A legal entity or rechts persoon is a group of people formed by law as a legal subject who can take legal actions like humans. They can own assets, make agreements, and take actions that can create legal relationships. The assets of a legal entity are separate from the assets of its members, so the legal entity can act through its administrators. Legal entities can also have rights and obligations that are separate from the rights and obligations of their members. This has important implications in the economic field, especially in trade. Thus, a legal entity can be considered as an entity that has assets, rights and obligations like an individual.

An example of submitting a legal entity can be done with the following steps: first, making a notarial deed; second, registering the legal entity with the local State Court Registrar's office; third, requesting ratification of the Articles of Association (AD) to the Minister of Law and Human Rights or the Minister of Finance for pension fund legal entities; fourth, announcing it in the State Gazette of the Republic of Indonesia.

There are many opinions on how legal entities can have the nature of legal subjects like humans. Various theories have been developed in the academic world to explain this. According to Salim HS, the concession theory is the most influential theory in positive law. This theory states that legal entities cannot have legal personality such as rights, obligations, and assets, unless permitted by law, which in essence is the state itself.

There are two types of legal entities that are distinguished, namely:

This is a legal entity established for the benefit of the public or the community in general. A public legal entity is a legal entity established by the government or a management body assigned to do so, such as the State of the Republic of Indonesia, Regional Governments of levels I and II, Bank Indonesia, and State-Owned Enterprises.

This is a legal entity established based on civil law or private law concerning the interests of many people within the legal entity. A private legal entity is a private legal entity established by individuals for specific purposes, such as profit, social, education, science, and others according to applicable law, such as limited liability companies, cooperatives, foundations, charities.

According to J.J. Dormeier, a Legal Entity can be explained as follows:

A Legal Entity includes a group of people who act as a single legal entity and a foundation, which is wealth used for a specific purpose. In addition to humans, a Legal Entity in law has rights and performs legal actions like humans, and has its own assets, is represented by management, and can sue or be sued before a judge.

Legal Entities can be divided into two types, namely public Legal Entities such as the state, provinces, and regencies, and private Civil Law such as limited liability companies (PT), foundations, and cooperatives.

From the explanation above, it can be concluded about the definition of a Legal Entity as a legal subject that includes the following:

  1. group of people (organization);
  2. able to take legal action in legal relations;
  3. has its own assets;
  4. has management;
  5. has rights and obligations;
  6. can sue or be sued in court.

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As a legal subject, a Legal Entity must meet the requirements stipulated by law, namely:

  1. have assets that are separate from the assets of its members;
  2. the rights and obligations of the Legal Entity are separate from the rights and obligations of its members.

There are four theories used as requirements for a Legal Entity to become a legal subject, namely:

  1. Fictitious Theory which states that Legal Entities are only created by the state;
  2. The Purposeful Wealth Theory that only humans can be legal subjects;
  3. The Ownership Theory which states that the rights and obligations of a Legal Entity are essentially the rights and obligations of members together; and
  4. The Organ Theory which states that the Legal Entity is an entity that is truly present in legal life.