Principle Of Limited Liability Research Articles

Judicial Review of the Application of Corporate Legal Veil in Malaysia and Indonesia: A Legal Comparison

This study aims to find a comparison of the Legal Corporate Veil between Malaysia and Indonesia. This research is a normative legal research as a literature review. It is found that in corporate law both in Malaysia and Indonesia there is a principle of limited liability between shareholders and company directors known as Separate Legal Entity. This principle essentially asserts that a person's responsibility in a company is limited to their responsibility within the company and does not extend to personal liability. In Malaysia, this regulation is governed by Section 20 of the Companies Act 2016. Meanwhile, in Indonesia, this principle is scattered in the provisions of the Limited Liability Company Act (UU PT) applicable to shareholders, directors, and commissioners. However, this principle may become inapplicable in certain cases, known as Piercing The Corporate Veil. In Malaysia, this is regulated under the Companies Act 2016 as well as several judicial decisions. In Indonesia, this principle becomes inapplicable if shareholders act in bad faith by using the company for personal gain and are involved in legal actions undertaken by the Company. One form of protection from personal liability for Directors and Commissioners is implemented based on the Business Judgement Rule principle. Personal liability does not apply if Directors and Commissioners can prove that the company's loss is not due to their negligence, they have acted in good faith, have no conflict of interest, and have taken action to prevent losses. In this study, there is also corporate responsibility outside the existing Limited Liability Company Law based on business and economic developments decided by The Constitutional Court.

The Contribution of Limited Liability Principle and Crowdfunding Concept to Access Finance

Especially in the early 19th century, states have been in search of finding finance for large projects such as dams, bridges and road construction that they could not finance on their own. As a result of evaluations, it was concluded that the necessary financing could be provided by limiting the liability of investors and then the limited liability principle, which is one of the prime building blocks of modern business life, has been legally accepted. Thanks to limited liability also small and medium-sized enterprises (SMEs) and start-ups have become more easily able to access the equity capital they need. However, although the limited liability principle makes it easier to reach equity capital, it makes it difficult to access debt capital (credit), especially in times of crisis. For this reason, alternative finance models such as crowdfunding emerged in the early 2000s to facilitate startups' access to debt capital. In this article, the contribution of the limited liability principle and crowdfunding to access capital are examined.

ОСОБЛИВОСТІ ПРОЕКТНОГО ФІНАНСУВАННЯ ДЛЯ ПІДПРИЄМСТВ ГОТЕЛЬНОГО І РЕСТОРАННОГО БІЗНЕСУ В УМОВАХ ЕВРОІНТЕГРАЦІЇ

The article examines project financing as a separate type of activity of credit institutions involved in the organization of financing hotel investment projects. The systematization of the world experience in the development of project financing made it possible to highlight the fundamental principles of project financing in relation to the hotel business. The principle of increased risk. Any project, the financing of which is carried out based on future cash flows, involves the distribution of risks among the maximum number of participants. The principle of adequate debt coverage. Compliance with this principle by the capital provider is based on the debt coverage ratio, which is determined by the ratio of expected revenues from project implementation to the total amount of debt. The principle of market viability of the project. The market principle requires a credit institution to conduct a detailed analysis of the market situation when concluding a credit agreement. Such market analysis is carried out in order to determine the dynamics of prices and demand for the period of operation of the hotel. The principle of limited liability of the client. According to it, the repayment of the debt occurs from the income from the implementation of the project, and the responsibility of the project initiator is determined by its own contribution. The principle of investment guarantee. A guarantee in project financing means an unconditional obligation to transfer the specified funds to the capital provider (usually a bank) in the event of a guarantee event. The purpose of this type of guarantee is to insure the debt obligations of the hotel project throughout its life cycle. The principle of debt repayment. This principle means that project financing will require unconditional repayment of funds according to the schedule. The principle of high financial leverage. This principle of project financing is based on maintaining a high ratio between own and borrowed funds. Such a scheme allows obtaining a number of advantages in the form of tax benefits, ensures the most effective use of credit instruments at each stage and contributes to the increase in the value of shares of project participants as a result of the completion of each sub-project and the commissioning of new hotels.

