1. Q1: Are there any criminal liabilities applicable to Indonesian Companies?
1.1 Responses: Based on Law No. 40 of 2007 on Limited Liability Companies as amended by Job Creation Law ("Company Law"), a limited liability company is defined as a legal entity limited by shares and established under an agreement. A Company duly established under Indonesian laws must have, at least, 2 (two) shareholders (Article 7 (1) of Company Law). Further, Company Law requires companies in Indonesia to be governed by three bodies, which are Shareholders, Board of Directors ("BoD"), and Board of Commissioners ("BoC"). An Indonesian company is required to have, at least, 1 (one) director and 1 (one) commissioner (Articles 93(3) and 108(3) of Company Law).
1.2 The Company Law and Law No. 1 of 1946 on the Indonesia Criminal Code ("Existing Criminal Code") do not specifically regulate criminal liabilities towards crimes conducted by a company as a legal subject. However, criminal liability of a company is recognized in several laws and regulations in Indonesia, such as the anti-corruption law, the manpower law, the money laundering law, the personal data protection law, and the consumer protection law (see point 2.2. below). Although it has been conceptually recognized, the procedures for investigating a company on alleged criminal offenses remain unclear.
The Supreme Court of Indonesia (Mahkamah Agung or "MA") has previously issued Supreme Court MA Regulation No. 13 of 2016 on Procedure of Handling Corporate Crime Cases ("MA Reg. 13/2016") as guidance for law enforcement authorities on handling criminal offenses committed by companies. Under Article 3 of MA Reg. 13/2016, a corporate criminal offense is defined as a crime conducted by any person based on an individual or joint employment or other relationships with a corporation, for and on behalf of the corporation. In other words, any person who commits a criminal offense on behalf of a company is regarded liable for the corporate criminal offense. The company, together with the relevant individual (such as the director who gives the order for performing the alleged criminal action), shall be liable for the relevant criminal offense.
Further to the above, in deciding whether a company has committed a criminal offense, the court will consider several factors:
- The company made a profit or was benefitted from such criminal act, or the activity was committed for the corporation's interest;
- The company allowed such acts to happen; or
- The company failed to take the necessary measures to prevent and/or minimize the impact of such criminal acts, and also ensure the company's compliance with the prevailing laws and regulations to avoid such criminal acts from being committed.
1.3 Criminal Liability of a Company under Law No. 1 of 2023 on Indonesia Criminal Code ("New Criminal Code"): Indonesia has recently enacted a New Criminal Code that was passed as law on 2 January 2023, and it will be effective starting 2 January 2026. The new code will revoke the Existing Criminal Code.
According to Article 46, of the New Criminal Code defines a corporate crime as any criminal action committed by:
- a member of a corporation's management that has a functional position within the structure of the corporation;
- any person who has a working relationship or any other relationship with the corporation that allows him/her to act for and on behalf of the corporation;
- any person acting in the interest of the corporation;
- any individual that ordered the crime; and
- the controller and/or beneficial owner of the corporation.
Furthermore, Article 48 of the New Criminal Code states that a company may be held accountable for a criminal act if one or more of the following conditions is satisfied:
- the criminal act falls under the scope of the business or activities of the corporation, as set out in the relevant articles of association or other applicable provisions;
- the act unlawfully benefits the corporation;
- the act was accepted as corporation policy;
- the corporation failed to take measures aimed at preventing or minimizing the criminal act, or ensuring the company's compliance with the relevant regulations to prevent the occurrence of the relevant crime; and/or
- the corporation deliberately allowed the criminal act to occur.
If one or more of the above conditions is satisfied, the liability for the criminal act will fall on the company, the individuals holding functional positions in the company, and the parties giving the orders, and the controllers and/or beneficial owners of the company (Article 49 of the New Criminal Code). In this regard, the individual who gives the order for the criminal act on behalf of the company will potentially become subject to criminal sanctions, the liable persons may include members of the BoD or BoC, shareholders, and/or employees of the company.
With regards to the above, the general requirement of criminal liability for the company under the New Criminal Code is generally in line and explicitly provides further details regarding criminal offenses as currently regulated by MA Reg. 13/2016 (see point 1.2. above).
Provisions under the New Criminal Code cannot be imposed on companies until the effective date of the New Criminal Code (i.e., 2 January 2026). Before such date, the criminal liability of an Indonesian Company shall be governed by the Company Law, the Existing Criminal Code, and MA Reg. 13/2016.
