Overview

Running a limited-liability company (Perseroan Terbatas – “PT”) is by no means a  stroll in the park and this is exactly the reason why the hiring of a skilled and experienced board of directors (“BoD”) is so crucial. However, regardless of how highly skilled a BoD is, it is only natural that a company may ultimately incur losses in relation to its business risks.

The question thus then becomes, when does a business risk become the personal liability of a BoD? The answer is liable to vary and may trigger intense debate among jurists. Nonetheless, it is widely agreed that as long as a BoD manages the relevant PT in good faith, then the BoD’s liability must be waived, irrespective of the size of the losses which are sustained.