Mergers & Acquisitions (M&A) In Indonesia

The landscape for foreign investment in Indonesia continues to improve as the Indonesian government works toward relaxing foreign investment regulations and improving the ease of doing business in Indonesia. These recent regulatory changes have a knock-on effect on Indonesia’s Merger & Acquisition landscape. Find out how we can navigate you through your M&A in Indonesia.
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Regulatory Advisory On Mergers & Acquisitions In Indonesia

Foreign investors lead most Mergers & Acquisitions (M&A) deals in Indonesia. It is important to note that foreign investments in Indonesia are to be conducted in the form of a PT Penanaman Modal Asing ( commonly known as a PT PMA) – the equivalent of a Limited Liability Company in Indonesia.

Foreign companies or investors should be aware of the recent changes in Indonesia’s Positive Investment List. This list determines the business lines that are open to foreign investments and, more importantly, the maximum percentage of foreign shareholding.

Indonesia laws and regulations on M&A include:
1.Law No 40 of 2007 on Limited Liability Companies (Company Law)
2.Law No 25 of 2007 on Investment
3.Law No 5 of 1999 on Prohibition of Monopoly and Unfair Business Competition
4.Law No. 13 of 2003 on Manpower.
5.Law No 8 of 1995 on the Capital Markets (Capital Markets Law)
6.Government Regulation 27 of 1998 on Merger, Consolidation, and Acquisition of a Limited Liability Company
7.Government Regulation 57 of 2010 on Mergers or Consolidations of Business Entities and Acquisitions of Company Shares Which May Result in Monopolistic Practices and/or Unfair Business Competition
8.KPPU Law No 3 of 2019 on Assessment of Mergers or Consolidations or Acquisitions of Companies That May Result in the Occurrence of Monopolistic Practices and/or Unfair Business Competition
9.OJK Regulation No. 9/POJK.04/2018 on Public Company Takeover
10.OJK Regulation No. 74/POJK.04/2016 on Merger or Consolidation of a Public Company

A Guide to the Types Of Mergers & Acquisition Transactions

Based on Indonesian Company Law, here are the most preferred types of Mergers & Acquisitions transactions in which we can assist.

All assets and liabilities are legally transferred to the acquired entity. The remaining firms are legally liquidated.
All entities are legally liquidated, all assets and liabilities are legally transferred to a newly formed entity.
A legal entity acquires shares of assets in a company resulting in a change of control in the acquired entity. There are strict procedures under the Indonesian Company Law, such as a Public Acquisition Announcement, Sale and Purchase agreement, and Deed of Transfer.
*M&A-related regulations vary between sectors and could either take precedence or complement existing general M&A laws and regulations.
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Processing Mergers and Acquisitions Transactions

In general, the procedures of Mergers and Acquisitions in Indonesia are summarised as follows:

  • The acquirer and the target company prepare an M&A proposal for newspapers.
  • The target company conducts an extraordinary general meeting of shareholders with at least 75% of 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)

The process of investigating the financial history and problems in the business is necessary for the company that will be acquired. A thorough investigation needs to be done by a potential investor, so it will not make a wrong move. Due diligence is also helpful for measuring the risk of the business that will be acquired.

A merger or an acquisition takes at least 30 days to be successfully completed from a regulatory perspective. However, it may take longer due to negotiations and diligence processes.

Filing The Mergers and Acquisitions Documents

  • 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
  • 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
*M&A-related regulations vary between sectors and could either take precedence or complement existing general M&A laws and regulations.
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Your Turnkey Solution for Mergers & Acquisitions In Indonesia

InCorp’s merger and acquisition services in Indonesia are designed to help 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.

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We were searching for suitable partner for the begining of our operation on Indonesian market. After short exploration and recommendation from our business partners we decided for Cekindo. Local knowledge, orientation at our business problematics, contacts and language. In a friendly approach combined with professional service. Consultation before the project – avoids so much unnecessary act of “foreigners” worse overview of the Indonesian legislative.
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Herewith we want to express our appreciation to PT. Cekindo Business International and their team for all the support on medical devices services so far. We would like to take this opportunity to thank Cekindo for taking the time to listen to our needs. Whenever a need has arisen, we have always received their consistent, timely and quality support. We would not hesitate to recommend Cekindo team for any related activity or services.
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