Government Drafting RUU on Business Entities to Revise the Establishment of Limited Liability Companies

The Government is currently drafting a Bill on Business Entities (Rancangan Undang-Undang– “ RUU ”) on Business Entities. Head of the Civil Legal Services Sub-Directorate at the Directorate General of General Legal Administration (Administrasi Hukum Umum– “ AHU ”) of the Ministry of Law, Endah Widyaningsih, explained that the formulation of this regulation aims to modernize the business entities arrangements in the form of limited liability companies (Perseroan Terbatas– “ PT ”) to ensure its relevance to global economic challenges.

“There is indeed such RUU —it's called the RUU on Business Entities. It is currently at the Academic Paper (Naskah Akademik– “ NA ”) stage and is about to proceed to discussions by the Inter-Ministerial Committee (Panitia antar Kementrian/PAK),” Endah told Hukumonline.

In general, RUU on Business Entities represents a comprehensive update to Law No. 40 of 2007 on Limited Liability Companies (“ Law 40/2007 ”), which serves as the primary legal foundation for the establishment process, legal status, corporate organs, governance, shareholder rights and obligations, as well as the dissolution of PT in Indonesia. With this revision, it is expected that the PT, as the main form of business entity, will become easier to establish and more attractive to both domestic and foreign investors.

“Whether it will be this year or next year, the NA has already been completed at the National Legal Development Agency (Badan Pembinaan Hukum Nasional/BPHN),” she concluded.