The Business Judgment Rule as The Limit of The Responsibility of State-Owned Enterprise Directors for Losses Due to Business Decisions

DOI

10.2991/978-2-38476-607-9_3How to use a DOI?

Keywords

Business Judgment Rule; Civil Liability; Directors; State-Owned Enterprises; Corporate Governance

Abstract

The limitations of civil responsibility for directors of state-owned companies (SOEs), which combine the twin characteristics of commercial organizations and public policy instruments, are determined in large part by the commercial Judgment Rule (BJR). This frequently leads to uncertainty about who is responsible for corporate losses brought on by actions made. The purpose of this study is to examine the BJR's doctrinal formulation and normative foundation as the boundaries of directors’ liability. Through an analysis of the SOE Law and the Limited Liability Company Law, a normative juridical methodology using statutory, conceptual, and comparative methods is employed. The findings demonstrate that, if decisions are taken prudently, in good faith, within the bounds of lawful power, and without a conflict of interest, the BJR shields directors from civil responsibility. However, legal ambiguity and the possibility of criminalizing sound business actions are brought about by inconsistent law enforcement, especially when it comes to the equating of corporate losses with state losses. Maintaining a balance between management liberty and responsibility requires consistent application of the BJR.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Enan Sugiarto
AU  - Sulistyandari Sulistyandari
AU  - Tri Lisiani Prihatinah
AU  - Rahadi Wasi Bintoro
PY  - 2026
DA  - 2026/08/06
TI  - The Business Judgment Rule as The Limit of The Responsibility of State-Owned Enterprise Directors for Losses Due to Business Decisions
BT  - Proceedings of the 9th International Conference on Business, Economics, Social Sciences & Humanities – Humanities and Social Sciences Track (ICOBEST-HSS 2026)
PB  - Atlantis Press
SP  - 24
EP  - 35
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-607-9_3
DO  - 10.2991/978-2-38476-607-9_3
ID  - Sugiarto2026
ER  -