T The establishment of state-owned enterprise holding companies is intended to improve the efficiency, synergy, and competitiveness of state-owned enterprises. however, indonesian law does not specifically regulate the relationship between parent companies and subsidiaries within a holding-company structure. consequently, each company remains subject to the separate legal entity principle. legal issues arose when pt indofarma (persero) tbk faced alleged financial statement irregularities, financial distress, suspension of debt payment obligations proceedings, outstanding obligations to creditors, and unpaid employee entitlements. meanwhile, pt bio farma (persero), as the parent company and majority shareholder, provided financial support and assistance in resolving these issues. this research examines the application of the separate legal entity principle to pt bio farma (persero) in relation to the actions of pt indofarma (persero) tbk and analyses the potential liability of the parent company for actions of its subsidiary that cause losses to third parties. this research employs a descriptive normative legal method using statutory, doctrinal, and corporate-document approaches. the results indicate that the separate legal entity principle has not been fully implemented in practice because pt bio farma (persero) continuously provided periodic loans and financial support to enable pt indofarma (persero) tbk to maintain its operations, thereby blurring the legal boundaries between the two entities. therefore, pt bio farma (persero) may be held liable if it is proven to have exercised dominant control, excessively intervened in the subsidiary’s management, abused its position as a shareholder, or undertaken actions that deprived the subsidiary of its independence.