LEGAL WRITING

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Date : June 06, 2017

To : Evan J. Cane

Cc : Widya Pusparini

From : EGS (Edwin Giovan Santoso)

Subject : Legal Subject Under Indonesian Law

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INTRODUCTION

Indonesian Civil Code (Civil Code) recognizes the types of legal subject
in Indonesia, namely Person (Natuurlijk Persoon) and Legal Entity
(Rechtspersoon). Though, Civil Code stipulates Person as a Legal Subject
in more detail.

Legal Subject is everything that holds the rights and obligations under the
law (including supporter of rights and obligations). The term person may
scope the domestic and foreign citizens. The rights and obligations of
every person are same and equal. Therefore, for example, the Article 5 of
Law Number 4 of 2004 Regarding Judicial Power stipulates the equality
before the law in the proceeding without distinguishing or discriminating
the individual (regardless the race, religion, tribe, etc).

This writing will elaborate further the types of the Legal Subject
acknowledged in Indonesia:

Person (Natuurlijk Persoon)

Persons (humans) bear the rights and obligations start when they are
born to this world. The rights and obligations will end when that person
has passed away.

Article 2 of the Civil Code states the child in the womb of a woman is
deemed to have already been born should his interest so requires. In the
event that the child is stillborn, he is deemed to have never existed.

The Article explains that the unborn child in the womb may be considered
as legal subject already, if his interest of the child requires doing so.
Whether the child has the power or possibility to live afterwards or not, is
not an issue here. As long as the born child manages to live, the child will
get his/her rights and obligations. However, the child that is stillborn
(dead after being born), shall be considered to have never existed in this
world.

Persons may exercise all of their rights and obligations as long as they
have capacity and authority to do so. Not every person is allowed to
exercise their rights and obligations if they dont have the capacity or they
are not competent in conducting such action. For example, Article 1330 of
Civil Code regulates that the incompetent individuals are: individual under
the age (minor), individual under guardianship, and married woman.

Legal Entity (Rechtspersson)

According to one of the most renowned Indonesian scholars, Subekti,

legal entities (or partnerships) have the rights and obligations as the
Persons have. Those entities have their own assets (and properties), can
sue, and can be sued before the court. Legal entities can do unlawful
conduct (like persons), though that conduct is only limited to assets and
properties legal matters. Considering its form is a body or institution, the
legal entity acts as the intermediary of its administrators.

Some examples of legal entity are regulated in Indonesia Commercial

Code (Commercial Code). However, the legal entity is not specifically
found and regulated under Civil Code. However, Article 1653 of Civil Code
states the existence of association, which states In addition to an actual
partnership, the law is also acknowledge associations of individuals as
legal entities, whether they are established by public authority or
acknowledged as such, or whether they are permitted as lawful, or
whether they are established with a specific objective, provided that they
do not violate the law or proper order.

Under that article, there are two main entities, namely public legal entity
(entity established by public authority), and private legal entity. The
examples of public entity are: state, province, regency, and municipality.

Meanwhile, the examples of private legal entity are:

a. Association (Article 1653 of Civil Code);

b. Limited Liability/Perseroan Terbatas (Article 36 of Commercial
Code, Law Number 40 of 2007 Regarding Limited Liability);
c. Cooperative/Koperasi (Law Number 12 of 1967 Regarding
Principles of Cooperative);
d. Foundation/Yayasan (Law Number 28 of 2004 Regarding
Foundation).

In the commercial context, the form of Limited Liability Company (PT) is

the most common and used one. PT is considered as a legal person;
therefore PT can be guilty and can be sued before the court if it is found
violating the law, aside to the directors as the natural persons.

PT is more preferable compared to the other forms of entity is due to two

things, first, the PT is a capital association, and second, the PT is an
independent legal entity. As a capital association then there is
convenience for shareholders of PT to transfer its shares to others.
Further, as an independent legal entity, the responsibility of shareholders
of PT is only limited to the value of shares held in PT.