| Summary: | ABSTRACT
This research is a normative legal research on legal principles, legal norm, and legal systematics which aims to investigate whether a hospital's financial undertaking that generates profit or Retained Earnings is in conformity with the provision in Article 3 paragraph (1) of the Foundation Act and to investigate the accountability of the Board of a Foundation for its policy that inflicts a loss on the Foundation or a third party.
This research comprised library research and field research. The library research was conducted by examining primary, secondary and tertiary legal materials through a documentary study. The field research was carried out by interviewing respondents consisting of Board of Foundations, Hospital Directors, the Head of the District Office of Social. Welfare, the Head of the District Office of Health, the Clerk of the District Court, and Notaries using interview guidelines.
The findings of the research are as follows:
1. A foundation engaged in health service establishes a hospital for the achievement of its goal. In addition to providing medical care, however, a hospital is used as a profit-making establishment. This research shows that this profitable operation does not conform to the provision in Article 3 paragraph (1) of the Foundation Act because health service is not a financial undertaking and a hospital is not a legal entity. Therefore, if a hospital's activities are intended to generate Retained Earnings, the hospital is deviating from the purpose for which a foundation is established as stipulated in Article 1 point 1 of the Foundation Act.
2. The Board of a Foundation is internally accountable to the Board of trustees as the highest authority and externally accountable to a third party. In practice, the Board 's internal accountability is always accepted by the Board of Trustees. External accountability occurs because of default or illegal acts. In practice, no legal action has ever been taken by a third party against the Board of a Foundation for default or illegal acts.
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