Business Judgment Rules Regulations by Directors in Indonesia

Abstract

This writing aims to analyze further implementation the Business Judgment Rule (BJR) principles in Indonesia and apply the BJR principles to the decisions made by directors that result in losses for a Limited Liability Company. This research employs a normative legal research method with a statutory approach. The research findings indicate that the BJR has been regulated in Article 97 paragraph (5) of the Indonesian Company Law. Article 104 paragraph (4) of the Limited Liability Company Law. This principle provides an exception to the liability of directors whose decisions result in losses for the Limited Liability Company, provided that the decision is made in good faith and full responsibility, as it constitutes an inherent fiduciary duty of the directors. An example of applying the Business Judgment Rule (BJR) is in a case decided by the Supreme Court of the Republic of Indonesia No. 121 K/Pid.Sus/2020, where the defendant in that decision was acquitted of all legal charges. However, in the judgments of the lower court and the appellate court, the defendant was found to have been proven guilty of committing corruption offenses. The Supreme Court argued that the defendant's actions to develop the company did not fall outside the scope of the BJR, as there were no elements of fraud, conflicts of interest, and intentional unlawful acts.