Unlocking Business Potential in Indonesia: Understanding Legal Names in Corporate Spaces

The legal name is the name registered with a government body, which is responsible for the supervision of business entities. The legal name of a company is important because that legal name is the name which must be used when the business enters into a legally binding transaction with others. The legal name of a company can therefore be important when setting up or running a business in Indonesia for a number of reasons.

The legal name of a company is the name under which it is incorporated and used to do business. It should be the same name as set out in the deed of establishment and can be used in all corporate communications. This means the legal name can be used on any contracts, invoices and statements of accounts issued by the company.

The legal name of a company is important when dealing with third parties, i.e. anyone who the company is dealing with outside of the company, to ensure the company name is being used. If the legal name is not being used this may lead to issues when payment is required, or not, from the company. Misunderstandings and unexpected issues could also arise.

To check a company’s legal name and whether this is the name being used to deal with third parties, the Articles of Association of the company can be checked. The legal name of a company must be the same as set out in the Articles of Association in the Company Register in the Netherlands. The legal name may be different to the trading name of a company whereas the trading name is the name by which the company is known.

When setting up a business in Indonesia, a decision must be made regarding the name of the business. The company must select whether the legal name will be used or whether the trading name will be used. Issues could arise if the wrong name is used on a legally binding document or contract and the company may not be able to rely on this contract or agreement to enforce the terms of the same.

The legal name of a company is listed on the Company Register in Indonesia. The Company Register includes information on every company, including the legal name of a company. This register can be accessed by anyone wishing to check details of a company. This can include checks on the company’s legal name. It is very important that when dealing with a company, the legal name is used and not another name or title such as the name of the director of the company.

A company and individuals acting on behalf of a company should not use the wrong name when dealing with another party. If the company is incorporated under a particular name the company should use that name and not another name or group of names by which it is known. Otherwise issues could arise such as the other party alleging the individual misrepresented the company or the contract being held not to be binding. For example in the case of MNM Family Restaurant & Catering Inc v McDonald Restaurants of Canada Ltd [2002] 57 OR (3d) 241 (ON SC). In this case, the individuals signed a contract on behalf of a corporation which was not yet been incorporated and the court found the contract to be valid as the individual who signed the contract referred to the contract as being between himself and the other individuals as directors. The Court determined that the contract was binding on the company as it had all the attributes of a contract.

A company can change its name but this must be done in accordance with legislation and as required by the articles of association. There will be certain steps that need to be taken to change the name. The new name must be registered in the Company Register and this will be made public to the extent required and restrictions may be placed on a company from using the old name. The existing leases and agreements of a company may also be affected by a change of name and the documentation will need to be reviewed to ensure the terms are still enforceable and applicable to the company with the name change.

The legal name of a company can be important and could result in serious implications for the company if the business has been run in an improper way which does not comply with regulations, and the company could face criminal liabilities.

It would be recommended that the legal name of a company is provided when registering to start a new business, and the business is incorporated under that legal name, to avoid confusion and issues arising in any transactions or dealings the company may have.