Business judgment rule in law number 1 year 1995 regarding limited liability company

Corporation may not operate its activities without any person assistance or human beings. Person are required by the limited liability company to operate/execute/confirm that the corporation activities shall meet interest and goals of the limited liability company. Grouping the person operating/executing/confirming activities of the limited liability company is often referred to as Bodies of Limited Liability Company. Bodies within the limited liability company consist of General Meeting of Shareholders, The Board of Directors, and the Board of Commissioners, which the respective bodies have its function and role. One of the limited liability bodies having prominent role in the management of a company is the Board of Directors. Article 1 figure 4 Law Number 1 year 1995 regarding Limited Liability Company states that the board of directors is a body of company fully in charge of the management in favor of the company and represents the company, both in as well as out court in compliance with the provisions of the company's articles of association. In the performance of management, the board of directors may make business decision for and on behalf of limited company. The issued business decision for and on behalf of the limited liability company may likely have risk of business, one of them is material losses for the company. The Board of Directors as human beings is irrespective from any defaults in making business decision resulted from a rational and humane condition. In the existing company law well known as Business Judgment Rule Doctrine, it provide protection to the company's board of directors from default resulted by a rational humane condition. The existence of Business Judgment Rule doctrine in one side provides protection for the board of directors, but in another side may be used by the board of directors having bad faith to protect himself from his intentional default or to make business decision harming the company for his own interest of the board of directors. That is why the provision of law must provide right guidelines for the performance of Business Judgment Rule doctrine. This article is intended to provide a guideline for applying Business Judgment Rule doctrine and the application and legal effect result from the Business Judgment Rule doctrine in Law Number 1 year 1995 regarding Limited Liability Company.