2. Q2: What are the criminal actions that may trigger the impostion of the criminal penalties towards Indonesian companies?
2.1 Criminal penalties imposed on Indonesian companies are regulated in separate laws and regulations from the Existing Criminal Code. Generally, the criminal penalties against a company could be both in the form of main and additional punishments. The main punishment is in the form of a fine, as the company cannot be sentenced to imprisonment. On the other hand, the additional punishment could be the seizure of the company's assets, compensation, or restitution, which are subject to specific regulations (Article 25 of MA Reg. 13/2016). The fine must be paid by the company no later than 1 (one) month after the judgment has become legally binding (i.e., there are no further legal efforts are taken by the company), and it could be delayed until the next month. If the company fails to pay the fine, the prosecutor may confiscate and auction the company's assets to pay for the fine (Article 28 of MA Reg. 13/2016).
2.2 Having regard to the above position, we have highlighted below, the types of corporate crimes, and the sanctions that could be imposed on an Indonesian company.
| Crimes | Criminal Sanctions for Company's Organ | Criminal Sanctions for the Company |
|---|---|---|
| Corruption | ||
| Violating the law by benefiting oneself or others, possibly harming the state finance or the economy (Article 2 of Anti-Corruption Law) | 4 (four) to 20 (twenty) years' imprisonment | IDR200 million to 1 billion fine |
| Providing or promising something to a public official to breach his/her official duties or giving something to him/her as compensation for such a breach of duty (Article 5 of Anti-Corruption Law) | 1 (one) to 5 (five) years' imprisonment | IDR50 to 250 million fine |
| Money Laundering | ||
| Placing, transferring, spending, paying, granting, depositing, carrying overseas, changing, or exchanging assets, knowing that such assets are linked to a criminal act (Article 3 of AML Law) | If the corporate entity is unable to pay the fine of up to IDR 100 billion, the punishment will be replaced by the company personnel, equivalent to the amount of penalty (Article 9 of AML Law) |
Up to IDR100 billion fine with additional criminal sanctions:
(Article 7 of AML Law) |
| Concealing the origin, sources, or location of assets, knowing that such assets are linked to a criminal act (Article 4 of AML Law) | ||
| Receiving, transferring, paying, granting, donating, depositing, exchanging, or using assets, knowing that such assets are linked to a criminal act (Article 5 of AML Law). | ||
| Personal Data Protection | ||
| Unlawfully obtaining or collecting personal data leading to potential harm to the data subject (Article 67 of PDP Law) | A prison term of up to 6 (six) years is imposed on the relevant company personnel (Article 67 to 68 of PDP Law) |
A fine of up to 10 times the maximum criminal fine, ranging from IDR4 billion to IDR6 billion, may be imposed on the controller of personal data. In addition to the criminal fine, the controller can be charged with the following criminal sanctions:
(Article 70 of PDP Law) |
| Unlawfully disclosing Personal Data (Article 67 of PDP Law) | ||
| Unlawfully utilizing Personal Data (Article 67 of PDP Law) | ||
| Unlawfully creating false Personal Data or falsifying Personal Data, potentially causing harm to other persons (Article 68 of PDP Law) | ||
| Environment | ||
| Conducting business and activities without obtaining the environmental license (Article 109 of Law 32/2009) | 1 (one) to 3 (three) years' imprisonment | IDR1 billion to IDR3 billion fine |
| Unlawfully importing waste, hazardous, and/or toxic materials into the territory of Indonesia (Article 105 and 106 of Law 32/2009) | 4 (four) to 15 (fifteen) years' imprisonment | IDR4 billion to IDR15 billion fine |
| Unlawfully clearing land by starting a fire (Article 108 of Law 32/2009) | 3 (three) to 10 (ten) years' imprisonment | IDR3 billion to IDR10 billion fine |
| Producing hazardous, and toxic materials without obtaining the permit or failing to manage them (Article 102 and 103 of Law 32/2009) | 1 (one) to 3 (three) years' imprisonment | IDR1 billion to IDR3 billion fine |
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In addition to the above, the company may be subject to an additional punishment, such as:
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| Employment | ||
| Unlawfully employing and involving children in any work, violating the prevailing regulations | 1 (one) to 5 (five) years' imprisonment |
IDR100 million to IDR500 million fine (Article 183 and 185 of Manpower Law) |
| Prohibiting female employees to take the maternity leave | ||
| Prohibiting company employees from taking the religious leave | ||
| The company does not pay the minimum wages to workers and other | ||
| The company does not provide severance pay, long-service pay, and compensation of benefits due to the termination of employees | ||
