Introduction MA - PW (200610)

Company Law: Introduction to Merger
& Acquisition
PUTRI WULANDARI
June 2020
ALI BUDIARDJO, NUGROHO, REKSODIPUTRO
Legal Framework
 Law No. 40 of 2007 on Limited Liability Companies (“Company Law”)

and implementing regulations;
 Other laws and regulations:
- Sectoral regulations
- Laws and regulations on anti-monopoly
Ali Budiardjo, Nugroho, Reksodiputro

Definitions
ACQUISITION
 What is acquisition?
 Art. 1 paragraph 11 Company Law
 Sample:

Definitions
MERGER
 What is Merger?
CONSOLIDATION
 What is Consolidation?

Merger vs Consolidation

Merger, Consolidation, Acquisition (“MCA”)
 In practice
 When to decide which transaction?

Acquisition
 Control?
 Share Percentage
 Other forms of control
 Interests that must be take into account:

- The company, minority shareholder, employees
- Creditors and other business partners
- Public and fair competition in doing business

Study Case/ Quiz No. 1 (1 Person)

Susunan Pemegang Saham PT ABC:
Pemegang Saham:
Nn. X (20%)
Tn. Y (10%)
Ny. Z (70%)
1) PT DEF membeli saham milik Nn. X (20%) – apakah ini akuisisi?
2) PT DEF membeli saham milik Nn. X (20%) dan Tn. Y (10%) – apakah ini akuisisi?
3) PT DEF membeli saham milik Nn. X (20%), Tn. Y (10%) dan Ny. Z (10%) – apakah ini
akuisisi?
4) PT DEF membeli saham milik Nn. X (10%), Tn. Y(10%), dan Ny. Z (35%) – apakah ini
akuisisi?
5) PT DEF membeli seluruh saham Ny. Z (70%) – apakah ini akuisisi?

Study Case/ Quiz No. 2 (2 Persons)
Susunan Pemegang Saham PT ABC:

• X (30%)
• Y (30%)
• Z (40%)
1) PT DEF membeli saham Z (40%) – apakah ini akuisisi?
2) PT DEF membeli saham X (30%) dan Y (40%) – apakah ini akuisisi?
3) PT DEF membeli saham X (30%), PT GHI membeli saham Y (30%), PT JKL

membeli saham Z (40%) – apakah ini akuisisi atau bukan? Alasannya?
4) PT DEF mau membeli saham Z, namun X dan Y menolak – apakah

dimungkinkan? Bagaimana caranya Z dapat menjual sahamnya?

The Basics: Acquisition
• Acquisition Through Shareholders vs Acquisition Through

Board of Directors
• Shares Acquisition vs Business Acquisition

The Basics
Share acquisition
• Sale of existing shares or subscription for new shares
• A company acquires the shares in another company (target)
• Target usually becomes a subsidiary of the purchasing
company
• Specific provisions in the Company Law (Art. 26, 62, 89,
125-128,131-133) may apply

The Basics
Share acquisition Through Shareholders

• Sale of existing shares
• A company acquires the shares in another company (target)
• Target usually becomes a subsidiary of the purchasing
company
125-128,131-133) may apply

The Basics
Share acquisition Through Board of Directors

• Subscription of new shares/ Sale of existing shares
• A company subscribes new shares in another company
(target)
• Target usually becomes a subsidiary of the subscribing
company
125-128,131-133) may apply

The Basics
Business acquisition
• A company acquires the assets of another company
• Complicated process: separate transfer of each asset,
contract, debt
• Advantage: liabilities remain with the selling company
(pick and choose)
• Specific provisions in the Company Law (Art. 62, 102)
may apply

The Basics
Business acquisition vs Shares acquisition

• Advantage vs disadvantage
• When and Why

Legal Due Diligence (LDD)
 What is legal due diligence?
 What are the documents/ aspects to be examined in an LDD

exercise?
– corporate;
– regulatory & compliance,
– manpower,
– commercial contracts,
– finance,
– assets,
– insurance,
– litigation.
 Vendor Due Diligence?

Legal Due Diligence (LDD)
 How to protect the Target Company’s data?
 Product of LDD exercise?
 How to protect the Purchaser’s interest?

Study Case/ Quiz No. 3 (2 Persons)
• PT A wants to acquire 100% shares in PT B

(shareholders: Ali 90% and Budi 10%)
• First things first?

Study Case/ Quiz No. 3 (2 Persons) - continued
• After conducting due diligence, the lawyers obtain information as

follow:
– Huge debts based on loan documents and financial statement
– Lack of compliance, such as license, reports, etc.
– The land is under collateral
– Big and loyal customers pursuant to commercial and material agreements
being provided
– Business is developing in the sense of commercial side (got this information
from the Client)
– The IPR is registered under PT B’s name
• What would you recommend?
• Shares/ Business Acquisition?

