Legal Literacy - The criminal law reform through the enactment of Law Number 1 of 2023 or the Criminal Code (KUHP) and Law Number 20 of 2025 or the Criminal Procedure Code (KUHAP) on January 2, 2026, is still understood simply as a technical change to the formulation of offenses and criminal threats. However, there is a fundamental shift that has escaped the attention of business actors. Now, corporations are placed as full criminal subjects, no longer just objects of administrative sanctions. new Criminal Code explicitly stipulates principal and additional penalties for corporations. This shift not only changes who can be penalized, but also touches on the basis of business certainty in Indonesia. Responsibility for criminal acts by corporations, which was initially directed at both the corporation and its management, is now clarified to primarily lie with the corporation. Only then can it be translated to the management or controlling party as regulated in Article 49 Paragraph 1 of the New Criminal Code.
For a long time, the business world has operated under the assumption that business disputes are essentially resolved through mechanisms civil law such as contracts, compensation, default, and torts. Criminal law is positioned as an ultimum remedium that is used in a limited way for acts containing malicious intent (mens rea) such as fraud or embezzlement. However, the new Criminal Code now introduces a new paradigm that corporations can be subject to fines (principal penalties), additional penalties and various actions that directly impact the structure and sustainability of the company, which are more sharply regulated in Article 329 to Article 338 of the Criminal Procedure Code.
Corporations in the new Criminal Code regime are placed as full subjects with the consequence that criminal law can penetrate the heart of business activities such as financial statements, operational structure, and corporate governance. All criminal sanctions normatively place criminal law no longer as an instrument outside the business world, but rather as a regulatory factor that works through financial and operational mechanisms. For example, Article 122 paragraph (3) of the Criminal Code stipulates that when fines or additional penalties are not met, the corporation's assets or income can be confiscated and auctioned by the Prosecutor to pay off the criminal obligations. More explicitly in Article 122 paragraph (4) of the Criminal Code, if it is still insufficient, the corporation can be subject to a substitute penalty in the form of freezing part or all of its business activities.
These changes have important intersections with civil law. In the Civil Code (KUHPerdata), compensation arises from default or unlawful acts (PMH) that must be proven through civil justice mechanisms. The new Criminal Code (KUHP) introduces the obligation to recover losses and confiscate profits, which functionally resemble restitution and compensation. Now, criminal judges can potentially determine the value of economic losses and order recovery as long as there is a crime as the basis of the legal event. However, it must be emphasized that the criminal mechanism is not intended to replace the resolution of purely civil disputes. Contract disputes that qualify as defaults in good faith remain within the civil domain. Only agreements used as instruments of crime can escalate to the criminal domain.
Implications for Investors and Creditors
The new configuration of corporate criminal liability has direct implications for the position of investors and creditors. The new Criminal Code opens the possibility of executing fines for compensation and criminal restitution against corporations through the mechanism of confiscation and auction of corporate assets if they are not fulfilled within the period specified in Article 122 of the Criminal Code. Furthermore, if the corporation's assets or income are insufficient to meet the criminal fines, the new Criminal Code allows for the imposition of substitute punishment in the form of freezing part or all of the corporation's business activities. Factually, this condition not only affects the asset structure but also potentially reduces the corporation's ability to generate cash flow to fulfill its contractual obligations.
In this context, criminal claims on corporate assets can practically "compete" with creditors' civil claims. In other words, the certainty of fulfilling the rights of investors and creditors is now also influenced by corporate criminal exposure, not solely by financial performance and administrative compliance. This shift also marks a transformation in the role of criminal law, from initially functioning to punish, to now taking on a corrective role towards the economic consequences of violations. The state not only punishes perpetrators but also corrects the economic impact through loss recovery, profit confiscation, and restrictions on business activities. Ultimately, criminal law is now part of the regulatory framework of the community and the state's economy.
For the business world, this change requires a paradigm shift. Compliance is no longer sufficient to be understood as formal fulfillment of regulations but must also be positioned as a business sustainability strategy. A criminal risk prevention system needs to be integrated into corporate governance, risk management, and corporate culture. This aims to ensure that compliance also functions to maintain the legal existence of the company itself. On the other hand, this reform is a step forward in encouraging a more responsible business world. However, without clear implementation guidelines and awareness of change by the corporation, this will also be a potential uncertainty and a trap for legal corporations that are not competent, especially for small and medium enterprises that may still have limited resources.
Therefore, a joint effort between policymakers, law enforcement officials, and the business community is needed to ensure that the expansion of corporate criminal liability functions as an instrument of development and stabilization, not a source of uncertainty. Transparent implementation guidelines, clear loss assessment standards, and protection for legitimate business continuity need to be part of the new Criminal Code implementation agenda. The entry of criminal law into the business world is not just a technical change, but a major paradigm shift in the Indonesian legal system. Business certainty is now no longer only determined by contracts and administrative regulations, but also by the corporation's ability to build legal sustainability through substantive compliance.
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