Regulatory Advisory On M&A In Indonesia
As the majority of Merger & Acquisition (M&A) deals in Indonesia are led by foreign investors. It is important to note, foreign investments in Indonesia are to be conducted in a form of a PT PMA – commonly referred to as a PT Penanaman Modal Asing, the equivalent of a Limited Liability Company in Indonesia.
Foreign companies or investors should also note the recent changes in Indonesia’s Positive Investment List. It determines the business lines that are open to foreign investments, and more importantly, the maximum percentage of foreign shareholding.
Other noteworthy Indonesia laws and regulations on M&A include:
- Law No 40 of 2007 on Limited Liability Companies (Company Law)
- Law No 25 of 2007 on Investment
- Law No 5 of 1999 on Prohibition of Monopoly and Unfair Business Competition
- Law No. 13 of 2003 on Manpower.
- Law No 8 of 1995 on the Capital Markets (Capital Markets Law)
- Government Regulation 27 of 1998 on Merger, Consolidation, and Acquisition of a Limited Liability Company
- OJK Regulation No. 9/POJK.04/2018 on Public Company Takeover
- OJK Regulation No. 74/POJK.04/2016 on Merger or Consolidation of a Public Company
Guidance On Types Of M&A Transactions
Based on Indonesia’s Company Law, here are the most preferred types of M&A transactions we can assist with.
Merger In Indonesia
All assets and liabilities are legally transferred to the acquired entity. The remaining firms are legally liquidated.
Consolidation In Indonesia
All entities are legally liquidated, all assets and liabilities are legally transferred to a newly formed entity
Share or Asset Acquisition In Indonesia
A legal entity acquires shares of assets in a company resulting in a change of control in the acquired entity. There are strict proceeds under the Indonesian Company Law such as Public acquisition announcement, Sale and purchase agreement, and Deed of transfer, to name a few.
*At this point, it is important to note, M&A-related regulations vary between sectors and could either take precedence or complement existing general M&A laws and regulations.
Processing M&A Transactions
In general, the procedures of M&As in Indonesia are summarised as follows:
– The acquirer and the target company prepares an M&A proposal in newspapers.
– The target company conducts an extraordinary general meeting of shareholders with the presence of at least 75% shareholders.
– Creditors approve the proposed M&A transaction.
– Determine the fair market value of the merger shares conversion formula through a valuation of shares.
– Third parties (as required by law and agreements) give approval.
– Relevant agencies (BKPM, OJK and Ministry of Law and Human Rights) approve the merging or acquired companies.
– Any relevant industry regulator gives approval (depending on the business nature of the target company)
From a regulatory perspective, a merger or an acquisition takes at least 30 days to be successfully completed. However, it may take longer due to negotiation and due diligence processes.
Filing M&A Documents
To merge with another company in Indonesia, the following documents must prepared include:
– A merger plan
– Announcement
– A deed of merger
– Shareholders register
– A certificate of collective shares
– Approval from the Ministry of Law and Human Rights or other relevant agencies
– Business Identification Number
To acquire a company in Indonesia, the following documents must prepared include:
– Announcement
– GMS resolutions
– A sale and purchase agreement
– A deed of transfer
– Shareholders register
– A certificate of collective shares
– Approval from the Ministry of Law and Human Rights or other relevant agencies
– Business Identification Number
Your Turnkey Solution for Mergers & Acquisitions In Indonesia
Cekindo’s mergers and acquisitions services in Indonesia are designed to help our clients achieve their strategic goals. Our comprehensive services comprise the valuation, negotiation, and completion stages, including financial audit and legal due diligence.
To learn more about Indonesia’s M&A regulations and processes fill in the form below and our M&A consultant will be in touch with you shortly.
