Review of Legal Protection to Directors Based on the Principle of Business Judgment Rule Against Limited Liability Companies that are Declared Dissolved (Study of PT. Istana Cempaka Raya)

Abstract

This research aims to investigate the review of legal protection for directors based on the Business Judgment Rule principle in cases involving limited liability companies that have been declared dissolved. This type of research is normative and empirical, with the approach method used being the statutory approach, conceptual approach, and analytical approach to the legal relationship between PT and its directors. The Business Judgment Rule principle in the Indonesian legal system is recognized as a doctrine that provides legal protection to directors of limited liability companies from liability for business decisions that are detrimental to the company, as long as the decision is taken in good faith, prudence, without conflict of interest, and within the limits of their authority. This principle is reflected in the provisions of Article 97 paragraph (5) of Law No. 40/2007 on Limited Liability Companies, which states that the board of directors cannot be held liable for the company's losses if it can be proven that the action has been carried out by these principles, Based on the principle of Business Judgment Rule, the limitation of the liability of the board of directors in the case of dissolution of a limited liability company lies in the extent to which the decisions taken about the dissolution are made in good faith, prudently, without any conflict of interest, and within the limits of authority granted by law and the company's articles of association. The Board of Directors cannot be held liable for losses arising from the dissolution decision if it can be proven that the action was the result of rational business judgment and was in the best interests of the company at the time the decision was made.