Perseroan Terbatas (PT) is the most commonly chosen business form by entrepreneurs in Indonesia. This type of company is favored by business owners because it offers the benefit of limiting the shareholders’ liabilities to the amount of their shares.
However, to operate smoothly and in compliance with applicable regulations, the establishment and operations of PTs must follow the Limited Liability Company Law established by the government.
In this article, we will provide a comprehensive review of Law Number 40 of 2007 on Limited Liability Companies (UU PT), along with other supporting laws that are important for entrepreneurs who wish to establish or run a PT in Indonesia.
Also Read: How to Check the Legality of PT and CV Companies Online
Law Number 40 of 2007 on Limited Liability Companies
Law Number 40 of 2007 on Limited Liability Companies (UU PT) is the legal basis that regulates various aspects related to the formation and management of limited liability companies in Indonesia. This law covers a wide range of topics, from the purpose and objectives of establishing a PT, the responsibilities of shareholders, to provisions concerning the management and dissolution of PTs.
Key Articles in the UU PT:
Here are some key articles in Law Number 40 of 2007 on Limited Liability Companies:
- Article 2: A company must have goals and business activities that do not conflict with statutory regulations and ethics. This is important to ensure that the PT operates legally and ethically.
- Article 3: Regulates the limited liability of shareholders, meaning shareholders are not personally liable for the company’s debts unless there is illegal action.
- Article 4: The company must comply with this law, its articles of association, and other applicable legal regulations.
By understanding the contents of this law, entrepreneurs can establish and manage PTs more securely and avoid potential legal issues.
Read the official text of Law Number 40 of 2007 on Limited Liability Companies (UU PT)
Also Read: Deed of Establishment for PT: Definition, Costs, and Process
Relevant Supporting Laws for Limited Liability Companies
In addition to Law Number 40 of 2007, there are several other laws that are also crucial to understand in the context of establishing and managing a limited liability company. Below are some supporting laws that are directly related to PTs:
Commercial Code (KUHD)
The Commercial Code (KUHD) regulates various matters related to trade, including limited liability companies. Articles 36 and 37 govern the requirements for establishing a PT and the importance of obtaining government approval. A limited liability company must have a name that reflects its business objectives and must obtain valid permission before it can operate.
Read the official text of the KUHD
Also Read: Cost of Establishing a PT: A Guide for Entrepreneurs and Prospective Business Owners
Capital Market Law (Law No. 8 of 1995)
Law No. 8 of 1995 on the Capital Market regulates capital market activities in Indonesia, which is relevant for PTs involved in capital market transactions. Article 5 mentions the authority of the Capital Market Supervisory Agency (Bapepam) in granting licenses and overseeing companies listed on the stock exchange, including PTs whose shares are traded.
Read the official text of Law No. 8 of 1995
Also Read: Requirements for Establishing a PT You Must Know
Law Number 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition
Law No. 5 of 1999 aims to create healthy business competition in Indonesia. For PTs that operate in the country, it is important to comply with this law to avoid involvement in monopolistic practices or unfair competition. This law ensures that all business players have an equal opportunity in the market.
Read the official text of Law Number 5 of 1999
Also Read: Difference Between Foundation and PT: Business Forms in Indonesia
Law Number 13 of 2003 on Manpower
Law Number 13 of 2003 on Manpower regulates the rights and obligations of employers and employees in Indonesia. As an employer, a limited liability company must comply with provisions regarding fair treatment of workers, job opportunities, and appropriate wages. This law is essential to ensure that labor relations within a PT are fair and non-discriminatory.
Read the official text of Law Number 13 of 2003
Also Read: How to Establish a PT: A Step-by-Step Guide
Law Number 25 of 2007 on Investment
Law Number 25 of 2007 on Investment regulates various types of investment in Indonesia, both domestic and foreign. For PTs receiving foreign investment, this law mandates that foreign capital must be invested through a PT registered in Indonesia. Article 5 stipulates that foreign investment must be in the form of a limited liability company that is recognized as a legal entity in Indonesia.
Read the official text of Law Number 25 of 2007
Also Read: Difference Between Sole Proprietorship PT and Regular PT
The Limited Liability Company Law (UU PT) is the main foundation governing the establishment and operations of limited liability companies in Indonesia. Additionally, there are several supporting laws that regulate other aspects such as the capital market, labor, fair competition, and investment. A thorough understanding of these laws will help you run your PT smoothly, legally, and sustainably.
If you plan to establish a limited liability company, make sure to comply with all provisions in the UU PT and related laws to build a successful and sustainable business.
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