The Responsibility of the Parent Company

Oct 13, 2025 by vinooalluri.com 26 views

Analysis of the Relationship between the Parent Company and the Subsidiary: A Case Study of PT. Perkebunan Nusantara IV (Persero) and PT. Pamina Adolina

In the business world, the relationship between the parent company and its subsidiaries is often a complex and interesting topic to be analyzed. The parent-subsidiary relationship is a crucial aspect of corporate governance, and understanding its dynamics is essential for companies operating in group structures. This study aims to provide an in-depth analysis of the relationship between PT. Perkebunan Nusantara IV (Persero) as a parent company and PT. Pamina Adolina as a subsidiary in Indonesia.

The Legal Framework for Parent and Subsidiaries Corporates in Indonesia

The legal framework governing the parent-subsidiary relationship in Indonesia is regulated by Law No. 40 of 2007. According to this law, the status of the legal entity of the parent company and subsidiary is still recognized independently, although there is a functional relationship between the two. This creates challenges in the management and supervision of the entities involved. The single company principle, which is a fundamental concept in corporate law, emphasizes the unity of the company group, but in practice, the economic activities carried out by the parent company and subsidiary show close synergy.

The Responsibility of the Parent Company

As the majority shareholder, PT. PTPN IV has a legal responsibility towards PT. Pamina Adolina. In this context, the principle of limited liability will be applied, which means that the parent company is not personally responsible for the obligations or debt borne by the subsidiary. However, there are exceptions where the theory of piercing the corporate veil can be applied in special conditions. This theory allows shareholders to be responsible if it is proven that they have used subsidiaries as a tool to avoid legal responsibilities. In this case, there must be legal evidence that shows that PT. PTPN IV has significant control over PT. Pamina Adolina so as to eliminate the independence of the subsidiary.

Instrumental Approach and Alter Ego Theory

In this analysis, the instrumental approach and the theory of Alter Ego played an important role in understanding the relationship between PT. PTPN IV and PT. Pamina Adolina. PT. Pamina Adolina can be considered an agent of its shareholders, namely PT. PTPN IV. In this capacity, the actions taken by PT. Pamina Adolina are considered as actions taken on behalf of shareholders, so that the subsidiary is not responsible for the legal consequences of the actions taken in accordance with the purpose of the parent company. The instrumental approach emphasizes the functional relationship between the parent company and subsidiary, while the Alter Ego theory highlights the agency relationship between the two entities.

The Challenges of Managing the Parent-Subsidiary Relationship

The parent-subsidiary relationship is a complex and dynamic entity that requires careful management and supervision. The challenges of managing this relationship include ensuring that the subsidiary operates independently while still fulfilling its obligations to the parent company. The parent company must also ensure that it does not exert excessive control over the subsidiary, which could lead to a loss of independence and autonomy. Furthermore, the parent company must be aware of its responsibilities towards the subsidiary, including the potential risks and liabilities associated with the subsidiary's activities.

Conclusion

This study provides a clear picture of the legal complexity governing the relationship between the parent company and subsidiary in Indonesia. Although legally the parent company and subsidiary are seen as separate entities, in practice there are interaction and interrelated responsibilities. Thus, it is essential for companies that operate in group structures to understand both legal and practical aspects that regulate this relationship in order to manage risks and responsibilities more effectively. This in-depth analysis can provide valuable insights for entrepreneurs, academics, and legal practitioners in understanding the dynamics that exist in company arrangements in Indonesia.

Recommendations

Based on this study, the following recommendations can be made:

Clear Communication: The parent company and subsidiary should maintain clear and transparent communication to ensure that both entities are aware of their responsibilities and obligations.
Independent Operations: The subsidiary should operate independently while still fulfilling its obligations to the parent company.
Risk Management: The parent company should be aware of the potential risks and liabilities associated with the subsidiary's activities and take steps to mitigate these risks.
Supervision and Monitoring: The parent company should supervise and monitor the subsidiary's activities to ensure that it is operating in accordance with its obligations and responsibilities.

Future Research Directions

This study highlights the need for further research on the parent-subsidiary relationship in Indonesia. Future research should focus on the following areas:

Case Studies: Conducting case studies of other parent-subsidiary relationships in Indonesia to gain a deeper understanding of the dynamics that exist in these relationships.
Comparative Analysis: Conducting a comparative analysis of the parent-subsidiary relationship in Indonesia with other countries to identify best practices and areas for improvement.
Theoretical Frameworks: Developing theoretical frameworks to explain the parent-subsidiary relationship in Indonesia and to identify the key factors that influence this relationship.

