Indonesian Company Law

Room 310
10:00-11:40
 Legal Legal Legal Regime Legal Method
FIRAC
Reasoning Framework Framework
Learning Approach
 Legal Method
• Study of basic principles, nature, sources, rules of law and
techniques on how binding laws are effectively applied [to
benefit individual and society]

Method – systematic
Law – set of rules to govern
procedure, technique, or
and limit behavior via set of
mode of inquiry employed by
institutions [politics,
or proper to a particular
economics, society, etc.]
discipline

Design, Structure and Operationalization

of Law
Principles of Effective Application of Law

• Legality
• Certainty
• Stability
• Uniformity
• Consistency
• Predictability
• Administrative Efficiency
• Economic Efficiency
 Legal Regime Framework
Policies - principles that
guide decision-making Laws - binding
and achieve rational rules of conduct to
enforce justice and
outcomes; statements
prescribe duty or
of intent and
implemented as obligation
procedures or protocols
Structures -
constructions or
frameworks of
identifiable elements
which give form and
stability to regime
Rules - authoritative Procedures and
statements which Protocols -
sequences of
clarify, demarcate,
interdependent and
or interpret laws or linked series of
policies.
actions that lead to
particular results
Institutions – self-
regulating, consistent
and organized pattern
of behavior or activities
 Legal Framework
Substantive law Policy of the law – What is the overarching principle of the law? What is
the rationale of the law? Why was the law enacted?

Scope of the law – What activities are governed by the law? What
activities outside its scope?

Rights and obligations of parties – What are the specific rights justified,
recognized, and protected by the law? What are the corresponding
obligations of the other party in regard to those rights?

Breach of rights and obligations – How are the rights and obligations
violated?
Defenses – What will preclude liability and exempt a party from the duty
of reparation?
Procedural law Remedies – How are disputes settled? What are the courses of action
available to parties for breaches of the law? What are the specific claims
that can be made for such breaches?
Legal Consequences – What form of reparation will an injured party be
entitled to?
 Legal Reasoning
• Methods lawyers use to apply laws to facts in order
to resolve legal questions
– Rules-based reasoning – relies on use of arguments
based on formal logic
• Major premise, minor premise, conclusion
– Analogical reasoning – compares and contrasts facts of a
pending case with facts of a decided case and argues
that current case should be similarly or differently
decided
– Policy reasoning – argues for a particular reasoning or
interpretation of a rule because it would result in sound
public policy
 FIRAC
• FIRAC is a methodology for legal analysis 
“Thinking like a Lawyer” and “Applying
statutory law to a fact pattern”

Facts Issues Rules Application Conclusion

 Facts
• ‘MATTER OF FACT’ (subject of proof) vs. ‘MATTER OF LAW’ (invocation of a
binding rule)
• Case - refers to an actual, potential, or hypothetical dispute which raises a
question of whether one or more laws were violated.
– Lawsuit
– Arbitration case
– Administrative proceeding

• Fact pattern - set of facts which lead to legal consequence

• “What facts are relevant to the final outcome of the problem/dispute”?
• Sources of key facts could be events, dates, people, documents, and statutes.
• “Facts” of the case describe what happened to cause the dispute.
– Can be mustered and gathered by asking 5W1H - What? When? Where? Why?
Who? How?
• material or key facts – usually disputed by the parties
• immaterial or irrelevant facts – facts that are not disputed
• background facts – important facts which provide context to the analysis
 Issues
• Lawsuit – brought because a party believes another person
has violated some law to his detriment.

• “law issues” (related to cause of action) vs. “element issues”

(questions about meaning of a particular word or phrase used
in a rule/law)

• “Issue spotting”- ability to identify single, certain and material

point arising out of fact pattern --> allegations and
contentions of parties
– if matter affirmed is on one side, and denied on the other, and when
a fact is alleged by one party and denied by the other, the matter is
then deemed put in issue between them.
 Rules
• “Rule” - text of law that was identified as relevant when
conducting issue spotting and broken down into its
“elements”
• Source of rule  primary source or a restatement
– Rule  General rule, Exceptions, Exceptions to
exceptions
 In Application, text of rule will be compared to the facts.
Actual words used in rule provide information needed for
Conclusion.
 If Rule is not expressed accurately, rest of analysis will be
flawed.
• Rule is the statement of rules/legal principles/precedence
pertinent in deciding issue identified.
 Application
• “Application” - comparison of two sets of words:
– words of law hat describe the conduct it prohibits/ requires/ permits making up the
“elements”; and
– words (facts) that describe the conduct that occurred.

• Best way to do an application is to compare each element, one at a time, to the

facts.
– Each element describes one part of the conduct covered by the rule.
– By proceeding methodically through all the elements, each and every part of the conduct
is compared to the facts.  

• Convert each element into an element issue.

– An element issue is a question that asks whether an element is satisfied.

• If one or more of the elements are not satisfied, the rule and the facts describe
different conduct.
 Conclusion
• Every rule – which prescribes conduct  leads to a legal conclusion

• “if-then” statement  if conduct described by the rule occurred,

then the conclusion stated in the rule should be reached.

• If all the elements were satisfied, the conduct occurred.

Alternatively, If one or more of the elements were not satisfied, the
conduct did not occur.

• Conclusion directly answers the question presented in the issue

section of the FIRAC. This section restates the issue and provides the
final answer.
 Indonesian Sources of Law
• Article 7 of Law 12/2011 on Law Regulation stipulates types
and hierarchy of rules in Indonesia.

• Hierarchy of rules:
– 1945 Constitution
– MPR decree – [DPR + DPD]
– Law [Undang Undang (UU)]/ Government Regulation in Lieu of
Law – [Pemerintah pengganti Undang Undang (PERPPU)]
– Government regulation [Peraturan Pemerintah (PP)]
– Presidential Regulation [Peraturan Presiden (PERPRES)]
– Local Law - Peraturan Daerah [PERDA]
– Governor Regulation, Mayor Regulation, Regent Regulation
[Peraturan Kepala Daerah (PERGUB, PERWAL, PERBUP)]
 Some Sources of
Indonesian Company Law

• LAW 40/2007 ON LIMITED LIABILITY COMPANY (27 August 2007)

[repealing Law 1/1995 on LLCs]

• Implementing Rules and Regulations of Law 1/1995 provided

they are not inconsistent with Law 40/2007

• Capital Market Law, Rules and Regulations on Publicly Owned

Companies

• Government Regulation No. 47 of 2012 on Social and

Environmental Responsibility of Limited Liability Company