Full Lenght Article the Role of Limited Liability Principle and Crowdfunding for Entrepreneurs to Access the Capital They Need

Full Lenght Article the Role of Limited Liability Principle and Crowdfunding for Entrepreneurs to Access the Capital They Need

TANGGUNG JAWAB PERSEROAN INDUK TERHADAP PEKERJA DARI SUATU ANAK PERSEROAN

The working relationship between the workers of a subsidiary to the parent company in a group of companies and also to find out the responsibility of the parent company to the rights of workers of a subsidiary. The research conducted is using normative legal research, which is a research method that answers a problem through an inventory of laws and regulations governing companies, employment and literature study.
 Based on the results obtained: First, based on the provisions of Law Number 13 of 2003 concerning Manpower, it is stated that the basis of the employment relationship is a work agreement. The point is that there will be no working relationship without a working agreement basis so that the employees of the subsidiary company do not have a working relationship with the parent company and only have an employment relationship with the subsidiary company, because the work agreement is only made between the subsidiary company and its employees. Second, the responsibility of the parent company that has controlled the subsidiary company cannot apply the principle of limited liability, because the parent company controls it by ordering the workers of the subsidiary company to do the work of other subsidiary companies.
 Keywords: Parent Company, Subsidiaries, Employees, Responsibilities, Employment Relations

Application of The Corporate Viel Piercing Principle in the Company for Forest and Land Burning

Forest and land fires generally carried out by concession holders in recent years are very detrimental to the community, nation, and state. The purpose of this paper is to analyze and elaborate application of the principle of piercing the corporate veil for companies on forest and land burning and who should be responsible for the loss of society. Because it corresponds to the concept of the rule of law as a system of laws and regulations, the approach adopted is normative law. Primary, secondary, and tertiary legal materials are used in the research. The results of this study are that in the case of a forest and land burning company, based on Article 3 number 2 in particular letters b and c of Law 40/2007, the principle of limited liability for shareholders does not apply if the shareholder concerned either directly or indirectly in bad faith uses The Company for personal interest and or the shareholders concerned are involved in unlawful acts committedby the Company.

THE LOSS OF STATE-OWNED ENTERPRISE (BUMN) AS NOT STATE LOSS IN SEPARATION PRINCIPLE PERSPECTIVE

The study aims to analyze, first, the BUMN sub-holding loss as a state loss and secondly, the responsibility of the BUMN holding company for the BUMN sub-holding loss. There is a dualism in the conception of state assets that are separated from BUMN in Indonesian laws and regulations. The research methods was normative legal research with a statutory approach and a case approach. The shares of BUMN sub-holding don’t come from the state but come from the BUMN and also the public. The capital investment which it does by the BUMN holding company to the BUMN sub-holding doesn’t make the BUMN sub-holding become a BUMN. In the Group Company, the principle of a separate entity continues to apply which leads to the principle of limited liability holding as a subsidiary shareholder. However, if BUMN as the majority shareholder has the right to actively intervene and it is proven that there is control of the company, then the principle of piercing the corporate vision can be applied. So the BUMN holding company must be responsible for BUMN sub-holding because of the control carried out by these BUMN holding companies. The results show that the BUMN sub-holding loss isn’t state loss.

Legal Accountability of a Sole Director in Micro and Small Limited Liability Company

There is a need to investigate the regulation of legal accountability of a Sole Director who is also the founder of the company in a micro and small Limited Liability company based on Article 153 letter J of the Job Creation Law, because of the possibility of an ill-intentioned Director trying to protect his/her personal assets and assuming liability only for the shares he owns. Based on the aforementioned background, the problems in this study can be formulated as follow: 1. How is the accountability of a Sole Directors in a micro or small Limited Liability company regulated? and 2. What is the form of legal accountability for the sole Director in a micro and small Limited Liability company? The type of legal research used in this study is normative juridical research. The form of legal liability of a Sole Director in a micro or small Limited Liability company is closely linked to the principle of limited liability of the Board of Directors. If the requirement of having 2 (two) persons is not met, it will result in the limited accountability of the Limited Liability company becoming unlimited accountability. Unlimited accountability means that all legal actions and losses of the Limited Liability company become the personal liability of the founder or shareholder.

