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LEGAL RISKS AND MITIGATION IN ESTABLISHING A LIMITED LIABILITY COMPANY THROUGH FOREIGN DOMESTIC JOINT VENTURE AGREEMENT Adinda Marianti; Elisatris Gultom
Multidiciplinary Output Research For Actual and International Issue (MORFAI) Vol. 5 No. 5 (2025): Multidiciplinary Output Research For Actual and International Issue
Publisher : RADJA PUBLIKA

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.54443/morfai.v5i5.3227

Abstract

This study analyzes the legal risks and benefits in establishing a limited liability company (PT) through a joint venture scheme between Foreign Direct Investment (PMA) and Domestic Investment (PMDN) in Indonesia. The research uses qualitative methods by reviewing legal documents such as Joint Venture Agreements (JVA) and Articles of Association (AoA), as well as Indonesian investment regulations. The study identifies key risks including inconsistencies between JVA and AoA, disproportionate governance structures, conflicting objectives between PMA and PMDN, and violations of foreign ownership limits under the Positive Investment List. These risks potentially cause operational conflicts and legal sanctions. Additionally, differences in legal backgrounds increase the chance of misinterpretation of ambiguous contract clauses. To mitigate these risks, the research suggests harmonizing the JVA and AoA, involving legal advisors familiar with Indonesian law and international business practices, and implementing clear governance and dispute resolution mechanisms such as arbitration. The findings aim to guide stakeholders in managing joint ventures effectively and legally compliant in Indonesia.