LEGAL RISKS AND MITIGATION IN ESTABLISHING A LIMITED LIABILITY COMPANY THROUGH FOREIGN DOMESTIC JOINT VENTURE AGREEMENT
Main Article Content
Adinda Marianti
Elisatris Gultom
This study analyzes the legal risks and benefits in establishing a limited liability company (PT) through a joint venture scheme between Foreign Direct Investment (PMA) and Domestic Investment (PMDN) in Indonesia. The research uses qualitative methods by reviewing legal documents such as Joint Venture Agreements (JVA) and Articles of Association (AoA), as well as Indonesian investment regulations. The study identifies key risks including inconsistencies between JVA and AoA, disproportionate governance structures, conflicting objectives between PMA and PMDN, and violations of foreign ownership limits under the Positive Investment List. These risks potentially cause operational conflicts and legal sanctions. Additionally, differences in legal backgrounds increase the chance of misinterpretation of ambiguous contract clauses. To mitigate these risks, the research suggests harmonizing the JVA and AoA, involving legal advisors familiar with Indonesian law and international business practices, and implementing clear governance and dispute resolution mechanisms such as arbitration. The findings aim to guide stakeholders in managing joint ventures effectively and legally compliant in Indonesia.
Book
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Journal:
Bamford, James Bamford, Walker, Geoff, Mogstad, Martin (2020), Water Street Partners LLC., Joint Venture Governance Index: Calibtrating the Strengh of Governance in Joint Ventures. https://corpgov.law.harvard.edu/2020/03/13/joint-venture-governance-index-calibrating-the-strength-of-governance-in-joint-ventures/
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https://hbr.org/2021/04/research-joint-ventures-that-keep-evolving-perform-better.
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Article in Website
Tim Hukum Online. (2023). Joint Venture: Definition, Characteristics, and Legal Basis. Joint Venture: Pengertian, Ciri-Ciri, dan Dasar Hukum (hukumonline.com).
Penasthika, Priskila P. (2024). Does Foreign Law Apply to International Contract Disputes in Indonesia?
Berlakukah Hukum Asing untuk Sengketa Kontrak Internasional di Indonesia? Oleh: Priskila P. Penasthika – Fakultas Hukum Universitas Indonesia (ui.ac.id)
Laws and Regulation
Law Number 1 Year 1967 jo. Law Number 11 Year 1970 concerning Foreign Investment
Law Number 6 Year 1968 jo. Law Number 11 Year 1970 concerning Foreign Investment
Law Number 6 Year 1968 jo. Law Number 12 Year 1970 concerning Domestic Investment
Law Number 25 Year 2007 concerning Investment
Law Number 40 Year 2007 concerning Limited Liability Companies
Law Number 6 Year 2023 concerning the Ratification of Government Regulation in Lieu of Law Number 2 Year 2022 on Job Creation into Law
