The Position of the Principle of Piercing the Corporate Veil in Company Law in Indonesia

Abstract

A limited liability company is a legal entity. This means that shareholders are responsible for the number of shares owned. Likewise, the board of directors and the board of commissioners in carrying out their duties and obligations for and on behalf of a limited liability company as a legal entity. However, this general principle is excluded, due to the application of the principle of piercing the corporate veil. This study intends to analyze what factors lead to the application of the principle of piercing the corporate veil and what are the legal consequences. The approach used in this research is the statutory approach and the conceptual approach. The legal material analysis method used in this study is a normative method, namely by conducting prescriptions with deductive-inductive reasoning to produce propositions or concepts as answers to the problems studied. The results of the study show that the shareholder’s responsibility is not limited to the number of shares owned when the shareholder commits ultra vires (abuse of authority). Likewise, the responsibility of the board of directors and the board of commissioners in accordance with the authority they have sourced from the law and the articles of association of the company which should be the responsibility of the legal entity has turned into the personal responsibility of the directors and commissioners for carrying out ultra vires.