Proceedings of the 2nd International Conference on Law, Economic, Governance, ICOLEG 2021, 29-30 June 2021, Semarang, Indonesia

Research Article

The Dilemma of Managing Limited Liability State-Owned Enterprises in Applying the Business Judgment Rule

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  • @INPROCEEDINGS{10.4108/eai.29-6-2021.2312616,
        author={Hasrul Benny Harahap and Bismar  Nasution and Hikmahanto  Juwana and Mahmul  Siregar},
        title={The Dilemma of Managing Limited Liability          State-Owned Enterprises in Applying the Business Judgment Rule},
        proceedings={Proceedings of the 2nd International Conference on Law, Economic, Governance, ICOLEG 2021, 29-30 June 2021, Semarang, Indonesia},
        publisher={EAI},
        proceedings_a={ICOLEG},
        year={2021},
        month={10},
        keywords={limited liability soes state finance business judgment rule},
        doi={10.4108/eai.29-6-2021.2312616}
    }
    
  • Hasrul Benny Harahap
    Bismar Nasution
    Hikmahanto Juwana
    Mahmul Siregar
    Year: 2021
    The Dilemma of Managing Limited Liability State-Owned Enterprises in Applying the Business Judgment Rule
    ICOLEG
    EAI
    DOI: 10.4108/eai.29-6-2021.2312616
Hasrul Benny Harahap1,*, Bismar Nasution1, Hikmahanto Juwana2, Mahmul Siregar1
  • 1: Universitas Sumatera Utara
  • 2: Universitas Indonesia
*Contact email: hbhlaw92@gmail.com

Abstract

State-Owned Enterprises (SOEs) should contribute to the national economy. Using the structure of a limited liability company as the basis for their management, limited liability SOEs place the board of directors as company managers responsible for the interests and objectives of the enterprise. As business entities, limited liability SOEs utilize the state financial system to ensure that the public aspect remains inherent in their management. This paper aims at analyzing the position of the board of directors based on the Business Judgment Rule in managing limited liability SOEs. This research uses a normative juridical method supported by library data. It aims at identifying the application of the business judgment rule principle by the limited liability SOEs board of directors. The results show that the structure of a limited liability company as the basis of the management protects directors based on the Business Judgment Rule. However, based on the state financial regulations, limited liability SOEs funds are considered part of state funds. Therefore, the losses of limited liability SOEs are considered state losses, which causes ambiguity in applying the business judgment rule in managing limited liability SOEs.