Corporate Criminal Liability: Key Sentencing Adjustments under Law 1/2026
The long-awaited reform of Indonesia’s Criminal Code has come into effect on January 2, 2026, following the enactment of Law No. 1 of 2023 on the Indonesian Criminal Code / Kitab Undang-Undang Hukum Pidana (“Law 1/2023”), which formally replaced the previous criminal code regime.
Consequently, corresponding adjustments to existing criminal penalty provisions are necessary to ensure consistency and legal certainty, as well as to prevent potential injustice arising from discrepancies between Law 1/2023 and criminal penalty provisions set out in other prevailing laws and regional regulations.
To address this, the Government has enacted Law No. 1 of 2026 on the Adjustment of Sentencing Provisions (“Law 1/2026”), which also became effective on January 2, 2026. Law 1/2026 is intended to harmonize and realign criminal sentencing provisions set out in laws and regional regulations enacted prior to the entry into force of Law 1/2023, ensuring consistency with the structure and principles of sentencing under the new criminal code.
Importantly, these adjustments and amendments have significant implications for corporate criminal liability, particularly in relation to the scope of corporate responsibility, attribution of acts to corporations, and the applicable sentencing framework. Set out below are several key adjustments and changes introduced under Law 1/2026 regarding corporate criminal liability.
♦ Changes in Criminal Fines for Corporate
Law 1/2026 amends the criminal penalty set out in laws other than Law 1/2023 that imposed single penalty. As for criminal acts committed by the Corporation, which includes legal entities in the form of limited liability companies, foundations, cooperatives, state-owned enterprises, regionally-owned enterprises or the equivalent, as well as associations both incorporated and unincorporated, business entities in the form of firm partnership, limited partnership, or the equivalent with the prevailing laws and regulations (the “Corporation”), that do not generate financial gain, Law 1/2026 imposes fine penalty for up to the maximum under Category V (i.e., Rp500,000,000 (five hundred million Rupiah).
However, where a criminal act committed by a Corporation result in financial benefits, Law 1/2026 imposes fine penalty for up to the maximum of Category VIII (i.e., Rp50,000,000,000 (fifty billion Rupiah).
Based on the elucidation of Article 79 (1) of Law 1/2023, criminal fines using a categorical system. This categorization is intended to provide clarity on the maximum amount of fines applicable to various criminal offenses and may be amended from time to time in the event of economic and monetary changes.
♦ Strengthened Enforcement of Corporate Additional Penalties
In accordance with Law 1/2023, the public prosecutor is authorized to impose an additional penalty on Corporations, including, among other, forfeiture of assets or proceeds derived from criminal acts, announcement of court judgments, revocation of licenses, permanent prohibition from engaging in certain activities, closure or suspension of business operations, and corporate dissolution. While these additional penalties are expressly listed, the mechanisms for their enforcement and the consequences of non-compliance are not comprehensively elaborated under Law 1/2023.
Law 1/2026 further addresses this gap by introducing more detailed execution provisions. With respect to assets forfeiture, the amendment now provides that should the assets ordered to be forfeited is not subject to seizure, other corporate assets of equivalent value may be forfeited as a substitute. It also clarifies that, in the event of a Corporation fails to bear the costs of announcing the court’s verdict, assets of equivalent value may likewise be subject to forfeiture.
Furthermore, Law 1/2026 refines the treatment of customary obligations by specifying that their fulfillment is deemed equivalent to a minimum Category IV of fine penalty (i.e., Rp200,000,000 (two hundred million Rupiah)).
In the event of non-compliance, the Corporation may be required to pay compensation equivalent to a Category IV of fine penalty. If such compensation remains unpaid, the prosecutor is authorized to seize and auction the Corporation’s revenue or assets to satisfy the outstanding obligation.
♦ Introduction of a Profit-Based Aggravation of Fines
In addition to strengthening the enforcement mechanisms for corporate fines penalty and to ensure that sanctions are not merely rely on the nominal but economically proportionate to a Corporation’s financial capacity, Law 1/2026 introduces a profit-based proportionality approach.
In circumstances where a Corporation is subject to a Category VIII of fine penalty (i.e., Rp50,000,000,000 (fifty billion Rupiah) and the court determines that such statutory fine is insufficient to achieve the objectives of sentencing, the court may impose an additional fine of up to 10% (ten percent) of the Corporation’s profit in the financial year preceding the issuance of the judgment.
♦ Non-Extinguishment of Criminal Liability Upon Corporate Restructuring
To prevent Corporations from evading criminal liability through certain corporate actions intended to extinguish prosecution, Law 1/2026 further regulates that the authority to prosecute a Corporation does not lapse due to structural or legal changes affecting the entity. Criminal proceedings may continue notwithstanding bankruptcy, change of corporate name, merger, consolidation, acquisition, spin-off, or dissolution. Accordingly, the occurrence of any of these corporate actions does not preclude the continuation of criminal proceedings against the Corporation.
AKSET
Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Adhitya Ramadhan (aramadhan@aksetlaw.com), Unisya Izhari Rinsta Savira (usavira@aksetlaw.com) or Shafa Femalea Sekar Nuswantari (snuswantari@aksetlaw.com) for further information.
Disclaimer:
The foregoing material is the property of AKSET and may not be used by any other party without our prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.
Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.
