CORPORATE CRIMINAL LIABILITY IN INDONESIA

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Even though corporations are classified as legal subjects in Indonesia, and can be held liable for criminal offenses in several prevailing laws in Indonesia, it is very rare for a corporation to be charged with criminal offense, instead passing the liability to the Director or the member of Board of Directors. With the new Supreme Court regulation concerning Corporate Criminal Liability, this may change.


Law No. 40 year 2007 concerning Limited Liability Company (“Company Law”) does not regulate specifically on liability for crimes conducted by corporation as a legal subject, however criminal liability for corporation is recognized in several prevailing laws in Indonesia, such as Capital Market Law, Consumer Protection Law, Electricity Law, Environmental Law, as well as Manpower Law.

Although there are several prevailing laws in Indonesia which recognize the criminal liability for corporations and placed corporation as legal subject for criminal offences that could be held accountable for criminal acts, there are very limited cases with corporations as its subject of criminal offences in criminal proceedings. One of the main factors is because the procedures on investigating corporations remain unclear.

However, on 29 December 2016, the Supreme Court of Indonesia (Mahkamah Agung) published Supreme Court Regulation No. 13 of 2016 concerning Procedures on Handling Corporate Crime Cases (“Regulation 13/2016”). This regulation is expected to be guidance for law enforcement agencies on handling criminal offences done by Limited Liability Companies (Perseroan Terbatas or “PT”).

DEFINITION OF CORPORATE CRIMINAL OFFENSE
Under Article 3 of Regulation 13/2016, corporate criminal offense is defined as a criminal act done by any person who, based on an employment relationship or other relationship, acts whether alone or with others, for and on behalf of the corporation within or outside the corporation business environment.

WHEN WILL CORPORATIONS BE HELD LIABLE FOR A CRIMINAL OFFENSE?
Based on Article 4 paragraph (2) of Regulation 13/2016, there are 3 (three) requirements to held corporation liable for a criminal offense:

  1. Corporation might receive profit or benefit from the criminal act, or the criminal act was done on behalf of the corporation;
  2. Corporation let the criminal act to be performed; or
  3. Corporation failed to take necessary steps to prevent the criminal act, to prevent a greater impact, and failed to ensure compliance with applicable laws in order to prevent criminal act.
  4. Investigation over suspected corporation will be represented by a member of Board of Directors. Summon letters or subpoenas will be addressed and delivered to the address of the corporation’s seat or where the corporation operates.

WHAT IS THE PUNISHMENT FOR CORPORATIONS FOUND GUILTY OF CRIMINAL OFFENSE?
The punishment could be basic and additional punishment. The basic punishment imposed on liable corporations is to fine the corporation. Thus, corporation is not sentenced to imprisonment or light imprisonment. In case of additional punishment, it can be by seizure the evidence or corporation’s assets, by compensation, or restitution.

The fines must be paid by corporations at the latest 1 (one) month after the court decision to be in effect and it could be extended until the next month. If the liable corporation failed to pay the fine, prosecutor will confiscate and auctioned corporation’s assets to pay the fine.

Based on this regulation, criminal liability also can be held for group of corporations (corporate group criminal liability). They can be accountable for the crime if it is committed with parent or subsidiary or other related corporations, depending on their roles within the crime. In addition, it also regulates corporation liability in cases of mergers, consolidations, spin-offs and liquidations of corporations.

HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.

SMART Consulting is an Indonesian Corporate Legal Services firm.SMART has assisted Clients in dealing with matters related to Manpower Law, such as drafting, reviewing and registering the Employee Toolkit, including Employment Agreement, Collective Labor Agreement, and Company Regulations. We also provide advisory services regarding Employment matters, as well as assistance in conducting termination of employment and manpower dispute resolutions.

Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
E: info@smartcolaw.com
H: +62821-1234-1235

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