Key Differences Between PT and CV in Indonesia

When starting a business in Indonesia, one of the first and most important decisions is choosing the right legal entity. Two of the most common forms are PT (Perseroan Terbatas / Limited Liability Company) and CV (Commanditaire Vennootschap / Limited Partnership). Both offer distinct characteristics, advantages, and limitations that entrepreneurs should carefully consider.

This article explores the definitions, pros and cons, and key considerations to help determine whether a PT or CV is the best structure for your business in Indonesia.

Definition of PT and CV

PT (Perseroan Terbatas / Limited Liability Company)

A legal entity recognized under Indonesian law, regulated by Law No. 40 of 2007 on Limited Liability Companies (as amended by the Omnibus Law on Job Creation, Law No. 11 of 2020).
Requires at least two shareholders, which can be individuals or corporate entities.
Has a clear organizational structure: shareholders, directors, and commissioners.
Provides limited liability protection, meaning shareholders are only liable for the amount of capital they invest.

There are two main types of PT:

PT Local – owned by Indonesian citizens/entities.
PT PMA – a Foreign Investment Company, allowing foreign individuals or entities to invest under the Positive Investment List.

CV (Commanditaire Vennootschap / Limited Partnership)

A partnership that is not a separate legal entity, regulated under the Indonesian Commercial Code (KUHD).
Composed of at least two partners:
- Active Partners (Sekutu Aktif): Manage the business and bear unlimited liability.
- Limited Partners (Sekutu Pasif): Contribute capital but are not involved in management. Liability is limited to their investment.
Easier and cheaper to establish compared to a PT, but with higher legal risks for active partners.

Read: Mengenal OSS RBA untuk Pengurusan Izin Usaha Terpadu di Indonesia

Pros and Cons of PT and CV

Choosing between PT and CV depends on balancing legal protection, credibility, and flexibility with cost and administrative requirements.

Pros of PT

Legal protection: Shareholders enjoy limited liability.
Credibility: Seen as more professional by clients, banks, and investors.
Growth potential: Easier to raise capital, attract investors, and engage in large projects.
Access to government tenders: Many projects require PT status.
Succession planning: Ownership can be transferred through shares.

Cons of PT

Higher cost: Establishment fees start at around IDR 10,000,000 and may be higher for PT PMA.
Longer process: Typically takes 20–30 working days, with multiple steps (deed, Kemenkumham approval, NPWP, OSS registration).
Ongoing compliance: Must submit annual reports, maintain proper bookkeeping, and adhere to corporate governance standards.

Pros of CV

Simple and fast setup: Establishment process is relatively quick and less costly.
Lower requirements: Does not require large paid-up capital or a complex structure.
Flexibility: Ideal for small businesses, family-owned companies, or startups testing the market.

Cons of CV

Unlimited liability for active partners: Personal assets are at risk in the event of debts or lawsuits.
Lower credibility: Many clients, banks, and investors prefer working with PTs.
Limited access to opportunities: CVs are often excluded from large-scale tenders or contracts.
Less attractive to investors: Cannot issue shares, making it harder to bring in external capital.

When to Choose PT or CV

Deciding between PT and CV requires evaluating the nature, scale, and goals of the business.

Read: Prosedur Pengurusan Izin Tinggal Investor di Indonesia

Choose a PT if:

You plan to attract investors or raise capital.
You aim to participate in government tenders or large corporate projects.
You want legal protection for shareholders and limited liability.
You are building a business with long-term growth and expansion goals.
You want to separate personal and business assets for tax and legal purposes.

Choose a CV if:

You are running a small-scale business with limited operations.
You need a quick and low-cost setup.
You are operating in a low-risk industry where unlimited liability is less concerning.
You do not need to attract outside investors or issue shares.