Corporate Criminal Liability Under Indonesia's New Criminal Code: Overview and Key Provisions

Corporate Criminal Liability Under Indonesia's New Criminal Code: Overview and Key Provisions

Regulation Summary | Criminal Law

Introduction

In line with the development of modern legal theory recognizing corporations as legal subjects, Law No. 1 of 2023 on the Indonesian Criminal Code (the “New Criminal Code”) expressly establishes corporations as subjects of criminal offences, as stipulated under Article 45 paragraph (1) of the New Criminal Code. The enactment of the New Criminal Code is also intended to address the evolution of modern criminal activities, particularly White-Collar Crime, Economic Crime, and Organized Crime, which have become increasingly complex and frequently involve corporate entities.

Key Definitions:

Corporation: Includes legal entities in the form of limited liability companies, foundations, cooperatives, State-Owned Enterprises (Badan Usaha Milik Negara or “BUMN”), Regional-Owned Enterprises (Badan Usaha Milik Daerah or “BUMD”), or their equivalents, as well as associations, whether incorporated or unincorporated, and business entities in the form of Partnerships (“Firma”), limited partnerships (Commanditaire Vennootschap or “CV”), or their equivalents, in accordance with the prevailing laws and regulations.
Beneficial Owner (“BO”): The ultimate beneficial owner of a Corporation who, although not formally part of the organizational structure, is able to exercise control over the Corporation.
Criminal Fine: A monetary penalty imposed on a convicted person pursuant to a court judgment.
Functional Position: Any person who has the authority to represent, make decisions for, or exercise supervision over a Corporation, including any person who orders (“Indirect Perpetrator”), participates in (“Co-Perpetrator”), incites (“Instigator”), or assists in the commission of a criminal offence (“Accessory”).
Other Relationship: Includes, for example, contractual arrangements of a temporary nature, such as employment or service contracts.
Controlling Person: Any person who has the power or authority to determine or implement the policies of a Corporation.
Business Scope or Activities: Includes activities that are generally carried out in the ordinary course of business of a Corporation.

Legal Paradigm Shift in Relation to Subjects of Criminal Liability :

Under the Previous Criminal Code, corporations were not recognized as subjects of criminal liability. However, certain sector-specific statutes, such as Law No. 20 of 2001 on the Eradication of Corruption Crimes (the “Anti-Corruption Law”), expressly recognized corporations as subjects of criminal liability, as reflected in Article 20 thereof. Accordingly, the New Criminal Code establishes a more comprehensive and integrated legal framework governing corporate criminal liability in Indonesia.

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