IMPLEMENTATION OF SHAREHOLDER’S ALTER EGO AND ITS ACCOUNTABILITY ACCORDING TO PIERCING THE CORPORATE VEIL DOCTRINE IN INDONESIA

Abstract

The doctrine of piercing the corporate veil on Law Number 40 of 2007 (Limited Liability Company Law) is widely interpreted as to include all the shareholders’ personal property as their responsibility for company liabilities. The application of the corporate veil doctrine can be found in cases such as fraud, inadequate capitalization, and failure to comply with corporate establishment formalities and of authority within the company as a result of the dominance of one or more shareholders (alter ego). This paper used a normative legal method by using an approach  comparing common law with a civil law system. The data obtained through a library literature review. The findings show that there is disharmony between the principle of shareholder responsibility within the company and the legal norms. Limited liability company are only responsible for as much as the amount of their capital included in the company and shareholders could also be responsible for more than their shares. In conclusion, although limited liability company law can be used as a legal basis to impose criminal liability against shareholders, however, the Criminal Court has, to date, been reluctant to recognize and apply the rules.