Indonesia has reformed its Criminal Code through Law Number 1 of 2023 (“KUHP”), which came into force on 2 January 2026, and its Criminal Procedure Code through Law Number 20 of 2025 (“KUHAP”), which entered into force on the same date. The implementation of the new KUHP and the new KUHAP marks a new paradigm in criminal law enforcement and the criminal justice system, particularly in addressing various forms of corporate crimes. Corporate criminal liability is now more advanced.
Under Article 45 paragraph (1) of the KUHP, corporations are expressly recognized as subjects of criminal offenses, which logically entails the possibility of corporate criminal liability. The scope of corporations that may be subject to criminal prosecution under the KUHP includes a wide range of business entities, both incorporated and unincorporated. Article 45 paragraph (2) of the KUHP further delineates the categories of corporations that may be held accountable for criminal offenses, encompassing various forms of organizational structures, as follows:
- limited liability company, Foundation, Cooperative, State-Owned Enterprise (BUMN), Regionally-Owned Enterprise (BUMD), or similar entities;
- Legal and non-legal entities; or
- Business entities in the form of Firms, Limited Partnerships (CV), or similar entities;
The new KUHP also regulates the categories of actors who may be held liable for corporate crimes. Article 46 of the new KUHP focuses on internal actors who act for, on behalf of, or in the interest of the corporation, including:
- Managers or officers with a functional position in the corporation’s organizational structure (internal functional management);
- Employees acting based on an employment relationship;
- Other persons acting for and on behalf of the corporation, even if not employees (such as contractors, agents, or representatives);
- Individuals acting in the interest of the corporation within the scope of its business (anyone whose actions benefit the corporation).
The above liability attaches to internal actors who represent or advance the corporation’s interests, whether acting individually or jointly.
On the other hand, Article 47 of the new KUHP expands liability to external actors who are not formally part of the corporate structure but who exercise real control. Those who may be held liable under Article 47 including:
- Persons who issue orders to the corporation (shadow directors or de facto controllers);
- Persons who exercise control over the corporation (control persons without formal titles);
- Beneficial owners outside the organizational structure who are able to control the corporation (ultimate beneficial owners or UBOs).
In essence, liability attaches to external controllers—individuals who may not appear in the organogram but who effectively control, direct, or influence the corporation.
Additionally, the KUHP introduces further provisions that refine and expand the conditions under which corporations may be subjected to criminal liability. Previously set out in Article 4 of Supreme Court Regulation Number 13 of 2016 on Procedures for Handling Corporate Criminal Cases, these conditions are now regulated under Article 48 of the KUHP in a cumulative‑alternative formulation, with two notable additions. First, with respect to the element “included within the scope of the corporation’s business or activities,” the assessment may now be grounded not only in the corporation’s articles of association but also in business activities generally undertaken by corporations, as well as other provisions applicable to the Corporation. Second, the element “recognized as an internal corporate policy” may be interpreted to include policies and/or formal decisions reflected in management decisions or conduct, or internal regulations.
If a Corporation meets any of the cumulative-alternative requirements specified in Article 48 of the KUHP, it may be subject to liability that can be imposed in the form of a minimum fine of Category IV (IDR 200 million or unless otherwise determined by law) as a Primary Crime (Article 118 of the KUHP), Additional Crime (Article 120 of the KUHP), and Punishment Actions to Corporation (Article 123 of the KUHP).
From the Criminal Procedure Code, Articles 331 through 333 of the KUHAP establish a comprehensive framework for the imposition of criminal liability on corporate entities. Under Article 331, judges are expressly authorized to impose criminal penalties and/or corrective measures on corporations. Importantly, the imposition of penalties on a corporation does not preclude simultaneous prosecution of other individuals who, under applicable laws and regulations, are proven to have participated in the offense. Article 332 further clarifies that a corporation and its responsible officers may be prosecuted jointly as co‑defendants, reflecting the dual‑track nature of corporate and individual liability. Article 333 then outlines the types of sanctions available, providing that courts may impose both primary and additional penalties on corporations.
The criminal justice system has also shifted from a predominantly retributive model to one that incorporates restorative principles. The KUHAP introduces three key mechanisms for out‑of‑court settlement, namely:
- Restorative Justice, as provided in the Article 327 paragraph (6) and Articles 79–82 of the KUHAP;
- Out-of-Court Settlement with Monetary Penalty by the Attorney General, as provided in Article 65 and 66 of the KUHAP; and
- Deferred Prosecution Agreements, a mechanism available to corporate defendants, governed by Article 328 of the KUHAP.
In light of the above, the KUHP and the KUHAP reflect a significant shift in Indonesia’s approach to corporate criminal liability by firmly recognizing corporations as independent subjects of criminal law. The introduction of out‑of‑court settlement mechanisms represents a progressive development, as it not only enhances procedural efficiency but also promotes restorative outcomes without diminishing the deterrent function of criminal law.
Written by: R. Bayu Perdana, Agdelia Meiva Azarine and Oxana Ferodova
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Photo by Siobhan Howerton: https://www.pexels.com/photo/police-crime-scene-by-building-wall-18527695/
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