Legal Standing of Parent and Subsidiary Companies of Indonesian Subsidiary State-Owned Enterprises

DOI

10.2991/978-2-38476-164-7_3How to use a DOI?

Keywords

BUMN; Business Judgment Rule; Board of Directors; Holding Company

Abstract

The formation of State-Owned Enterprise Holding (BUMN) is a strategic plan to organize the BUMN’s management structure and its subsidiaries, aiming to optimize BUMN performance and create a more competitive business environment in Indonesia. However, as this holdingization increases, legal consequences arise for BUMN’s parent and subsidiary companies, especially concerning applying the principles of the Business Judgment Rule, which concerns legal protection for each company’s directors. Therefore, further research needs to be done to discuss this issue. This research examines the problems: First, the legal standing of BUMN’s parent and subsidiary companies in Indonesia. Second, the application of the principles of the Business Judgment Rule (BJR) to BUMN subsidiaries’ directors in Indonesia. The method used in this research is normative juridical, using a positive legal approach and a conceptual approach using qualitative data types. The results of this research conclude that: First, the legal standing of a BUMN that has become a subsidiary in a holding company is no longer a BUMN because the shares of a BUMN subsidiary no longer come directly from the state but rather originate from its parent company. Second, there are several differences between the application of the principles of the Business Judgment Rule in the scope of BUMN subsidiaries and its parent company. As there is still a conflict of opinion related to BUMN subsidiaries’ status, it is hoped that there will be a uniform view on the legal standing of BUMN subsidiaries, which could also affect the application of BJR within the company.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Ulil Afwa
AU  - Fathya Neysa Oktavia
PY  - 2023
DA  - 2023/12/21
TI  - Legal Standing of Parent and Subsidiary Companies of Indonesian Subsidiary State-Owned Enterprises
BT  - Proceedings of the 3rd International Conference on Law, Governance, and Social Justice (ICoLGaS 2023)
PB  - Atlantis Press
SP  - 17
EP  - 27
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-164-7_3
DO  - 10.2991/978-2-38476-164-7_3
ID  - Afwa2023
ER  -