Legal Accountability of a Sole Director in Micro and Small Limited Liability Company

There is a need to investigate the regulation of legal accountability of a Sole Director who is also the founder of the company in a micro and small Limited Liability company based on Article 153 letter J of the Job Creation Law, because of the possibility of an ill-intentioned Director trying to protect his/her personal assets and assuming liability only for the shares he owns. Based on the aforementioned background, the problems in this study can be formulated as follow: 1. How is the accountability of a Sole Directors in a micro or small Limited Liability company regulated? and 2. What is the form of legal accountability for the sole Director in a micro and small Limited Liability company? The type of legal research used in this study is normative juridical research. The form of legal liability of a Sole Director in a micro or small Limited Liability company is closely linked to the principle of limited liability of the Board of Directors. If the requirement of having 2 (two) persons is not met, it will result in the limited accountability of the Limited Liability company becoming unlimited accountability. Unlimited accountability means that all legal actions and losses of the Limited Liability company become the personal liability of the founder or shareholder.

THE DOCTRINE OF PIERCING THE CORPORATE REVIEW IN THE COURT DECISION NO. 656/PDT.G/2015/PN.MDN

Limited Liability Company (Ltd.) or Perseroan Terbatas (PT) is a legal entity in Indonesia that constitutes a capital alliance formed by an agreement that features a limited liability principle. Limited liability is a principle that limits the responsibility of shareholders to the risk of the Company. However, the principle of limited liability is frequently misapplied, as shareholders look for ways to protect themselves from the risk of more significant losses, to take advantage of all company profits for personal gain. Shareholders who abuse the principle of limited liability for personal gain, on the other hand, will be subject to the Piercing the Corporate Veil doctrine. This doctrine imposes the transfer of liability for personal losses to shareholders who cause harm to the company in bad faith. Based on this understanding, this paper seeks to comprehend the application of the Piercing the Corporate Veil doctrine by analyzing Medan District Court Decision Number: 656/Pdt.G/2015/PN.Mdn. The research method used in this study was normative legal research reviewed with a statute approach and a conceptual approach. The conclusion drawn from the problem is as follows: the regulation regarding the Piercing the Corporate Veil doctrine is borne not only by shareholders but also by the Board of Directors and the Board of Commissioners who fail to implement the principles of fiduciary duty of skill and care. Furthermore, in the case of 656/Pdt.G/2015/PN.Mdn, the judge considered the provisions of Article 3 paragraph (2) of the UUPT in implementing the Piercing the Corporate Veil Doctrine by punishing the Defendants jointly and severally to indemnify the Plaintiff.

Limited Liability Principle to One-Tier System in Individual Company

The purpose of this study is to describe and analyze the characteristics of the one-tier system in an individual company following the enactment of Law Number 11 of 2020 concerning Job Creation (UU Cipta Kerja) and to analyze the legality of the principle of limited liability to the one-tier system in an individual individual company after the enactment of Law Number 11 of 2020 on Job Creation. The method used in this legal research is a normative method with a statute approach. Characteristics that can be seen from the one-tier system in this individual company includes, inter alia the establishment, capital, organs, shareholders and responsibilities. Meanwhile, the legality of the limited liability principal of the one tier system in an individual company can be seen in Article 153J paragraph (1) of the Job Creation Law, where it clearly states that principal. However, the limited liability system can only be apply to the one tier system in an individual company, as long as it obliges to the Article 153J paragraph (2) of the Job Creation Law.

PROBIJANJE PRAVNE LIČNOSTI

The subject of the paper is the institute of piercing the corporate veil – the review of norms as well as court practice cases related to the application of this institute. The primary goal of this paper is detailed presentation of the institute of piercing the corporate veil, as an important exception from the principle of limited liability with certain forms of companies and recognition of important significance that is still not entirely used in practice. The conclusion from research is that it is necessary to provide a more precise and clearer positive legal regulations of this institute in order to unify court practice and facilitate creditors in applying and proving rights through the institute of piercing the corporate veil. With more precise regulation of legal provisions and positive examples of court practice, the creditors would be encouraged to use this instrument more frequently. Methods used in this paper include dogmatic method, normative method, comparative method as well as axiology method, explained in more detail below.

