Government Regulation No. 44 of 1997 on Partnership
Introduction
Government Regulation No. 44 of 1997 on Partnership ("PP 44/1997") is a comprehensive legal framework governing partnerships in Indonesia. It defines the rights, obligations, and liabilities of partners, as well as the establishment, operation, and dissolution of partnerships.
Definition of Partnership
PP 44/1997 defines a partnership as a legal entity formed by two or more persons who agree to contribute their capital, skills, or labor to a common enterprise with the intent of sharing profits and losses.
Types of Partnerships
PP 44/1997 recognizes two main types of partnerships:
- General Partnership: All partners have unlimited joint and several liability for the debts and obligations of the partnership.
- Limited Partnership: There are two types of partners: general partners, who have unlimited liability, and limited partners, who have limited liability to the extent of their capital contributions.
Establishment of a Partnership
To establish a partnership, the partners must enter into a written partnership agreement. The agreement must specify, among other things:
- The name and address of the partnership
- The names and addresses of the partners
- The type of partnership
- The purpose of the partnership
- The capital contributions of each partner
- The profit-sharing ratio
- The management structure
Rights and Obligations of Partners
Partners have the following rights:
- To participate in the management of the partnership
- To share in the profits of the partnership
- To inspect the partnership’s books and records
Partners have the following obligations:
- To contribute their capital, skills, or labor to the partnership
- To act in the best interests of the partnership
- To share in the losses of the partnership
Liability of Partners
In a general partnership, all partners are jointly and severally liable for the debts and obligations of the partnership. This means that creditors can pursue any or all of the partners for payment. In a limited partnership, only the general partners are liable for the debts and obligations of the partnership.
Management of the Partnership
The partnership agreement may provide for the management of the partnership by all partners or by a designated managing partner. The managing partner has the authority to act on behalf of the partnership and to bind the partnership to contracts.
Dissolution of the Partnership
A partnership may be dissolved by:
- The agreement of all partners
- The death, withdrawal, or bankruptcy of a partner
- The expiration of the partnership’s term
- A court order
Upon dissolution, the partnership’s assets are liquidated and the proceeds are distributed among the partners in accordance with the profit-sharing ratio.
Conclusion
PP 44/1997 provides a clear and comprehensive framework for the establishment, operation, and dissolution of partnerships in Indonesia. By understanding the provisions of PP 44/1997, businesses and individuals can effectively utilize partnerships to achieve their business objectives.
