles 22 and 23 regulate the requirement for a notarial deed and registration.
Civil Code (KUHPerdata)
Articles 1618–1652 of the Civil Code regulate partnerships in general. A partnership is considered a specific form of civil partnership, characterized by the use of a common name and unlimited liability of partners.
Minister of Law and Human Rights Regulation No. 17 of 2018
This regulation changed the registration system from the District Court to the Online Business Entity Administration System (SABU). This step improved efficiency and transparency in the establishment of partnerships.
Read also: Advantages and Disadvantages of Partnerships in Indonesia
Characteristics of Partnerships Under the Law
Partnerships have three main characteristics that distinguish them from other business entities:
- Operate a business continuously for profit.
- Use a common name as their legal identity.
- Each partner bears full and unlimited liability for all obligations or debts of the partnership.
Read also: Characteristics of Partnerships in Indonesia
Legal Entity Status of Partnerships
Although partnerships have an organizational structure, they are not legal entities. This means that partnership assets are not separated from the personal assets of the partners. As a result, partners can be personally sued for the obligations of the partnership.
Read also: Types of Partnerships in Indonesia: Complete Guide
Practical Implications
- A partnership must be established through a notarial deed.
- Registration must be done online through the Ministry of Law and Human Rights system.
- Partners bear full and joint liability for debts and obligations.
- A partnership can sue and be sued as an entity.
With this legal framework, establishing a partnership in Indonesia has certainty and a clear foundation. However, prospective founders must also understand the risks of personal liability.
Practical Solutions for Establishing a Partnership
Establishing a partnership requires legal knowledge, a notarial deed, and official registration. This process can be complicated for new entrepreneurs. To simplify the process, you can use Partnership Establishment Services from vOffice. In addition to legal establishment, vOffice also provides a bonus virtual office, ensuring your partnership is ready to operate professionally with a prestigious business address.
With vOffice’s support, you not only gain secure legal status but also office facilities that support your business growth.
Contact us now for a FREE consultation!
FAQ about the Legal Basis of Partnerships
Is a partnership a legal entity?
No, a partnership does not have the status of a legal entity. Therefore, liability for the company’s obligations is directly attached to the partners personally.
What is the main legal basis of partnerships in Indonesia?
The legal foundations of partnerships are regulated under the KUHD (Articles 16–35), the Civil Code (Articles 1618–1652), and Minister of Law and Human Rights Regulation No. 17 of 2018.
What is the procedure for registering a partnership?
Through a notary, then registered online in the Ministry of Law and Human Rights SABU system.
Who is responsible for partnership debts?
All partners are jointly and fully liable.
