Transition to Legal Entity Status Limited Liability Companies in Indonesia

Background. Changes to the mechanism for obtaining legal entity status for limited liability companies (PT) in Indonesia under the Job Creation Law have shifted the requirement from ministerial approval to a registration system, raising questions about the legislative rationale and its implications for legal certainty and the protection of third parties. Research Purpose. This study aims to analyze the ratio legis of the amendment to Article 7(4) of the Limited Liability Companies Act regarding the acquisition of legal entity status by a limited liability company (PT) and to evaluate the legal consequences of this amendment on legal certainty and the protection of third parties through a comparison with the laws of Singapore and the United Kingdom. Research Method. This normative study employs legislative, historical, and comparative (Singapore and the United Kingdom) approach, using a literature review to collect legal materials. Findings. These changes are based on a risk-based licensing approach, time efficiency, and efforts to support MSMEs, although the academic explanation in the Academic Paper remains limited. Changes to the regulations pose the risk of a time gap and a shift in verification toward the realm of formal administration, while legal protection for third parties is based on internal protection through contractual arrangements between the parties and external protection through statutory regulations. Conclusion. The transition to a registration-based system has improved the efficiency of establishing a PT, however, Indonesia needs to strengthen the disclosure of public data, clarify the role of notaries, and specifically regulate the transfer of directors’ responsibilities.