Simple Limited Partnership Agreement Template for Indonesia
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What is a Simple Limited Partnership Agreement?
The Simple Limited Partnership Agreement is a foundational document used in Indonesia when establishing a Commanditaire Vennootschap (CV), a popular business structure for small to medium-sized enterprises. This agreement is essential when one or more parties wish to actively manage a business (general partners) while others want to invest capital without involvement in day-to-day operations (limited partners). It complies with the Indonesian Commercial Code (KUHD) and recent business regulations, making it suitable for both local and foreign investment structures. The document covers crucial aspects such as capital contributions, profit sharing, management rights, partner obligations, and liability limitations, while providing flexibility for business growth and partner relationships.
About the Simple Limited Partnership Agreement
A Simple Limited Partnership Agreement is a crucial legal document that establishes a Commanditaire Vennootschap (CV) in Indonesia, one of the most flexible business structures for entrepreneurs and investors. This agreement creates a formal partnership where general partners manage daily operations while limited partners contribute capital without management obligations, making it ideal for businesses requiring both operational expertise and financial investment.
When do you need this document?
You need this agreement when forming a partnership where some parties want active management roles while others prefer passive investment. This structure is particularly valuable when establishing import-export businesses, manufacturing ventures, or service companies where foreign investors want to partner with local operators. The CV structure allows foreign investment up to certain thresholds without requiring complex corporate structures, making it popular among small to medium enterprises seeking growth capital. You also need this document when converting an existing business partnership into a formal legal entity or when adding silent partners to your existing business operations.
Key legal considerations
The agreement must clearly distinguish between general partners, who have unlimited liability and management authority, and limited partners, whose liability is restricted to their capital contributions. Capital contribution clauses should specify the amount, form, and timeline of each partner's investment, whether in cash, assets, or services. Profit and loss distribution mechanisms must be explicitly defined to prevent future disputes, including how losses will be allocated and whether limited partners can participate in specific business decisions. The agreement should address partner withdrawal procedures, transfer of partnership interests, and dissolution conditions. Management authority clauses must clearly delineate which decisions require unanimous consent versus those that general partners can make independently, particularly regarding business expansion, major contracts, and financial commitments.
Legal requirements in Indonesia
Under the Indonesian Commercial Code (KUHD), your partnership agreement must be registered with the Ministry of Law and Human Rights and obtain a Deed of Establishment from a notary public. The business must secure necessary permits including a Business Identification Number (NIB) through the Online Single Submission system and comply with Minister of Law and Human Rights Regulation No. 17 of 2018 regarding registration procedures. Foreign limited partners must comply with Law No. 25 of 2007 on Investment, which may restrict foreign ownership percentages in certain business sectors. The partnership must maintain proper accounting records and file annual reports as required by Indonesian business regulations. Tax registration with the Directorate General of Taxes is mandatory, and the partnership must comply with VAT requirements if annual turnover exceeds specified thresholds under Indonesian tax law.
GOVERNING LAW
Applicable law
This Simple Limited Partnership Agreement is drafted to comply with Indonesia law. Key legislation includes:
Indonesian Civil Code (KUHPer): Provides general provisions on contracts and agreements, particularly Book III on Obligations, which is relevant for partnership contracts
Law No. 25 of 2007 on Investment: Regulates investment activities in Indonesia, including foreign investment in partnerships and business entities
Government Regulation No. 24 of 2018: Covers electronic business licensing services and registration requirements for business entities including limited partnerships
Minister of Law and Human Rights Regulation No. 17 of 2018: Outlines registration procedures for limited partnerships and other business entities
Law No. 7 of 2014 on Trade: Contains provisions regarding trading activities and business operations that may affect partnership operations
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