The Firma (FA) Business Partnership

The Firma (FA) Business PartnershipFirma (FA) Business Partnership is a specific business partnership structure, often called a “Persekutuan Perdata Firma” in Indonesian legal terms. Here, two or more individuals or entities jointly own and operate a business for a shared commercial purpose.

 

Formation and Legal Requirements

To create an FA partnership, partners must draft an agreement deed, a crucial legal document that requires notarisation. This agreement deed outlines various aspects of the partnership, including the distribution of responsibilities among partners and the teams governing the partnership’s operations.

Advantages of the FA Business Partnership

One of the primary advantages of the FA entity is its capacity to accommodate a higher capital infusion due to the involvement of multiple partners. Additionally, the FA structure offers the advantage of permanent validity, allowing for potential expansion and growth in the future. Within the FA, it is possible to categorise staff based on their skills and expertise, facilitating efficient management.

Decision-Making and Representation

In the FA partnership, each partner, often referred to as an ‘executive partner,’ possesses the authority to act independently on behalf of the FA. This autonomy in decision-making is a distinctive feature of the FA structure. However, it’s important to recognise the legal distinction between the FA’s ‘own wealth’ and ‘allied wealth’ and adhere to the associated regulations.

Challenges and Considerations

Despite its advantages, the FA Business Partnership has certain limitations. New partners cannot join the partnership without the consent of existing partners, potentially restricting growth opportunities. Internal conflicts within the partnership significantly threaten its stability and longevity.

Moreover, each partner is responsible for settling any unpaid debts incurred by the company, underscoring the importance of prudent financial management and cooperation among partners to ensure the FA’s success and sustainability.