CORPORATE LAW

Take a deep dive into Indonesia's

All information is based from December 16, 2025

Corporate law in Indonesia..

men and women having a meeting
men and women having a meeting

governs the legal formation, operation, and dissolution of various business entities, with a strong focus on the Limited Liability Company (Perseroan Terbatas or PT). It is the body of legal rules and regulations that govern a company, such as its incorporation process, legal relationship between founders/shareholders and third parties, as well as other laws that hold its legal basis from Law No. 40 of 2007 concerning Limited Liability Companies.

  • Dutch Colonial Era (1602-1942)

The Dutch East India Company (VOC), founded in 1602 represented one of the earliest forms of corporate entities influenced by the Dutch commercial legal frameworks, especially the Wetboek van Koophandel (WvK).

  • Post-Independence

After gaining independence, Indonesia adopted the WvK after independence until a modernized corporate law was introduced. Rapid industrialization in the late 20th century pushed Indonesia for modernization in corporate rules.

  • Modern Era

UUPT No. 40/2007 is now the core of Indonesian corporate law, formalizing rules for limited liability companies, including shareholder protections, and transparency.

  1. Legality Principle: No one can be punished unless their act is clearly criminalized by law beforehand

  2. Territorial Principle: Criminal law is based on state sovereignty, where they are obliged to guarantee legal order and have the right to impose penalties on anyone who commits a crime within its territory.

    1. Article 4 of Law 1/2023: Criminal provisions in the law apply to anyone who commits:

      1. Criminal acts in Indonesia

      2. Criminal acts on Indonesian ships or aircraft

      3. Criminal acts in the field of information technology that occur in Indonesia

  3. Nationality Principle: Indonesian citizens can be prosecuted for certain crimes committed abroad.

  4. Accountability Principle: A person can only be punished if the crime was done intentionally or negligently and they were capable of taking responsibility.

  5. Protection Principle/Passive National: Indonesia can prosecute foreign nationals who commit crimes abroad, if the victim is an Indonesian citizen or if the crime harms Indonesian national interests.

woman in gold dress holding sword figurine
woman in gold dress holding sword figurine

background/historical overview

key principles

brown concrete pillars indoors
brown concrete pillars indoors

Corporate law might sound like it’s only for CEOs or giant companies, but in reality, it affects almost every part of a young person’s life today, from starting small businesses, to joining their first jobs.

relevance to the youth

main ways Indonesian corporate law connects to modern youth:

1. Entrepreneurship and Start-ups

Many teens start small businesses, and corporate law teaches how to register a business, digital licensing, partnership agreements, profit sharing, online selling regulations and more legal protections if something goes wrong.

pile of assorted-title books
pile of assorted-title books

2. Career and Professional Development

When young individuals enter internships or part time jobs, corporate law helps them understand employment contracts, workplace responsibilities, and their rights as young workers. It also teaches them how companies must legally operate, which helps prevent unfair treatment or exploitation in the workplace. Under Indonesia’s corporate regulations, companies must clearly outline job descriptions, working hours, compensation, confidentiality rules, and conditions for probation or termination. Many youths often agree to unpaid overtime because they don’t understand what a lawful contract should contain. By understanding these, we can protect ourselves from unfair or unsafe work conditions.

three men sitting while using laptops and watching man beside whiteboard
three men sitting while using laptops and watching man beside whiteboard

3. Financial Literacy

With investment apps becoming popular, more youth purchase stocks, crypto, or digital assets online. Law No. 8 of 1995 on the Capital Market explains the rights of shareholders, such as receiving dividends, voting in company decisions, and being protected against corporate fraud. Understanding these basics help young investors avoid online investment scams, illegal trading platforms, and fake business opportunities. By learning about financial statements, risk, and corporate governance, we can stay informed and safe.

1 us dollar bill
1 us dollar bill

Corporate Law Cases in Indonesia

This section presents a list of corporate law case examples involving youth in Indonesia to illustrate how legal provisions are applied in practice.

GoTo IPO and Shareholder Protection

When PT GoTo Gojek Tokopedia Tbk went public, it became subject to Law No. 40 of 2007 on Limited Liability Companies and capital market regulations enforced by the Financial Services Authority (OJK). Corporate law requires the company to provide transparent and accurate disclosures, apply good corporate governance, and ensure equal treatment of shareholders, including minority investors. Issues surrounding valuation, share dilution, and governance after the IPO highlight how corporate law functions to safeguard investor rights and maintain trust in Indonesia’s capital market.

people sitting on chair
people sitting on chair

Small Enterprise Teen Founder Faces Partnership Dispute

A young entrepreneur established a small business with partners based largely on trust rather than clear legal agreements. As the business grew, disputes emerged over profit sharing, decision-making authority, and ownership percentages, with the founder feeling sidelined despite being the original creator of the business. Because the partnership structure and roles were not clearly documented in a formal deed or articles of association, the conflict escalated into a legal dispute. This case reflects a common corporate law issue in Indonesia’s UMKM sector, where founders fail to formalize business arrangements early on.

Further Readings

Works Cited