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Types of Business Entities

Aside of the business entity owned by the government, In general, business entity in Indonesia consist of the following types:

Civil Partnership

Civil partnership is a company consist of 2 or more legal subject, there are 3 forms of partnership:

  1. Firms (Firma), regulated under Commercial Code, Firm is a partnership to carry out business by two or more people with joint name. Owner of the firm consist of several persons who engage in partnership and each partners shall set aside their personal assets as mentioned in the company’s article of association.

    Characteristic of a firms:

    • all partners are active in managing the company

    • unlimited responsibilities

    • firms will cease from existence if one of the member resign or deceased.

  2. Limited Partnership (Commandiatire Vennotschap or CV) is a partnership established by more than 2 partners. Limited Partnership recognize two types of partners:

    • Active partner is the partner who in charge of the running of the company and fully responsible of the company’s debt

    • Passive partner, is the partner who only invest funds to the active partner and not involve in the business of the company. Passive partner is responsible to the risks to the extent of the capital invested.

Profit of the company shall be divided to the members accordingly to the proportion as agreed in the article of association.

Limited Liability Company

A Limited Liability Company (Perseroan Terbatas-PT) is a legal entity which is an association of capital, established on the basis of agreement, conduct business activity on the basic capital which is wholly divided into shares and comply with the requirements as set by the company laws and its implementing regulation.

Limited Liability Company is the most commonly used type of business applicable in Indonesia.

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