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

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.