The Possibility of One Shareholders on Job Creation Law

The rules regarding limited liability companies in Indonesia continue to evolve and undergo several changes and are currently regulated in Article 1 Number 1 of Law Number 40 of 2007 on Limited Liability Companies (“Limited Company Law”) as amended by Law Number 11 of 2020 on Job Creation (“Job Creation Law”). The Job Creation Law explains that a limited liability company is a legal entity which is a capital alliance, established based on an agreement, conducting business activities with authorized capital which is entirely divided into shares or individual legal entity that meet the criteria for Micro and Small Businesses as stipulated in the laws and regulations on Micro and Small Business.

Furthermore, the existence of the Job Creation Law gave birth to a new form of limited liability company, which is an individual company, that makes it easier for Micro and Small Businesses to obtain their legal entity status. Individual companies are also known in the Common Law legal system, the type of single shareholder business organization or sole shareholder, where there is only one party acting as a shareholder.

Individual companies regulated in the Job Creation Law have several differences from the limited liability companies known in the Limited Liability Company Law. Aside from the amendments regarding Article 1 Number 1 of the Limited Liability Company Law regarding the definition of a Limited Liability Company, there are also differences among others regarding the procedure for establishing a limited liability company, as regulated in Article 7 of the Limited Liability Company Law which originally had to be established by 2 (two) or more persons with a notarial deed in Indonesian, does not apply to individual companies. The establishment of an individual company is based on Article 153A Number 3 of the Job Creation Law is because in this latest regulation establishing a limited liability company can be carried out by 1 (one) person and based on a statement of establishment made in Indonesian, so it does not require a notarial deed.

Moreover, regarding the authorized capital of an individual company, the minimum capital deposited into the company is not regulated. Regarding the authorized capital of the company, it is the amount of capital in the deed of establishment up to the maximum amount of capital if all shares are issued. Also, in a limited liability company, there are also issued capital and paid-up capital. Issued capital is the amount of capital that the founders of the company are able to include, paid-up capital is capital that is invested in the company. The owners of capital as shareholders have absolute control over the management of their funds by the Board of Directors, which is done through the General Meeting of Shareholders (GMS). The command that these shareholders have over the management of the company can drag the shareholders into a liability in the event of a limited liability company loss.

In connection with the previous, if the individual company suffers a loss, the shareholders are liable to the extent of the shares included in the personal company, unless the shareholders do the things as regulated in Article 153J Paragraph (2) of the Job Creation Law, in respect of the following: In this case, the individual shareholders of the company can be burdened with personal liability up to the shareholder’s assets.

The existence of the job creation law is based on the spirit of the government to provide ease of doing business in Indonesia. This should also be felt by micro and small businesses, one of which is the birth of an individual company. Individual companies have a strategic position in encouraging economic development in Indonesia. Ease of business actors to start a business to develop and compete in the global industry, with the existence of Individual Company that has differences from a common limited liability company known in the Limited Liability Company Law.

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