Business Organisations Partnerships

Partnerships Maatschap (Persekutuan Perdata) Firma (Fa) Commanditaire Vennootschap (CV)

Maatschap A contract whereby two or more persons agree to contribute something together, to carry on a business together, in order to share in the profits accruing from the common effort.

Internal Liability Among Partners (Maatschap) The partners may appoint one of them or a third person as manager. A manager so appointed is entitled to perform all acts of management which he considers necessary, despite the disapproval of some or all of the partners, provided that he is acting in good faith. The manager is able to act in the partnership name and to bind the partners to third parties and third parties to the partner

Internal Liability Among Partners (Maatschap) When no one is appointed to be a manager of the company, each partner is deemed to have authorized the others to act in the name of the Maatschap and on their behalf. Unless specifically limited by partnership agreement, each partner is entitled to act on behalf of the partnership and bind the partners to third parties and third parties to partnership. Each partner have the right specifically to object to the action of another partner prior to the time to that action.

Liability to Third Parties (Maatschap) A third party contracting with a partner cannot rely on the apparent authority of that partner to bind the Maatschap as a whole or the other partner individually. In the absence of specific authorization from the other partner, the third party can look only to the acting partner for liability on the contract.

Liability to Third Parties (Maatschap) An exception to that general rule occurs when the contract executed by one partner is beneficial to the partnership as a whole, in which the third party can look to the partnership as a whole for satisfaction of its claim. The partners are liable for equal portion of the claim unless at the time of concluding the contract, the third party was informed that each partner would be liable for debts of the Maatschap only in proportion to this partnership interest.

Liability to Third Parties (Maatschap) On the other hand, a third party contracting with the Maatschap always stands liable to the Maatschap as a whole, but the third party may find itself in a position to enforce its own claim only against the partner or partners with whom it has specifically dealt.

Indonesian Partnership is Not a Legal Entity Maatschap is not a legal entity in the same sense as a corporation. Cannot enter into legal relations in the same manner as a physical person. Have no independent capital in the manner of a corporation where only the capital of the organization is available for satisfaction of its debts.

Indonesian Partnership is Not a Legal Entity The partners are individually and severally liable with their entire private capital directly or indirectly (through liability to a partner who is bound) to third parties for all commitments of the partnership

Distribution of Profits and Losses (Maatschap) Unless specifically have been agreed upon, the profits and or losses will be shared according to the value of each partner’s contribution and that partners contributing only skill of efforts will share in profits or losses in proportion equal to that of the partner which contributes the least in terms of money and goods.

Dissolution and Winding-up (Maatschap) The Maatschap is automatically terminates when one of this following occurs: 1. The termination of Maatschap activities at the time specified in the maatschap agreement 2. The destruction of the object or purpose for which the Maatschap was formed 3. The withdrawal of one or more partners 4. The death, placement under guardianship, or bankruptcy of one of the partners.

Distributin of Maatschap Property If, after payment of all debts, Maatschap property reamains, the property will be devided among the partners according to the provisions of the maatschap contract. If the property is not sufficient to pay all the debts of the Maatschap, the debts will be the burden of each partner according to the provisions of the contract of maatschap.

Dissolution and Winding-up The Maatschap automatically terminates when one of the following occurs: 1. the termination of Maatschap activities at the time specified in the Maatschap agreement. 2. the destruction of the object or purpose for which the Maatschap was formed. 3. the witdrawal of one or more partners. 4. the death, placement under guardianship, or bankruptcy of one of the partner.

Dissolution and Winding-up (continuation) The winding-up process will normally be carried out by “liquidator” (trustees) appointed by the partners, or If the partners do not agree on the appointment of one or more among them to act as the trustee, then the partners will act together as trustees of the property.

The Firma The Firma is a partnership form which is generally use by commercial partnership such as trading and service enterprises. Unlike a Maatschap whereas the partners act under their own names, a Firma does busnisses under a common trade name.

Formation of the Firma A Firma can come into existence by a written or an oral contract. For evidence purpose, it is best that a written contract or an authentic deed be made when establising a Firma.

Registration of Firma After a Firma has been incorporated by an authentic deed, the partners should promply register the deed with the local court and publicize the deed in the Official Gazette. With regard to third parties an unregistered Firma will be regarded as having unlimited business purposes, partners with unlimited responsibility, and an indefinite period of existence. With this provision, a third party acting in good faith is protected when dealing with an unregistered Firma.

A Good Faith Third Party Protection Toward Unregistered Firma A third party doing business with a number of persons under a common name may assume the existence of a Firma. Whoever gives the impression of acting as a partner of a Firma will be liable for his act. A person who holds himself out as a partner is estopped from denying the existence of the Firma. In the contrary, if a Firma has been registered, the third party will bear the risk involved in doing business with a partner who lacks the authority to execute such business.

The Property of the Firma In the Maatschap, the property of the Maatschap is only the sum total of what the partners have contributed to the Maaschap plus profits minus the debts to third parties. The Firma goes one step further by separating the property of the Firma from the personal property of each individual partner.

The Property of the Firma (continuation) As a consequence the creditors of the Firma have a claim on the Firma’s property with priority over the creditors of each individual partner. The creditors of the Firma may put their claim directly on the Firma’s property, whereas the creditors of each individual partner may claim only if the goods or propety have become the partner’s personal property after the winding-up of the Firma.

Legal Relations between Partners The same as Maatschap.

Relation to Third Parties Each partner has the right to act in the name of the Firma within the scope of its activities and bind the Firma toward third persons unless he has been expressly denied this right. Each partner is responsible for each and every liability of the Firma toward third persons.

New Partners of the Firma If because of the death of one of the partner or because of other circumtances a partner has to be substituted, there are two possible method: a. the old Firma may be dissolved and a new Firma set up, or b. the old Firma may be continued by substituting a new partner for the old one. For (a) the new Firma will not responsible for the old debts.

Dissolution and Winding-up of the Firma The same as Maatschap. If its property is not sufficient to pay all the debts of the Firma, the partners have to contribute pro parte. If Firma property remains after the payment of all debts, the property will be divided among the partners according to the provisions of the Firma contract.