The Importance Of Implementing Business Judgment Rules And State Financial Administration In SOE Governance

Illustration. (Photo: Doc. Antara)

JAKARTA - State-Owned Enterprises (BUMN) as defined by Law no. 19 of 2003 is a business entity whose entire or most of the capital is owned by the state through direct participation originating from separated state assets.

As a state-owned enterprise, BUMN has a dual role, namely as an agent of development as well as a business entity. Where, BUMN as an extension of the state's arm in advancing people's welfare, but on the other hand as a corporate entity, BUMN is also obliged to make a profit (profit-oriented).

However, in carrying out their business, SOEs and SOE Subsidiaries may experience losses. This condition will become a problem when faced with various laws and regulations that apply to the SOEs themselves. Especially if the loss is considered a state financial loss, not as a business entity.

Based on Article 2 and/or Article 3 of Law Number 20 of 2001 in conjunction with Law Number 31 of 1999 concerning the Eradication of Criminal Acts of Corruption (UU Tipikor), the management and employees of BUMN can be held criminally responsible for alleged criminal acts of corruption for causing losses to state finances.

"This is a concern for BUMN directors in carrying out their daily duties in managing, regulating, and making decisions related to the day-to-day business of BUMN", said Aldi Andhika Jusuf, Partner of K&K Advocates.

Aldi explained, related to the accountability of the directors, there is a doctrine in the Indonesian legal order known as the Business Judgment Rule (BJR) doctrine, where this doctrine becomes an important pillar for the protection of the board of directors in decision making. The doctrine basically says that the board of directors cannot be held responsible for mistakes in decision-making and/or for the loss of the company.

Observing this, K&K Advocates assesses that business actors within BUMN are required to have a comprehensive understanding related to the implementation of BJR, as well as state financial administration so that the potential for losses to companies that have an impact on allegations of corruption can be minimized.

For this reason, K&K Advocates is compelled to hold a Webinar entitled 'Implementation of Business Judgment Rules and State Financial Administration in the Governance of SOEs' today, Thursday, September 16.

Speaking at the webinar, Dian Puji Nugraha Simatupang, Lecturer of State Administrative Law, Faculty of Law, University of Indonesia, emphasized that the concept of BUMN is "ownership" (private) and not "control", so that the state is domiciled as a shareholder or as the owner of capital, not as a holder of public power or state finance managers in general.

Therefore, state capital participation is separated, with the intention that governance and responsibilities including rights and obligations are separated and transferred to BUMN, not to the state or the State Budget (APBN).

"As a shareholder, the state is not managing public finances to achieve state goals like a ministry or institution, but is doing business, so the assessment is not an authority judgment, but a business judgment", Dian explained, stressing that the same applies to BUMN subsidiaries, the state does not have rights. manage it, because the right of the state as a public legal entity is only to establish BUMN.

If the state wants the Subsidiary to comply with the provisions regarding its management and responsibilities, the State must have direct shares, and cannot directly intervene through the hands of the public, because it violates the contrarious actus principle.

Dian also highlighted the legal uncertainty that could potentially occur in SOEs, namely the fulfillment of elements that harm the state, so that business decisions, corporate policies, and business actions that are considered wrong are state losses.

Meanwhile, Wardaya, Partner of K&K Advocates explained, the Business Judgment Rule (BJR) is a regulation that frees management from responsibility in corporate transactions that are carried out within the power of the corporation and management's authority, where there is a reasonable basis to show that the transaction was carried out carefully and good faith.

"The BJR doctrine aims to protect the board of directors as long as it is carried out within the limits of authority with full prudence and good faith. The BJR principle is also implied in Article 97 paragraph 2 of the Limited Liability Company Law, namely the principle of prudence and good faith. Then in Article 5 paragraph 3 of the Law SOEs emphasize the BJR principles in the GCG (good corporate governance) element", Wardaya explained.

He added that the PT Law also stipulates that the Board of Directors can be protected if the policies they take are deemed appropriate, even though the company may suffer losses. Then in Article 11 of the BUMN Law, it has also been emphasized that all the provisions and principles that apply to PT as regulated in the PT.

"This means that the principles that apply to limited liability companies also apply to SOEs", concluded Wardaya.