Mergers and Acquisitions deals in Indonesia are an alternative venture for foreign investors through PT Penanaman Modal Asing (PT PMA). Before conducting M&A deals, foreign companies and investors must stay updated on Indonesia’s Positive Investment List, which outlines eligible business sectors and sets limits on foreign ownership.
Types of Mergers & Acquisition Transactions
Merger in Indonesia
All assets and liabilities are legally transferred to the acquired entity. The remaining firms are legally liquidated.
Consolidations in Indonesia
All entities are legally liquidated, all assets and liabilities are legally transferred to a newly formed entity.
Share or Asset Acquisitions 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 procedures under the Indonesian Company Law, such as a Public Acquisition Announcement, Sale and Purchase agreement, and Deed of Transfer.
Mergers and Acquisitions: Transaction Process
| No | Procedures |
|---|---|
| 1 | The acquirer and the target company prepare an M&A proposal for newspapers. |
| 2 | The target company conducts an extraordinary general meeting of shareholders with at least 75% of shareholders. |
| 3 | Creditors approve the proposed M&A transaction. |
| 4 | Determine the fair market value of the merger shares conversion formula by valuing shares. |
| 5 | Third parties (as required by law and agreements) approve. |
| 6 | Relevant agencies (BKPM, OJK, and Ministry of Law and Human Rights) approve the merging or acquiring of companies. |
| 7 | Any relevant industry regulator gives approval (depending on the business nature of the target company). |
The process of closing a company can take between 1 to 1.5 years to complete. According to Act Number 40 of 2007 concerning Limited Liability Company, the steps to dissolve a company are as follows:
Mergers and Acquisitions: Requirements
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