| The company does not comply with the requirement for employing foreign employees | 1 (one) to 12 (twelve) months' imprisonment |
IDR 10 million to IDR 100 million fine (Article 187 of Manpower Law) |
| The company does not comply with the requirement on minimum working hours | ||
| The company does not comply with the requirement on minimum leave and off-working days | ||
| The company does not have a Company Regulation | N/A |
IDR 5 million to IDR 50 million fine (Article 188 of Manpower Law) Please note that the criminal sanctions imposed above do not release the companies from their obligations to pay the entitlements and/or compensations to the employees |
| Consumer Protection | ||
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Producing or trading goods and/or services, which are not complying with the required standards, or without providing the necessary information as regulated under the laws and regulations (Article 8 of Consumer Law) |
Up to 5 (five) years' imprisonment (Article 62 of Consumer Law) |
IDR500 million to IDR2 billion fine (Article 62 of Consumer Law) Please note that in the event these violations cause serious injuries or, serious illness, or permanent disabilities, or death, the additional sanction may be punished such as:
(Article 63 of Consumer Law) |
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Misleadingly offering, promoting, and/or advertising goods and/or services. (Article 9 of Consumer Law) |
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Offering, promoting, advertising, or making misleading statements on the produced or traded goods and/or services (Article 10 of Consumer Law) |
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Using methods that may cause physical or psychological disturbance to consumers. (Article 15 of Consumer Law) |
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producing advertisements that mislead consumers regarding the information of the goods. (Article 17 of Consumer Law) |
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2.3 New Form of Criminal Sanctions under the New Indonesian Criminal Code: Since the Existing Criminal Code does not recognize a company as a subject of criminal actions, the New Criminal Code has introduced new criminal punishments specifically applicable to a company. The sanctions can be divided into two main categories (i) main punishment in the form of fine, and (ii) additional punishment (Article 118 of New Criminal Code).
Under the New Criminal Code, fines as punishments for companies are stipulated under 8 (eight) categories with each criminal offense is subject to a fine of a particular category. Each category has a different maximum fine, as set out in the table below:
| Category | Maximum Fine for Company |
|---|---|
| I | Categories I – IV are subject to a IDR200 million fine |
| II | Categories I – IV are subject to a IDR200 million fine |
| III | Categories I – IV are subject to a IDR200 million fine |
| IV | Categories I – IV are subject to a IDR200 million fine |
| V | - |
| VI | Fine for a prison term of up to 7 years (IDR 2 billion) |
| VII | Fine for a prison term of between 7 and 15 years (IDR 5 billion) |
| VIII | Fine for a prison term of up to 20 years (IDR 50 billion) |
In the event that a company has committed an offense punishable by a prison term (as specified in categories VI to VIII), the maximum fine will be subject to the length of the prison term (Article 121 of New Criminal Code).
For instance, in a crime of embezzlement whereby the maximum prison term is 4 (four) years and the maximum fine is stipulated in Category IV (Article 486 of New Criminal Code), the company will be punished with the minimum fine of Category IV and the maximum fine of Category VI.
Additional Criminal Penalties: On the other hand, the company will also face an additional punishment, which could be in the form of:
- Compensation payments;
- Remediation of the consequences of the criminal acts;
- Fulfilment of neglected obligations;
- Fulfilment of customary obligations;
- Financing of job trainings;
- Confiscation of assets generated from the criminal acts;
- Announcement of the court decisions;
- License revocation;
- Permanent prohibition of certain business activities;
- Closure of all or part of business premises and/or corporate activities;
- Freezing of all or part of corporate activities; and
- Dissolution.
Please take note, that if no additional penalties are imposed on the company, its assets or income may be seized and auctioned by the prosecutor (Article 120 of New Criminal Code). However, the government will issue further regulations on sanctions against corporate crimes. These regulations are expected to provide clarity on how the above sanctions shall be imposed. Up to the writing of this Memorandum, the Indonesian government has yet to issue such government regulations.
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