THE LEGAL RELATIONSHIP BETWEEN PARENT COMPANIES AND SUBSIDIARIES IN THE HOLDING COMPANY SYSTEM IN INDONESIA

Dicki Irvandi

Abstract


This paper aims to examine the form of legal relationships between parent companies and subsidiary companies within the holding company system in Indonesia. This study employs normative legal research using a statute approach and a case approach. The research is explanatory in nature and uses secondary data consisting of primary legal materials such as the State-Owned Enterprises Law, the Limited Liability Company Law, and Government Regulation No. 72/2016, analyzed qualitatively. The legal relationship between a parent company and its subsidiaries arises from the establishment of several legal entities whose share ownership is controlled by the parent company, forming what is known as a holding company. The parent company acts as a central authority with the power to supervise and control its subsidiaries and is responsible for their operations. However, subsidiaries still have the authority to enter into agreements with third parties. The parent company’s responsibility toward its subsidiaries is limited and adheres to the principle of separate entities, meaning that if the subsidiary acts in bad faith, the parent company cannot be held liable.


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DOI: https://doi.org/10.3059/insis.v0i0.29068

DOI (PDF): https://doi.org/10.3059/insis.v0i0.29068.g14988

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