Limitations of the Study

This study has several limitations that should be acknowledged. Firstly, the study is based on a single case study of PT. Perkebunan Nusantara IV (Persero) and PT. Pamina Adolina, which may not be representative of other parent-subsidiary relationships in Indonesia. Secondly, the study relies on secondary data, which may not be comprehensive or up-to-date. Finally, the study does not consider the impact of external factors, such as economic and political changes, on the parent-subsidiary relationship.

Conclusion

In conclusion, this study provides a comprehensive analysis of the parent-subsidiary relationship in Indonesia. The study highlights the legal complexity governing this relationship and the challenges of managing it. The study also provides recommendations for companies operating in group structures and identifies areas for future research.
Frequently Asked Questions (FAQs) about the Parent-Subsidiary Relationship in Indonesia

In our previous article, we provided an in-depth analysis of the parent-subsidiary relationship in Indonesia, focusing on the case study of PT. Perkebunan Nusantara IV (Persero) and PT. Pamina Adolina. In this article, we will answer some of the frequently asked questions (FAQs) about the parent-subsidiary relationship in Indonesia.

Q: What is the parent-subsidiary relationship in Indonesia?

A: The parent-subsidiary relationship in Indonesia refers to the relationship between a parent company and its subsidiary, where the parent company has a majority stake in the subsidiary.

Q: What is the legal framework governing the parent-subsidiary relationship in Indonesia?

A: The legal framework governing the parent-subsidiary relationship in Indonesia is regulated by Law No. 40 of 2007, which emphasizes the single company principle and the independence of the subsidiary.

Q: What are the responsibilities of the parent company towards the subsidiary?

A: The parent company has a legal responsibility towards the subsidiary, including the principle of limited liability, which means that the parent company is not personally responsible for the obligations or debt borne by the subsidiary.

Q: What is the theory of piercing the corporate veil?

A: The theory of piercing the corporate veil allows shareholders to be responsible if it is proven that they have used subsidiaries as a tool to avoid legal responsibilities.

Q: What is the instrumental approach and Alter Ego theory?

A: The instrumental approach and Alter Ego theory emphasize the functional relationship between the parent company and subsidiary, and the agency relationship between the two entities, respectively.

Q: What are the challenges of managing the parent-subsidiary relationship?

A: The challenges of managing the parent-subsidiary relationship include ensuring that the subsidiary operates independently while still fulfilling its obligations to the parent company, and ensuring that the parent company does not exert excessive control over the subsidiary.

Q: What are the recommendations for companies operating in group structures?

A: The recommendations for companies operating in group structures include maintaining clear communication, ensuring independent operations, managing risks, and supervising and monitoring the subsidiary's activities.

Q: What are the future research directions for the parent-subsidiary relationship in Indonesia?

A: The future research directions for the parent-subsidiary relationship in Indonesia include conducting case studies of other parent-subsidiary relationships, conducting a comparative analysis with other countries, and developing theoretical frameworks to explain the parent-subsidiary relationship.

Q: What are the limitations of this study?

A: The limitations of this study include the reliance on secondary data, the focus on a single case study, and the lack of consideration of external factors that may impact the parent-subsidiary relationship.

Q: What are the implications of this study for entrepreneurs, academics, and legal practitioners?

A: The implications of this study for entrepreneurs, academics, and legal practitioners include a deeper understanding of the parent-subsidiary relationship in Indonesia, the importance of clear communication and independent operations, and the need for further research on this topic.

Q: What are the next steps for companies operating in group structures?

A: The next steps for companies operating in group structures include implementing the recommendations outlined in this study, such as maintaining clear communication and ensuring independent operations, and continuing to monitor and evaluate the parent-subsidiary relationship.

Q: What are the potential benefits of a well-managed parent-subsidiary relationship?

A: The potential benefits of a well-managed parent-subsidiary relationship include increased efficiency, improved risk management, and enhanced competitiveness.

Q: What are the potential risks of a poorly managed parent-subsidiary relationship?

A: The potential risks of a poorly managed parent-subsidiary relationship include increased risk of liability, decreased efficiency, and reduced competitiveness.

Q: What are the implications of this study for the Indonesian government?

A: The implications of this study for the Indonesian government include the need to review and update the legal framework governing the parent-subsidiary relationship, and to provide guidance and support for companies operating in group structures.

Q: What are the next steps for the Indonesian government?

A: The next steps for the Indonesian government include reviewing and updating the legal framework governing the parent-subsidiary relationship, providing guidance and support for companies operating in group structures, and continuing to monitor and evaluate the impact of the parent-subsidiary relationship on the Indonesian economy.