Corporate Criminal Liability Under Indonesia’s New Criminal Code

The enactment of Law Number 1 of 2023 concerning the Criminal Code, together with its amendments as regulated under Law Number 1 of 2026 concerning Penal Adjustments (hereinafter referred to as the “New Criminal Code”) marks a significant transformation of the country’s criminal justice system. One of its most notable developments is the strengthened recognition of corporations as subjects of criminal law that may be held directly liable, on an equal footing with natural persons.

Corporation as the New Subject of Criminal Law

Under Law Number 1 of 1946 concerning Criminal Law Regulation (the Old Criminal Code), only individuals could be held criminally responsible, as it did not recognize corporations as criminal subjects. Nevertheless, corporate criminal liability had been indirectly acknowledged through several regulations, such as Supreme Court Regulation Number 13 of 2016 on Procedures to Handle Criminal Cases by Corporations, as well as laws including the Law Number 31 of 1999 concerning Eradication of the Crime of Corruption as amended by Law Number 20 of 2001 (Anti-Corruption Law), Law Number 32 of 2009 concerning the Environmental Protection and Management (Environmental Law), and Law Number 8 of 2010 concerning the Prevention and Eradication of the Crime of Money Laundering (Money Laundering Law), etc.

Conversely, the New Criminal Code recognizes a corporation as a subject of criminal law, as stipulated in Article 45 paragraph (1) of the New Criminal Code. Paragraph (2) of the same Article further defines the scope of corporations to include legal entities in the form of limited liability companies, foundations, cooperatives, state-owned enterprises, and region-owned enterprises, or other equivalent entities, as well as associations, whether incorporated or unincorporated, and business entities such as firms and limited partnerships, or other equivalent forms in accordance with the applicable laws and regulations.

Corporate Criminal Liability

Article 46 of the New Criminal Code provides that a Corporate Crime constitutes a criminal offense committed by corporate management holding functional positions within the corporate structure, or by persons who, based on an employment relationship or other relationship, act for and on behalf of the corporation or in the interest of the corporation, within the scope of its business or activities, whether acting individually or jointly. Article 47 further explains that Corporate Crimes may also be committed by order-givers, controlling persons, or beneficial owners who are outside the formal corporate structure but are able to exercise control over the corporation.

Furthermore, Article 48 of the New Criminal Code sets out five conditions under which a corporation may be held criminally liable, namely where the criminal act:

a. falls within the scope of the corporation’s business or activities as stipulated in its articles of association or other applicable provisions;

b. unlawfully benefits the corporation;

c. is accepted as corporate policy;

d. occurs due to the corporation’s failure to take necessary measures to prevent the crime, mitigate its impact, or ensure compliance with applicable laws; and/or

e. is allowed to occur by the corporation.

Article 49 provides that criminal liability for Corporate Crimes as referred to in Article 48 may be imposed on the corporation itself, corporate management holding functional positions, order-givers, controlling persons, and/or beneficial owners of the corporation.

Nevertheless, the New Criminal Code does not clearly regulate when corporate criminal liability should be assigned to specific Corporate Responsible Persons, nor does it clearly define the level of fault or control required to hold corporate management, controlling persons, or beneficial owners liable. This lack of clarity may create uncertainty in law enforcement, especially in distinguishing between individual and corporate criminal responsibility within complex corporate structures, thereby leaving room for debate and argumentation in court proceedings.

Types of Sanctions for Corporations

Pursuant to Article 118 of the New Criminal Code, sanctions against corporations consist of principal and additional penalties. Article 119 stipulates that the principal penalty for corporations is a fine. Article 120 paragraph (1) further provides that additional penalties may include:

1. payment of compensation;
2. remediation of the consequences of the criminal offense;
3. fulfillment of neglected obligations;
4. fulfillment of customary obligations;
5. financing of job training programs;
6. confiscation of goods or proceeds obtained from the criminal offense;
7. publication of the court judgment;
8. revocation of certain licenses;
9. permanent prohibition from engaging in certain activities;
10. closure of all or part of the corporation’s business premises or activities;
11. suspension of all or part of the corporation’s business activities; and
12. dissolution of the corporation.

Conclusion and Recommendation

The New Criminal Code marks an important development in Indonesia’s criminal law by formally recognizing corporations as subjects of criminal law and establishing a framework for corporate criminal liability. It explains how criminal acts can be attributed to corporations and expands the types of sanctions that may be imposed on corporate offenders. However, implementing regulations are still needed to clarify the standards for imposing criminal liability on corporate management, controlling persons, and beneficial owners, as well as to clearly distinguish between employee actions that result in corporate liability and those that lead to individual criminal responsibility.

Bibliography:

• Law Number 1 of 2023 concerning the Criminal Code; and
• Law Number 1 of 2026 concerning Penal Adjustments.

Authored by Alessandra Patricia Wijaya (cia@fwp.co.id)

This article is intended to provide a broad summary and general information on certain recent legal developments in Indonesia. It is not intended to constitute legal advice, nor should it be treated as such. FWP disclaims any responsibility or liability for any inaccuracies, interpretations, or omissions contained in this update. For any specific legal concerns or actions that may impact your legal rights and responsibilities under Indonesian law, it is highly recommended that you seek advice from a qualified Indonesian legal professional.