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CV Establishment

Written by Yovitha Manuella S. L. Tobing on 24/07/2024
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

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Introduction

Commanditaire Vennootschap (CV) is a non-legal entity established by one or more parties as limited partners and one or more parties as complementary partners with different responsibilities to conduct business activities on an ongoing basis. Establishing a CV can be a strategic move to start a business, leveraging minimal capital, an easy set-up process, flexibility in ownership and operations, and quick decision-making.

Definition

CV (Commanditaire Vennootschap) is a business entity in Indonesia, often referred to as “Persekutuan Komanditer” in Indonesian law. It is a partnership between two types of partners: a Limited Partner and a Complementary Partner. A limited partner is a partner who is only limitedly liable according to the amount of capital invested, while a Complementary is fully responsible for the company’s obligations. The Commercial Code explains in Article 19 that “A company formed by way of lending money, also known as a limited partnership, is established between a person or several companies who are jointly and severally liable for the whole, and one or more people as money lenders.”

The Importance of Establishing CV

Establishing a CV is crucial for entrepreneurs looking to start a business with minimal capital and a straightforward set-up process. The structure allows for flexibility in ownership and operations, enabling efficient resource management and faster decision-making. This makes it an attractive option for those who want to quickly respond to market changes and business opportunities.

Benefits

Minimal Business Capital: The ability to start a business with relatively minimal capital by combining several passive liability companies’ capitals, reducing personal financial burden.
Simpler Establishment Process: Fewer legal requirements and less complicated documentation saves time and money.
Ownership and Operations Flexibility: Roles and responsibilities can be assigned according to expertise and contribution, allowing efficient resource management.
Faster Decision-Making: A more straightforward decision structure enables quicker responses to market changes and business opportunities.

Requirements

To engage with our CV establishment services, please prepare the following documents:

Founders’ Information: Copy of the e-KTP and Taxpayer Identification Number for all founders.
Business Details:
- Proposed name of the CV.
- Aims and objectives of the CV.
- Domicile and registration plans for the deed.
Legal Documentation: Documentation required for the Deed of Establishment and subsequent registration processes.

Duration

The establishment of a CV typically takes about 8 working days, contingent upon the completion of all documentation and procedures.

The Process of CV Establishment

Determine the Founders: At least two founders are required, as Limited Partners and Complementary Partners, with different rights and obligations.
Prepare the Establishment Documents: Gather necessary data and documents, such as the e-KTP of the founders, the name of the CV, the aims and objectives, the domicile, and the registration date of the deed of establishment.
Apply for the CV Name: Submit the application to the Ministry of Law and Human Rights through Sistem Administrasi Badan Usaha (SABU) Application, ensuring the name uses Latin letters, is not similar to other CVs, and does not violate ethical norms and public order.
Create a CV Establishment Deed: Create an establishment deed with the help of a sworn Notary public.
Obtain Certificate of Registration/Surat Keterangan Terdaftar (SKT): Register the CV through SABU to get the SKT, indicating registration at the Ministry of Law and Human Rights.
Apply for Nomor Pokok Wajib Pajak/Tax Identity Number (NPWP/TIN): Get a business entity Taxpayer Identification Number from the Tax Office of the CV’s domicile.
Apply for Nomor Induk Berusaha/Business Identity Number (NIB/BIN): After District Court approval, apply for a Business Identity Number through the Online Single Submission.

Additional Insights

The difference between CV and Limited Liability Company (LLC) is CV and LLC are common business entities in Indonesia. An LLC is a legal entity with capital consisting of shares, owned by shareholders. Key differences include:

	CV	LLC
Company Form	Company form Non-Incorporated Company.	Incorporated Company.
Capital for Establishment	No minimum capital for establishment.	No minimum capital for domestic investment LLC and greater than 10 Billion for foreign investment LLC.
Founder	Minimum 2 people, and must be Indonesian citizens.	Minimum 2 people can be both Indonesian citizens and foreigner.
Organization	Managed by two types of parties: limited partners and complementary partners.	Managed by RUPS, Commissioners, and Director.

More comprehensive provisions related to the technical establishment of CV are regulated in Minister of Law and Human Rights Regulation number 17 of 2018 concerning the Registration of Limited Liability Partnerships, Firm Partnerships, And Civil Partnerships.

How We Can Help

At Putranto Alliance, we assist in setting up a CV in compliance with existing laws and regulations. Our company establishment team will guide you through every step, which are:

Establishing Initial Presence
Our team provides guidance on navigating the regulatory landscape and procedures for CV establishment in Indonesia, ensuring proper documentation and compliance with Ministry of Law and Human Rights guidelines.
Creating Deeds
With our allied notary, we can help create a CV deed of establishment.
Licensing and Permitting
We handle the application process through the Online Single Submission (OSS) system for efficient licensing, ensuring all necessary permits and approvals are obtained promptly.
Taxpayer Identification Number Registration
Our experts facilitate the application and issuance of the CV Tax Identification Number to fulfill tax obligations.
Compliance and Reporting
We guide clients on post-establishment reporting requirements and compliance with Indonesian regulations, ensuring proper documentation and records for regulatory purposes.
Legal Support
We offer legal counsel and support throughout the CV establishment process, ensuring adherence to legal frameworks and requirements.

FAQs

How does the profit-sharing mechanism work in a CV?

The profit-sharing mechanism in a CV is typically outlined in the partnership agreement. Profits are usually distributed based on the proportion of capital contributions or as agreed upon by the partners. Limited Partners receive a share of the profits relative to the investment made, while Complementary Partners may receive a larger share due to an active management role and unlimited liability.

How can a CV raise additional capital after establishment?

A CV can raise additional capital through various means, such as reinvesting profits, bringing in new Limited Partners, or obtaining loans. However, it is essential to document any changes in capital contributions and update the partnership agreement accordingly. Any significant changes should also be reported to the Ministry of Law and Human Rights to ensure compliance.

Can a CV engage in all types of business activities in Indonesia?

While a CV can engage in a wide range of business activities, certain sectors may have specific regulations or restrictions. For example, some industries may require additional licenses or permits, and foreign investment regulations may limit the types of activities a CV can undertake. It is essential to consult with legal experts to ensure compliance with industry-specific regulations.

What are the potential risks associated with establishing a CV?

The primary risk for Complementary Partners in a CV is unlimited liability, meaning the CV is personally liable for the company’s debts and obligations. This can put the personal assets of the CV at risk. Additionally, the lack of formal structure compared to an LLC can lead to potential conflicts among partners and challenges in managing the business effectively.

What are the post-establishment compliance requirements for a CV in Indonesia?

Post-establishment compliance for CVs in Indonesia includes:

Ongoing tax filing and ensuring timely payments to maintain financial legality.
Regular updates and renewals of licenses as dictated by sector-specific regulatory bodies.
Routine auditing and compliance checks to remain in good standing and current with all legal obligations.
The possibility of changing legal entity

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