Legal Aspects of the Liability of the Board of Directors in Limited Liability Companies Experiencing Bankruptcy in Indonesia, Based on Law No. 40 of 2007 on Limited Liability Companies

DOI

10.2991/978-2-38476-531-7_56How to use a DOI?

Keywords

Board of directors; corporation; bankruptcy; legal liability; limited liability company

Abstract

The Board of Directors plays a strategic role in the management of a Limited Liability Company (PT) and is responsible for all managerial policies and decisions taken. Based on Law No. 40 of 2007 concerning Limited Liability Companies (UUPT), the Board of Directors can be held personally liable if the company’s bankruptcy occurs due to errors, negligence, or abuse of authority in carrying out their duties. This liability can also be joint and several if carried out with other parties in management. This study aims to normatively examine the legal aspects of the Board of Directors’ liability in PT bankruptcy cases in Indonesia, using normative juridical methods through an analysis of laws and legal doctrines. The results show that the main criteria that can give rise to personal liability include violations of the principle of prudence, actions that are contrary to the articles of association or legal provisions, and decisions that are unfairly detrimental to the company. However, if the Board of Directors can prove that their actions were carried out in good faith and in accordance with the principles of good corporate governance, then they cannot be subject to legal liability. Therefore, law enforcement must consider the principles of justice, proportionality, and objective evidence to prevent inappropriate accountability.

Copyright

© 2025 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  - Juliana Pasu Christina Sinaga
AU  - Tommy Leonard
AU  - Elvira Fitriyani Pakpahan
PY  - 2026
DA  - 2026/01/03
TI  - Legal Aspects of the Liability of the Board of Directors in Limited Liability Companies Experiencing Bankruptcy in Indonesia, Based on Law No. 40 of 2007 on Limited Liability Companies
BT  - Proceedings of the 1st International Forum on Psychology, Law, and Education (IFPLE 2025)
PB  - Atlantis Press
SP  - 566
EP  - 579
SN  - 2352-5398
UR  - https://doi.org/10.2991/978-2-38476-531-7_56
DO  - 10.2991/978-2-38476-531-7_56
ID  - Sinaga2026
ER  -