Indonesia: Draft Of New Indonesian Criminal Code And The Potential Impact On Corporations

Last Updated: 29 October 2019
Article by Ridzki Putra Ramadhan
Most Read Contributor in Indonesia, October 2019

The Indonesian House of Representatives (Dewan Perwakilan Rakyat or "DPR") has been considering revisions to the country's Criminal Code. Some of the proposed changes could have a significant impact on companies in Indonesia.

One of the biggest changes in the draft Criminal Code (Rancangan Kitab Undang-Undang Hukum Pidana or "RKUHP") would be to recognize corporations as legal persons subject to criminal sanctions. This would be a major shift from the current Criminal Code (Kitab Undang-Undang Hukum Pidana or "KUHP"), which does not contain such recognition of corporations. Imposing criminal sanctions against corporations is a relatively new concept in the Indonesian legal system, having only been made possible through the issuance of Supreme Court Regulation No. 13 of 2016 on Procedures for the Management of Criminal Cases Involving Corporations ("SCR 13/2016").

While SCR 13/2016 introduced the idea of subjecting corporations to criminal sanctions, it is only an implementing regulation that governs the formalities of managing corporate criminal cases. As of this writing, there are still no laws (undang-undang) in Indonesia that might serve as the foundation for corporate criminal liability.

The question is, how does the RKHUP formulate and govern the enforcement of corporate criminal liability?

Corporations Under the RKUHP

Pursuant to Article 45 (2) of the RKUHP, "corporation" includes legal entities in the form of a limited liability company (perseroan terbatas), foundation, cooperative, state-owned enterprise (badan usaha milik negara) or regional-owned enterprise (badan usaha milik daerah), or the equivalent, as well as associations of both legal and non-legal entities or business entities in the form of a firm (firma) or limited partnership (commanditaire vennootschap or "CV"), or the equivalent.

The definition of corporation in the RKUHP includes both legal and non-legal business entities under the Indonesian legal system. The definition also appears, with the use of the phrase "or the equivalent," to anticipate the possibility of new types of legal or non-legal entities appearing.

Corporate Criminal Action Under the RKUHP

Under Article 46 of the RKUHP, a corporate criminal act is defined as a criminal act carried out by a member or members of management with the authority in the organizational structure of the corporation to represent, take decisions for or supervise the operations of the company, or by persons based on a work relationship or other relationship acting for and on behalf of the corporation or acting in the interest of the corporation, within the scope of the business or activities of the corporation, both individually and together.

Article 47 of the RKUHP stipulates that a corporate criminal action can also be committed by a person who is outside the corporation's organizational structure but who has control over or is the beneficial owner of the corporation and who gives the order for the action.

Based on the foregoing, it is worth noting that it is not only people in management positions (e.g., directors or commissioners) who can be held accountable for corporate criminal actions, but also employees, shareholders, the parent company and even people outside of the company's organizational structure, provided it can be proven that such persons were acting for the interest of the company and/or possess control over the company.

The definition of criminal corporate action in the RKUHP appears to be more detailed than the definition contained in SCR 13/2016, which simply stipulates that a corporate criminal action is a criminal action for which a corporation can be held accountable in accordance with the relevant laws and regulations governing corporations.

The RKUHP also addresses the issue of liability for corporations. Under Article 48 of the RKUHP, a corporation can be held liable for a criminal act if such act:

  1. is within the scope of business or activity of the corporation as determined in the corporation's articles of association or other applicable provisions;
  2. illegally benefits the corporation; and
  3. is an accepted action/policy of the corporation.

In light of the foregoing, the imposition of criminal sanctions against a corporation would supposedly be subject to the fulfilment of the above, in addition to the fulfilment of the elements of the criminal provision under which the corporation is charged.

Criminal Sanctions for Corporations

The RKUHP stipulates that criminal sanctions for corporations comprise (i) principal criminal sanction (pidana pokok) and (ii) additional criminal sanction (pidana tambahan).  The principal criminal sanction that can be imposed on a corporation is in the form of a fine. This is essentially the same as under SCR 13/2016.

What is an interesting development in the RKUHP are the newly formulated additional criminal sanctions as set out in Article 120 paragraph (1). This article provides that such additional criminal sanctions include the following:

  1. payment of compensation;
  2. rectification of impact of criminal action;
  3. performance of obligations that have been neglected;
  4. fulfilment of customary obligations;
  5. funding for job training;
  6. confiscation of goods or profits derived from criminal act;
  7. public announcement of court decision;
  8. revocation of certain permits;
  9. permanent prohibition of certain acts;
  10. closure of all or part of the business premises and/or the corporation's business activities;
  11. freezing of all or part of the corporation's business activities; and
  12. dissolution of corporation.

The sanctions in points h, j and k can be imposed for a maximum period of two years. In the event that the convicted corporation fails to carry out the additional criminal sanctions in points a to e, the assets or revenue of the corporation can be confiscated and auctioned by the district attorney to fulfil the additional criminal sanctions.

The RKUHP also provides several actions that can be imposed on corporations by the state. Pursuant to Article 123, such actions are:

  1. acquisition of the corporation;
  2. funding for job training;
  3. placement under supervision; and/or
  4. placement under conservatorship.


It is still unclear how criminal sanctions might be imposed on and enforced against corporations found to have committed a criminal act. If these proposed changes in the draft Criminal Code are in fact passed, we would still have to wait for the passage of necessary implementing regulations. At the moment, we can only monitor the progress of the proposed RKUHP and see if the House of Representatives passes it in its current form, including the new provisions on corporation criminal actions and liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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