Legal Basis in Establishing a Business

In building a business, it is important to understand the type of legal basis there are to protect the business and the employees. Unfortunately, there are still many young entrepreneurs who take this aspect lightly and not trust legal experts to step in to develop their business. The legal basis for building a business is needed to ensure the sustainability of business activities itself. Thus, business owners can reduce potential risks that will occur in the future.

In Indonesia, all types of actions by individuals and groups must be based on the provisions of the applicable laws. Therefore, to discuss further the legal basis in establishing a business, CoHive VOZA held an interesting discussion titled, “Legal Aspects of Creating Business” (Legal Aspects of Building a Business). In this discussion, we invited Dr Michael Hans S.H., S.E., M.Kn., LL.M., CLA, a lawyer and legal counsellor, intellectual property consultant, certified legal auditor, and founder of Brand Advice. This discussion was moderated by Reyhan Mahardika, Event Management Associate CoHive.

In building a business, there are four important aspects that require a legal basis, namely:

The originality of business ideas

Before initiating a business, it is important to see the existing regulations which are needed to formulate the contracts for the business. Moreover, it is also necessary to do in-depth research on the originality of the business idea, because the act of plagiarism can later be prosecuted by law. Therefore, for this reason, the protection of business ideas needs to be implemented, i.e business licenses, agreements, trademarks, and NDA (nondisclosure agreements).

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Intellectual property

Intellectual property is a term used for a set of exclusive rights granted to those who have produced works and meet the criteria of the applicable laws. There are several forms of intellectual property rights (IPR), i.e copyrights, patents, trademarks, designs, and business secrets. Business owners need to think about their IPR thoroughly because that way they can have a definite legal basis and get protection by the state.


Unfortunately, there are many misconceptions about contract making, one of which is the procedure for writing one. Michael emphasized that in making a contract, four elements must be fulfilled. Particularly agreement, fulfilling existing authorities, and the existence of a legal objective and object. He also stressed that whatever the business is, it has to be written under the law, even if it’s between family members. By writing and signing contracts, the regulations between partners become clearer and they can prevent violations of rights as well.

Business structure

After completing the three aspects above, business owners can start focusing on the business structure. The first step is to determine the type of company, the type of contract needed, and the funding. Also, location and licensing need to be considered as well. Regarding this matter, Michael reminded the importance of licensing, both on the environment, location, and taxes.

 “Juris ignorantia non-excusat” ignorance of the law is not something without reason. This means that the law has a binding character, both for those who do and do not understand the law. However, there are still many people who have misunderstandings about this and are disadvantaged by irresponsible parties. Therefore, as law-abiding citizens, it is crucial to educate ourselves on the existing law, thus they can protect their right both as a citizen and business owner.

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