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Company Merger Indonesia
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A company merger unites two or more businesses into a single, unified company. Indonesian company mergers are governed by the 2007 Limited Liability Company Law (Law No. 40 of 2007).
For any Indonesian company merger to proceed, it needs the green light from all participating shareholders and the Ministry of Law and Human Rights. Approval is also required from the Indonesian Competition Commission and other appropriate agencies.
Merger
- Definition: A merger is when two or more companies combine to form a new entity.
- Nature of Agreement: Typically involves mutual consent and collaboration between the merging companies.
- Company Identity: A new name and identity are created for the merged entity.
- Size and Power Dynamics: Companies involved are generally of similar size and financial strength.
- Stock Issuance: New stocks are issued to represent ownership in the newly formed entity.
- Decision-Making Process: Requires approval from both companies' boards and shareholders, fostering collaboration.
- Objectives: Aims for synergy, operational efficiency, and market expansion for both entities.
Acquisition
- Definition: An acquisition occurs when one company takes control of another by purchasing a majority of its shares.
- Nature of Agreement: Can be friendly or hostile; often initiated by the acquiring company without the target's consent.
- Company Identity: The acquired company usually loses its identity and operates under the acquiring company's name.
- Size and Power Dynamics: The acquiring company is usually larger and more financially robust than the target company.
- Stock Issuance: No new stocks are issued; the acquirer typically buys existing shares of the target company.
- Decision-Making Process: The acquiring company dictates terms, often leading to power imbalances and potential conflicts.
- Objectives: Focuses on gaining market share, technology, or resources rather than mutual growth.
Regulations Governing Company Mergers
- 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
- 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
- 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
- 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
Document Requirements
To merge with another company in Indonesia, the following documents must be prepared
- Identity and contact details of new Company Directors and Commissioner
- Identity and contact details of current Company Directors and Commissioner
- Identity and contact details of current Company Directors and Commissioner
- Scan a copy of the Deed of Establishment along with the SK
- Scan a copy of the latest Article of Association along with the SK
- Scan a Copy of the Tax Id, NIB, and Business License
- Copy of the Lease Agreement between the company and building management
Merge Your Company in Indonesia with LMI Consultancy
- Consult your inquiry with our professional consultant
- Submit necessary document
- Proceed with the payment
- Application process
- Receive the complete document
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Setup a Business in Indonesia with LMI Consultancy
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FAQ
In Indonesia, how many different kinds of corporate mergers exist?
Indonesian companies merge in various ways, including:
- A merger by acquisition involves one company taking over another, inheriting its assets and debts, and leading to the acquired company’s dissolution.
- Consolidation merger unites two companies into a single, new organisation.
- An absorption merger occurs when one firm absorbs another, taking on its assets and debts, leading to the acquired firm’s dissolution.
What Indonesian regulations govern company mergers?
The legal framework for company mergers in Indonesia is established under Law No. 40 of 2007.
How much time is needed to complete a company merger in Indonesia?
Legally, mergers require a minimum of 30 days to finalise. Negotiations and due diligence, however, could extend the process.
Disclaimer : Our services in LMI Consultancy provide consulting services focused on ensuring client compliance with applicable immigration and legal regulations in Indonesia. We do not provide or facilitate the production of official government documents, nor do we offer any expedited or preferential access to government services.
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