Implementation of the Doctrine of Business Judgment Rule in Management of Limited Liability Companies

Abstract

This research was conducted to determine the implementation of the business judgment rule doctrine in the management of a limited liability company. The problems are going to study are: first a pa duties, obligations and powers of directors under the company law? The second problem, namely what are the elements of prudence and good faith in relation to the responsibilities of the board of directors? The approach used in this study is the approach of legislation (statute approach), and the conceptual approach. The method of analysis of legal materials used in this study is a normative method, namely prescription with deductive-indicative reasoning to produce propositions or concepts as an answer to the problem under study. The results showed that the first, directors in carrying out the duties, obligations and authority under company law should be based on the principles of fiduciary duty, namely that of directors in managing and running the company must comply with the intent and purpose as well as the company’s business. The Board of Directors carries out the management of the company for the benefit of the company and in accordance with the aims and objectives of the company. In addition, the board of directors has the authority to carry out management in accordance with the policies that are deemed appropriate, within the limits stipulated in the laws and / or articles of association of the company. Second, the element of prudence and good faith in relation to the responsibilities of the board of directors, namely as referred to in Article 97 paragraph (5), that members of the board of directors cannot be held responsible for personal losses if they can prove that: (a) the loss was not due to their fault or negligence. ; (b) the board of directors has carried out the management in good faith and prudently for the interest of and in accordance with the aims and objectives of the company; (c) the board of directors does not have a conflict of interest, either directly or indirectly, over management actions that result in losses; and (d) have taken steps to prevent the loss from arising or continuing.