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

Zilmi Haridhi; Adam Afiz; Samuel Buha Raja Nadeak; Muhammad Fadil; Muhammad Hakeem

doi:10.32734/rslr.v3i1.16331

Authors

Zilmi Haridhi Universitas Sumatera Utara
Adam Afiz Universiti Teknologi Mara
Samuel Buha Raja Nadeak Universitas Sumatera Utara
Muhammad Fadil Universitas Sumatera Utara
Muhammad Hakeem Universiti Teknologi Mara

DOI:

https://doi.org/10.32734/rslr.v3i1.16331

Keywords:

Separate Legal Entity, Piercing the Corporate Veil, Limited Liability Company Act

Abstract

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.

Downloads

Download data is not yet available.

References

Ais, C. (2000). Menyingkap Tabir Perseroan (Piercing The Corporate Veil): Kapita Selekta Hukum Perusahaan Indonesia. Bandung: Citra Aditya Bakti.

Arsht, S. S. (1979). The Business Judgement Rule Revisited. Hofstra Law Review, 8(1)

Ediwarman. (2016). Monograf Metode Penelitian Hukum. Yogyakarta: Genta Publishing

Fuady, M. (2007). Doktrin-Doktrin Modern dalam Corporation Law dan Eksistensinya dalam Hukum Indonesia. Bandung: PT. Citra Aditya Bakti.

Gilford Motor Co. v Horne

Hendrawan, A., Miharja, M., Putranto, R. D., & Salim, E. (2021). The Application of Tax Law to A Corporation’s Bankruptcy Restricted in Indonesia. Budapest International Research and Critics Institute-Journal (BIRCI-Journal)

Intihani, S. (2022). Piercing the Corporate Veil Doctrine Implementation in Limited Stockholders Activities. Jurnal Hukum Jurisdictie, 4(1).

Jaya Puri Hotel Bhd v National Union of Hotel, Bar & Restaurant Workers & Anor

Jones v Lipman

Juliani, H., Nurfahmi, L. T. P., & Sa’adah, N. (2019). Tinjauan terhadap Pemaknaan Kekayaan Negara yang Dipisahkan pada BUMN dan Akibat Hukum yang Timbul Pasca Putusan Mahkamah Konstitusi Nomor 48/PUU-XI/2013. Diponegoro Law Journal, 8(2). https://doi.org/https://doi.org/10.14710/dlj.2019.25463

Khairandy, R. (2013). Pokok-Pokok Hukum Dagang Indonesia. Yogyakarta: FH UII Press.

Lim Kar Bee v Duofortis Properties (M) Sdn. Bhd

M. Agus Santoso. (2011). Kajian tentang Manfaat Penelitian Hukum Bagi Pembangunan Daerah. Yuriska Jurnal Ilmiah Hukum, 3(2). DOI: https://doi.org/10.24903/yrs.v3i2.117

Malaysia Companies Act 2016

Malaysia Employee Provident Fund Act 1991

Malaysia Income Tax Act 1967

Nasution, B., Nugroho, S., & Sirait, N. N. (2020). Implementation of Shareholder’s Alter Ego and Its Accountability According to Piercing The Corporate Veil Doctrine in Indonesia. PalArch’s Journal of Archaeology in Egypt, 17(7)

Reed, B. C. (2021). Clearing Away the Mist: Suggestions for Developing a Principled Veil Piercing Doctrine in China. Vanderbilt Journal of Transnational Law. 39(5)

Sembiring, S. (2017). Hukum Dagang (5th ed.). Bandung: PT. Citra Aditya Bakti

Smith, Stone & Knight Ltd. v Birmingham Corporation.

Undang-Undang Republik Indonesia Nomor 17 Tahun 2003 tentang Badan Usaha Milik Negara

Undang-Undang Republik Indonesia Nomor 28 Tahun 2007 tentang Perubahan Ketiga atas Undang-Undang Republik Indonesia Nomor 6 Tahun 1983 tentang Ketentuan Umum dan Tata Cara Perpajakan

Undang-Undang Republik Indonesia Nomor 41 Tahun 2007 tentang Perseroan Terbatas

Widjaya, I. G.. (2003). Hukum Perusahaan: Berbagai Peraturan dan Pelaksanaan Undang-Undang di Bidang Usaha. Jakarta: Penerbit Kesaint Blanc.

Widiyono, T. (2013). Perkembangan Teori Hukum dan Doktrin Hukum Piercing The Corporate Veil dalam UUPT dan Realitasnya serta Prospektif Kedepannya. Lex Jurnalia, 10(1)

Widjaya, R. (2000). Hukum Perusahaan. Jakarta: Kasaint Blanc.