ИСТОРИЧЕСКИЙ ОПЫТ ПРАВОВОГО РЕГУЛИРОВАНИЯ ДЕЯТЕЛЬНОСТИ АКЦИОНЕРНЫХ ОБЩЕСТВ В РОССИИ XVII–XIX ВВ.

The relevance of the study is caused by the development of the economic system of Russia and legal relations in the business area, as well as by the particular role of joint-stock companies as constituent entities. The retrospective analysis of Russian legislation is necessary to understand the cause-and-effect relations of legislative consolidation of legal norms, which govern the joint-stock companies' activity. The results of such an analysis can contribute to solving the problems of current lawmaking in this field. This paper presents the historical and administrative prerequisites for the establishment of joint-stock business entities in pre-revolutionary Russia. The paper considered the issue of the reception of a joint-stock form of entrepreneurship and analyzed principal legislative acts regulating the questions of defining a legal status and creating joint-stock companies. From the content of the Manifesto of January 1, 1807, the author identified the essential features of a joint-stock company, which, by their nature, correspond to those enshrined in current Russian legislation. The study considered the historical prerequisites of normative consolidation of the principle of limited liability of corporation participants. The author investigates the issues of joint-stock companies establishment and the structure of a Charter as a constituent document; focuses on the insufficient legal regulation of the joint-stock companies activity, which resulted in the increased regulatory role of Charters. The paper analyzes special aspects of normative regulation of joint-stock companies activity in the territory of the Russian Empire, for example, the established limitations. The author concludes on the absence of a clear split of various legal company types and identifies the collision in terms used in legislation to define joint-stock companies. Within the research, the author concludes the existence of continuity of current corporate legislation.

Применение доктрины «срывания корпоративного покрова» в российском гражданском праве

The article analyzes the problems of application of the doctrine of “Piercing the corporate veil” in the Russian civil law. The article deals with the emergence and formation of the principle of limited liability and its relationship with this doctrine, analyzes the legal institutions that lead to the removal of the “corporate shield”.

تجرید الشریک فى شرکة الشخص الواحد من المسؤولیة المحدودة دراسة مقارنة

سمح المشرع المصرى في عام 2018 بإنشاء شرکة الشخص الواحد. وقد کان هذا التعديل نتيجة لجدل قانونى محتدم بين مؤيدى مبدأ وحدة الذمة المالية وبين مؤيدى فکرة السماح بإنشاء شرکة الشخص الواحد کاستثناء على مبدأ وحدة الذمة المالية تشجيعا للتجارة والاستثمار. هذا وقد کان العامل الأساسى لدى مؤيدى مبدأ وحدة الذمة المالية هو الخشية من إساءة استخدام الشريک في شرکة الشخص الواحد لمبدأ المسؤولية المحدودة للإضرار بدائني الشرکة والغير. وقد ظهر مبدأ التجريد لمعالجة حالات إساءة استخدام مبدأ المسؤولية المحدودة ومضمون هذا المبدأ هو تنحية الشخصية المعنوية للشرکة بکل ما يستتبعه ذلک من تمتع الشرکة بذمة مالية مستقلة عن الشرکاء واعتبار الشريک مسؤولا مسؤولية شخصية عن ديون الشرکة. وبناء عليه تعالج هذه الدراسة مبدأ التجريد من المسؤولية المحدودة کضمانة لعدم إساءة استخدام مبدأ المسؤولية المحدودة في شرکات الشخص الواحد. وتبدأ هذه الدراسة ببحث أصول مبدأ تحديد المسؤولية في قوانين الشرکات المقارنة. ثم تتطرق هذه الدراسة إلى بحث الجدل القانوني حول السماح بإنشاء شرکة الشخص الواحد. وتبحث هذه الدراسة مبدأ التجريد من المسؤولية المحدودة في القانون الإنجليزى والأمريکي کمثالين لدول القانون العام والقانون الألماني کمثال على دول القانون الخاص الأوروبية وقوانين بعض البلاد العربية المختارة وهي دولة الإمارات العربية المتحدة ومصر. ثم تختتم هذه الدراسة ببيان أهم الضوابط التي تحکم مبدأ التجريد في القانون المصرى والمقارن. In 2018 the Egyptian legislator allowed the establishment of one- man companies. This new amendment was a result of heated legal debates between proponents of the doctrine of Unified Patrimony and the supporters of the view that called for the establishment of one-man companies as an exception of the doctrine of Unified Patrimony in the interests of trade and investment. The main concern of opponents of the establishment of one-man companies is the abuse of the limited liability by the sole shareholder in a one-man company to the detriment of the company’s creditors as well as third parties. Accordingly, the doctrine of piercing the corporate veil has emerged as a buffer to prevent the abuse of the doctrine of limited liability by allowing the court to disregard the separate personality of the company including the company’s separate patrimony and holding the partner personally liable for the debts of the company. This article addresses the doctrine of piercing the corporate veil as a safeguard to prevent the abuse of the corporate form in one-man companies. Accordingly, this study looks at the origins of the principle of limited liability under comparative company law. Then, the study looks at the legal debates that accompanied the establishment of one-man companies. The study further examines the doctrine of piercing the corporate veil under the English and American Law as examples of Common Law Countries, German Law as an example of a European Private Law country and finally, the stance of selected Arab Laws regarding the doctrine of piercing the corporate veil is examined using the United Arab Emirates Law and Egyptian Laws as examples. Finally, the study concludes by outlining the major principles governing the doctrine of piercing the corporate veil both under the Egyptian Law and Comparative Law.

