The Expansion of Corporate Criminal Liability under the New KUHP

As is well known, the Government officially brought Undang-Undang Nomor 1 Tahun 2023 into force on 2 January 2026. Undang-Undang Nomor 1 Tahun 2023, commonly referred to as the new Kitab Undang-Undang Hukum Pidana (KUHP), introduces several significant changes, particularly in the business sector.

One of the most notable changes is the formal recognition of corporations as subjects of criminal offenses. As stipulated in Article 45 paragraph (1) of the new KUHP, “A Corporation constitutes a subject of a criminal offense.” This differs from the previous KUHP, which only recognized individual persons as subjects of criminal offenses. Although corporations had previously been recognized as subjects of criminal offenses through Peraturan Mahkamah Agung Nomor 13 Tahun 2016 tentang Tata Cara Penanganan Perkara Tindak Pidana oleh Korporasi (Perma 13/2016), corporate criminal offenses were still defined as criminal offenses committed by persons based on an employment relationship or other relationship, either individually or jointly, acting for and on behalf of the corporation, both within and outside the corporate environment, as provided under Article 3 of Perma 13/2016. Accordingly, the regulation of corporate criminal offenses under the previous KUHP was limited to liability borne by individual persons.

Under the new KUHP, Article 46 provides that: "A corporate criminal offense is a criminal offense committed by management holding a functional position within the organizational structure of the Corporation, or by a person based on an employment relationship or other relationship who acts for and on behalf of the Corporation or acts for the benefit of the Corporation, within the scope of the Corporation's business or activities, whether individually or jointly." This amendment was introduced in response to the previous approach, under which criminal liability tended to focus primarily on corporate organs. For example, in embezzlement cases, which are commonly used as the basis for criminal charges arising from business transactions, enforcement generally focused on imposing criminal sanctions on the individual responsible for the offense.

Likewise, in environmental pollution cases arising from waste disposal activities, the relevant corporate organ would generally be regarded as the party responsible for the act. Consequently, criminal sanctions in the form of imprisonment or fines would primarily be imposed on those individuals. However, what if the fine involves restitution of losses suffered by the State as a result of tax embezzlement? The assets of the relevant corporate organ may not necessarily be sufficient to satisfy the full amount of the fine imposed by the court.

1. Expansion of Corporate Liability

The enactment of the new KUHP has fundamentally expanded corporate criminal liability. Liability is no longer limited to the personal liability of corporate organs but may also extend directly to the Corporation itself. The new KUHP expressly provides that, in addition to fines as the principal penalty for corporate criminal offenses, Article 120 of the new KUHP regulates additional penalties that may be imposed on corporations, including:

• Payment of compensation
• Remediation of the consequences of the criminal offense
• Performance of neglected obligations
• Fulfillment of customary obligations
• Financing of job training
• Confiscation of goods or profits obtained from the criminal offense
• Publication of the court judgment
• Revocation of certain licenses
• Permanent prohibition from engaging in certain acts
• Closure of all or part of the Corporation’s business premises and/or activities
• Suspension of all or part of the Corporation’s business activities
• Dissolution of the Corporation

These principal and additional penalties create distinct legal and business risks for corporations. Personal liability may now result in broader corporate liability. In cases involving tax embezzlement, not only may the perpetrator be subject to criminal sanctions, but the Panel of Judges may also order the Corporation to bear the fine. Similarly, in environmental pollution cases, criminal sanctions may not only be imposed on the relevant corporate organ, but the Corporation's licenses may also be revoked as a consequence of the offense.

2. Application of Corporate Criminal Liability

Nevertheless, it remains important to examine whether a particular criminal offense may properly be categorized as a corporate criminal offense or merely as an individual offense. An embezzlement offense initiated and committed solely by a director without any corporate decision or policy basis cannot automatically be categorized as a corporate criminal offense. Article 48 of the new KUHP establishes limitations by providing that a corporate criminal offense may only be attributed to a Corporation if:

• It falls within the scope of the business or activities as determined in the Articles of Association or other provisions applicable to the Corporation
• It unlawfully benefits the Corporation
• It is accepted as a corporate policy

Accordingly, understanding corporate liability in relation to corporate criminal offenses is essential in order to minimize legal and business risks that may arise for corporations as a result of criminal offenses.