THE VALIDITY OF CONTRACTS IN THE DUAL POSITION OF DIRECTOR IN A LIMITED LIABILITY COMPANY

Abstract

The phenomenon of directors holding dual positions in two or more related limited liability companies raises legal issues regarding the validity of contracts signed by the same party for two different entities. This study aims to analyze the legal consequences of the validity of contracts made by directors with dual positions. The purpose of this study is to determine the validity of contracts in the case of directors with dual positions in limited liability companies and the legal consequences of the validity of such contracts. The method used is normative juridical with a legislative and conceptual approach. The results of the study show that contracts made by directors in dual positions have the potential to be legally flawed if they do not meet the principles of good faith, fiduciary duty, and Good Corporate Governance. These contracts can be canceled if there is evidence of a conflict of interest or misuse of internal information that violates the doctrines of self-dealing and insider trading. Therefore, transparency and supervision through the approval of the Board of Commissioners or the General Meeting of Shareholders are important mechanisms to ensure the validity of contracts in modern corporate practice.