Tanggung Jawab Atas Kebijakan Yang Diterapkan Oleh Perusahaan Induk Kepada Perusahaan Anak Yang Berakibat Pada Timbulnya Suatu Kerugian

Liability to the parent company for policies implemented by subsidiaries that result in losses with third parties is a major problem in the practice of group. This problem This problem is due to absence of legislation that specifically regulate of the company group, the regulatory framework of the realationship the parent and it’s subsidiaries in the group companies is use Corporate Law. The incorporation of the company’s subsidiary in the group does not abolish the legal status of a subsidiary. Parent companies in the group company contractions have immunity over the implementation of the principle of limited liability. the purpose of writing this journal is to know, how is the assignment legal liability to the parent company for the policies applied to the subsidiary companies resulting in a loss to a third party and how to anticipate control without legal liability the parent company for its policies that impact the economic insecurity of the subsidiary in the construction of group companies. The research that the author uses is normative legal research. From this research, assigning legal liability to the parent company through the implementation of policies implemented by the subsidiary is certainly seen from the fault that cause losses. One effort that can be done to anticipate control without legal liabilty of the parent companies it’s Make Charter Corporate Relations and Between Subsidiaries or make agreement control between the parent company and subsidiary.

Feniks se ponovo rađa

The separation of company assets from the assets of its shareholders and the limited liability of company shareholders are two fundamental principles of company law. The principle of limited liability places a "corporate veil" betweeen the company and its shareholders, protecting them from personal responsibility for corporate obligations. It also enables investors to limit their exposure to potential loss to their actual investment in company and to shift the risk of corporate insolvency to the business's creditors. By creating incentives for business ventures, the"corporate veil" of limited liability principle is beneficial to corporate shareholders and the society in general. However, it also opens the door for different kinds of abuses, one of which is embodied in the emergence of "phoenix" companies. A "phoenix" company is usually defined as a new company that arises from the ashes of its failed predcessor, taking over its assets and continuing its business, usually under the same or similar name, and with the same (de facto or de iure) controllers. The phenomenon of "phoenixism" encompasses a range of activities, some of which are legitimate and lawful means of saving the business in financial distress, while others are illegal and constitute an abuse of the corporate limited liability form and the abuse of insolvency and tax law; there are also different shades of grey inbetween the two. The aim of this paper is to describe the conceptual framework of "phoenix" companies, present the main indicators for detecting their activities, and categorise the various types of phoenix activity, with the aim of distinguishing between the harmful and beneficial "phoenixing".

