On Tuesday, 17 November 2015, Universitas Gadjah Mada once again inaugurated a new Professor from the Faculty of Law. The academic was Sulistiowati, who was officially inaugurated as Professor in a ceremony held at the UGM Senate Hall and led by the Chair of the UGM Board of Professors, Prof. Dr. Ir. Sunjoto, Dip.HE, DEA.
In her inaugural speech entitled “Dominance Without Responsibility of Parent Companies,” Sulistiowati discussed legal solutions to prevent parent companies within corporate groups in Indonesia from exercising dominance without accountability. She explained that issues concerning legal responsibility in corporate groups toward third parties of subsidiary companies arise from the application of corporate legal principles recognizing corporations as separate legal entities, while parent companies as shareholders enjoy limited liability.
She further explained that in pyramid corporate group structures, the liability of parent companies becomes increasingly limited as the layers of subsidiaries expand. Consequently, parent companies may effectively enjoy “limited liability from limited liability” when lower-level subsidiaries or affiliated companies are unable to fulfill their legal obligations to third parties.
“Therefore, legal solutions that impose responsibility on parent companies are necessary to prevent domination without accountability for the actions of subsidiaries. Such measures should be considered in order to uphold the principle of justice for third parties who suffer losses due to subsidiary activities. The imposition of legal responsibility on parent companies for their dominance over subsidiaries may be examined through Article 1367 of the Indonesian Civil Code, which allows a person to bear responsibility for losses caused both by themselves and by those under their supervision,” explained the Head of the Commercial Law Department at the Faculty of Law UGM. (FH Reporter/Sekar-Lita)
