Challenges and the Need for Clarity

Oct 13, 2025 by thesweetdesigns.com 139 views

The Role of the District Court in Applying Derivative Rights: Unraveling the Complexity of the Limited Liability Company Law No. 1 of 1995

Introduction

Law Number 1 of 1995 concerning Limited Liability Companies marked a significant shift in Indonesia's corporate law landscape by adopting the continental European legal system, replacing the Anglo Saxon system that was previously in place. This change brought about new challenges for the court in applying the law, particularly in ensuring justice for all parties, especially minority shareholders. The introduction of derivative rights, which allows minority shareholders to file a lawsuit or request to the court for the arbitrary actions of the majority shareholders, has become a crucial instrument in protecting their rights. However, the implementation of derivative rights in Law Number 1 of 1995 raises its own set of complexities, primarily due to differences with general civil procedural law.

Challenges and the Need for Clarity

The application of derivative rights is complicated by several aspects. Firstly, changes in legal subjects have added to the complexity in determining the position of the parties in the case. Previously, only the Board of Directors could act as the party who filed a lawsuit in the court. However, Law Number 1 of 1995 has opened opportunities for minority shareholders to file a derivative lawsuit, thereby increasing the complexity in determining the position of the parties in the case.

Secondly, differences in the form of requests have created confusion. The request that is usually submitted is a voluntary, without opponents, and the resulting decision is called 'constitutive vonnis'. However, in Law Number 1 of 1995, derivative requests involve two parties, namely minority shareholders as plaintiffs and majority shareholders as defendants. The resulting decision also becomes 'condemnatory vonnis'. This fundamental change requires judges to understand and apply the law carefully so that the decision generated in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary.

The Importance of Case Analysis

To create legal certainty and effectiveness of Law Number 1 of 1995, an in-depth analysis of the decisions and determinations of derivative requests filed by minority shareholders in the District Court is essential. Research that focuses on cases in the North Jakarta District Court, for example, can provide a concrete picture of how the judge interprets and applies provisions related to derivative rights in practice.

This analysis is not only useful to understand the development of law in the field of the Company, but can also be a material for recommendations for the court to formulate the procedures and rules of trial that are clearer and more effective in handling cases related to the management of the Company. This is important to ensure justice and legal certainty for all parties, both majority and minority shareholders, and encourage the realization of a healthy company governance.

The Role of the District Court in Applying Derivative Rights

The District Court plays a crucial role in applying derivative rights in accordance with Law Number 1 of 1995. The court must ensure that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary. The court must also understand and apply the law carefully to ensure that the decision generated is fair and just for all parties involved.

The Challenges Faced by the District Court

The District Court faces several challenges in applying derivative rights. Firstly, the court must deal with the complexity of the law, particularly in determining the position of the parties in the case. Secondly, the court must ensure that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary.

The Importance of Judicial Training

Judicial training is essential to ensure that judges understand and apply the law carefully. The training should focus on the provisions related to derivative rights in Law Number 1 of 1995 and the procedures and rules of trial that are clearer and more effective in handling cases related to the management of the Company.

Conclusion

In conclusion, the application of derivative rights in accordance with Law Number 1 of 1995 raises its own set of complexities, primarily due to differences with general civil procedural law. The District Court plays a crucial role in applying derivative rights, and the court must ensure that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary. Judicial training is essential to ensure that judges understand and apply the law carefully.

Recommendations

Based on the analysis, the following recommendations are made:

The court should provide judicial training to judges on the provisions related to derivative rights in Law Number 1 of 1995 and the procedures and rules of trial that are clearer and more effective in handling cases related to the management of the Company.
The court should establish a clear and effective procedure for handling cases related to the management of the Company.
The court should ensure that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary.

Future Research Directions

Future research should focus on the following areas:

The development of law in the field of the Company, particularly in relation to derivative rights.
The effectiveness of the procedures and rules of trial in handling cases related to the management of the Company.
The impact of judicial training on the application of derivative rights in the District Court.

By addressing these research directions, we can gain a deeper understanding of the complexities of derivative rights and the role of the District Court in applying them in accordance with Law Number 1 of 1995.
Frequently Asked Questions (FAQs) on the Role of the District Court in Applying Derivative Rights

Q: What is the purpose of derivative rights in Law Number 1 of 1995?

A: Derivative rights allow minority shareholders to file a lawsuit or request to the court for the arbitrary actions of the majority shareholders, thereby protecting their rights.

Q: What are the challenges faced by the District Court in applying derivative rights?

A: The District Court faces several challenges, including the complexity of the law, particularly in determining the position of the parties in the case, and ensuring that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary.

Q: What is the role of the District Court in applying derivative rights?

A: The District Court plays a crucial role in applying derivative rights, ensuring that the decision generated is in accordance with the Limited Liability Company Law, the Company's Articles of Association, and Court Function in accordance with Law Number 4 of 2004 concerning Judiciary.

Q: What is the importance of judicial training in applying derivative rights?

A: Judicial training is essential to ensure that judges understand and apply the law carefully, particularly in relation to derivative rights. The training should focus on the provisions related to derivative rights in Law Number 1 of 1995 and the procedures and rules of trial that are clearer and more effective in handling cases related to the management of the Company.

Q: What are the benefits of clear and effective procedures for handling cases related to the management of the Company?

A: Clear and effective procedures for handling cases related to the management of the Company can ensure justice and legal certainty for all parties, both majority and minority shareholders, and encourage the realization of a healthy company governance.

Q: What are the potential consequences of not providing judicial training on derivative rights?

A: Not providing judicial training on derivative rights can lead to confusion and misapplication of the law, resulting in unfair and unjust decisions for all parties involved.

Q: What are the potential benefits of research on the development of law in the field of the Company, particularly in relation to derivative rights?

A: Research on the development of law in the field of the Company, particularly in relation to derivative rights, can provide a deeper understanding of the complexities of derivative rights and the role of the District Court in applying them in accordance with Law Number 1 of 1995.

Q: What are the potential benefits of research on the effectiveness of procedures and rules of trial in handling cases related to the management of the Company?

A: Research on the effectiveness of procedures and rules of trial in handling cases related to the management of the Company can provide insights into how to improve the procedures and rules of trial to ensure justice and legal certainty for all parties involved.

Q: What are the potential benefits of research on the impact of judicial training on the application of derivative rights in the District Court?

A: Research on the impact of judicial training on the application of derivative rights in the District Court can provide insights into the effectiveness of judicial training in improving the application of derivative rights in the District Court.

Conclusion