Piercing the corporate veil in various jurisdictions – Principled or unprincipled?

The principle of limited liability of a company has been uniformly adopted by developed countries. In order to ensure a fair balance, the courts agree on occasion to ‘pierce’ or ‘lift’ the corporate veil, which involves imposing liability on the mother company for actions of its subsidiary or individual shareholders, directors, and other involved persons for actions of the company. In this regard, there have been several studies arguing the legal issues associated with the limited liability of a company and piercing the corporate veil such as Schall (2016) and Michoud (2019). This paper compares current veil-piercing practices in three jurisdictions: the UK, the US, and Australia in order to outline the advantages and limitations of the approaches taken by the courts in each country as well as to identify best practices in terms of veil piercing. For that purpose, an analytical approach to the examination of the relevant legal rules, principles, and court cases has been adopted in undertaking the present paper. The paper comes up with a number of specific suggestions and recommendations for improving the regulatory role in regard to the subject of piercing of the corporate veil.

Основные политико-правовые аргументы pro и contra идеи субординации займов участников юридических лиц (Main Political and Legal pro and contra Arguments of the Idea of Loan Subordination for Members of Legal Entities)

Russian Abstract: В статье рассматриваются ключевые доводы, которые обсуждаются в российском и зарубежном научном дискурсе применительно к вопросу о необходимости понижения в очередности (субординации) займов участников юридических лиц. Главными аргументами в пользу субординации являются злоупотребление принципом ограниченной ответственности, стимулирование более раннего открытия процедуры, недопустимость переноса финансовых рисков, создание ложной видимости платежеспособности и др. Основное возражение против состоит в том, что понижение в очередности дестимулирует попытки санации общества вне формальной процедуры несостоятельности (банкротства). Автор приходит к выводу, что изложенные аргументы наряду с зарубежным опытом должны приниматься во внимание при разработке оптимального регулирования в России. English Abstract: The author considers the key arguments that are discussed in the Russian and foreign scientific discourse in relation to the need to reduce the priority (subordination) of loans for members of legal entities. The main arguments in favor of subordination are the abuse of the limited liability principle, stimulation of an earlier opening of the procedure, inadmissibility of the transfer of financial risks, and the creation of false solvency, etc. The main objection is that the reduction in priority discourages the attempts to reorganize the company outside the formal insolvency (bankruptcy) procedure. The author reaches the conclusion that the presented arguments along with foreign experience should be taken into account in the development of an optimal regulation in Russia. Full text in Russian: https://zakon.ru/magazine/vestnik_ekonomicheskogo_pravosudiya_rf_ranee_vestnik_vas_rf/558.

Protection of Property Rights Based on the Doctrine of Piercing the Corporate Veil in the Russian Case Law

In the Russian justice system, the doctrine of piercing the corporate veil was developed at the case law level and is used to prevent abuse in corporate relationships on the part of those who control a legal entity in detriment to the property rights of the legal entity’s creditors. Since the principle of limited liability is important for Russian civil circulation, it is necessary to identify the relevant grounds for the application of said doctrine and its application criteria. Our objective is to justify not only the need for preservation of the doctrine of piercing the corporate veil in the Russian legal system, but also the development of the doctrine by giving it concrete substance based on generalization of existing case law. The criteria for applying the doctrine of piercing the corporate veil are: monitoring the activities of a legal entity by another entity which can influence commercial companies’ decision making, actually or legally; violations or abuse of rights; existence of a cause-and-effect relationship between a violation or an abuse of rights on the part of the beneficiary and the creditor’s losses; the existence of exceptional circumstances in which it is impossible to protect the creditors’ legitimate interests with other legal measures; and dispute arising from private law relations. The main consequence of applying the doctrine of piercing the corporate veil is the disregard for the corporate entity. Autonomy can manifest in three areas (extension of a party’s debts to the legal entities under its control; acknowledgement that the rights and liabilities are actually vested in the party which managed the legal entity; acknowledgement of the legal entity as a representative of the controlling legal entity).