JURIDICAL IMPLICATION OF SHARE CROSS HOLDING ACCORDING TO LIMITED LIABILITY COMPANY LAW IN INDONESIA

Soerodjo, Irawan (2018) JURIDICAL IMPLICATION OF SHARE CROSS HOLDING ACCORDING TO LIMITED LIABILITY COMPANY LAW IN INDONESIA. Journal of Legal, Ethical and Regulatory Issues, 21 (2). pp. 1-18. ISSN 1544-0044

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Abstract

Share cross holding, which is based on the provisions in Limited Liability Company Law (UUPT) namely Law number 40 of 2007 which regulates that a Limited Liability Company (PT) is not allowed to issue new shares to be self-owned either directly or indirectly. Share cross holding often occurs in business activities, either within the country or overseas. With this share cross holding, without capital payment, a company may own and control another company through share ownership (either majority shares or controlling shares by cross holding. This is not in line with the purpose of capital increase of a business entity which is to have a sound financial condition. Business actors perform share cross holding merely for the purpose of controlling another company in order it is shown that there is enhanced effectiveness and productivity of the company for the sake of profit. As such capital increase is quasi, and as a matter of fact (in reality), there is no increased capital at all, thus such capital increase is only a formality and recorded in the company book.

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