Can the Board of Directors Be Held Liable if the Company Suffers a Loss Due to an Employee's Actions?

In principle, directors cannot automatically be held personally liable merely because the company suffers a loss due to an employee's act. Under company law, directors are responsible for the management of the company and can only be held liable if the loss arises from their own fault or negligence in performing their duties. This is in line with Article 97(3) of the Company Law, which states that every member of the board of directors is personally liable for losses to the company if that person is at fault or negligent in carrying out their duties. This provision reflects the application of the piercing the corporate veil doctrine.

On the other hand, Article 1367 of the Indonesian Civil Code (KUHPerdata) states that a person is liable not only for losses caused by their own acts, but also for losses caused by the acts of persons under their responsibility. In the context of a company, this provision in principle places responsibility on the company as the legal entity that is the employer, not on the directors personally. This is due to the principle of separate legal entity, which means the company is an independent legal subject capable of acting in its own name before the law — including the capacity to own assets, to sue and be sued in court, and to bear other legal responsibilities. Therefore, if an employee commits an unlawful act resulting in loss, the party generally held liable in the first instance is the company as the employer.

Accordingly, as long as the directors can demonstrate that the loss was not caused by their fault or negligence, that the management of the company was carried out in good faith and with due care, that there was no conflict of interest, and that steps were taken to prevent the loss as provided under Article 97(5) of the Company Law, then a loss arising solely from the individual act of an employee in principle remains the responsibility of the company as a legal entity, not the personal responsibility of the directors.