Acquisition Timeline

Sample of Newspaper Announcement of
Acquisition Through Shareholders

Sample of Announcement to Employees

Sample of Post-Acquisition Announcement

What documents to prepare?

Documents & Actions Reference
Pre-Acquisition • Proposed Acquisition Plan (if through BOD) Proposed Acquisition Plan at least contains: See the details in:
Announcement • Pre-acquisition Announcements (Newspaper • Parties’ detailed information;
• Company Law
and to Employees) • Reason of this acquisition;
• Audited Financial Statement for the last 3 years; • PP 27/1998 Art. 26
Approvals • Required Prior Approvals (Corporate • Draft amendment of articles of association;
Approvals/Spousal Consent/ Regulatory • Funding availability of the acquirer; • PP 28/1999 Art. 29
Approvals) • Settlement of minority shareholders’ rights;
EGMS • Acquisition Plan • Acquirer’s Statement Letter stipulating that the
acquisition is not funded from loan, money
• Draft Deed of Acquisition/Transfer of Shares laundering, financial crime;
• Execute Deed of Acquisition/Transfer of Shares • The proposed shareholding ratio and schedule
and Deed of Amendments to AOA before a until completion;
notary
Application for Acquisition • Deed of Acquisition/Transfers of Shares • EGMS resolutions; • Company Law
and amendment of AOA to • Deed of Amendment of AOA and Change in • Announcement of Acquisition in newspaper
• PP 27/1998 Art. 31 – 32
MLHR BOD/BOC
Announce results of • Post-acquisition Announcement Company Law Art. 133

Acquisition in newspaper
Notify KPPU if Acquisition Check Threshold? The obligation to deliver written notification to See details in:
Threshold is reached KPPU if the acquirer and target entities’
Antimonopoly Law & PP 57/2010
combined asset value in Indonesia reach or are
greater than IDR 20Tn

The Basics
Merger/ Consolidation
• Companies merge into one new company (surviving and
dissolving company)
• Transfer of assets and liabilities through general
succession of title
89, 122-123, 126-129, 130, 132-133) apply
• Reasons for Merger?

Case Study/ Quiz No. 4 (2 Persons)
26
XYZ Limited, suatu perusahaan yang berasal dari Jepang berminat untuk melakukan investasi langsung (foreign direct
investment) di Indonesia. XYZ Limited saat ini tertarik untuk melakukan investasi di bidang portal web.
XYZ Limited memiliki beberapa opsi perusahaan di Indonesia, namun tertarik dengan salah satu portal web dengan
nama PT ABC yang menyediakan portal untuk menjual kerajinan tangan hasil pedagang lokal indonesia.
Namun XYZ Limited melihat bahwa PT ABC masih merupakan suatu perusahaan yang belum mendapatkan pasar
yang cukup besar di Indonesia dan masih merupakan perusahaan menengah. Salah satu direktur dari PT ABC bertemu
dengan perwakilan dari XYZ Limited. Direktur PT ABC kemudian menceritakan bahwa sebelum XYZ Limited
memberikan penawaran, PT ABC sedang dalam proces due diligence untuk mengambil suatu perusahaan bernama PT
DEF yang mana merupakan suatu perusahaan yang bergerak di bidang postal.
Mendengar hal tersebut, XYZ Limited merasa bahwa hal tersebut membuat prospek PT ABC di bidang portal web
semakin baik.
Pertanyaan:
1. Apabila Anda ditunjuk sebagai konsultan hukum dari XYZ Limited, Anda diminta untuk memberikan pendapat
hukum terkait dengan:
– Apakah XYZ Limited sebaiknya melakukan akuisisi saham atau akusisi bisnis/aset atas PT ABC?
– Apakah Anda akan menganjurkan pengambilalihan saham/ akuisisi atas PT ABC via pemegang saham atau
via direktur? Berikanlah alasannya.
2. Apabila Anda ditunjuk sebagai konsultan hukum dari PT ABC, Anda diminta untuk memberikan pendapat hukum
terkait dengan:
– Struktur yang terbaik, apakah merger atau akuisisi? Pros and Cons?
– Apabila opsi akuisisi yang diambil, apakah Anda akan menganjurkan pengambilalihan saham/ akuisisi atas
PT ABC via pemegang saham atau via direktur? Berikanlah alasannya.
Questions?

Thank You

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Company Law: Introduction to Merger

 Law No. 40 of 2007 on Limited Liability Companies (“Company Law”)

 Other laws and regulations:

- Laws and regulations on anti-monopoly

Ali Budiardjo, Nugroho, Reksodiputro

 Art. 1 paragraph 11 Company Law

Ali Budiardjo, Nugroho, Reksodiputro

 Art. 1 paragraph 9 Company Law

 Art. 1 paragraph 10 Company Law

Ali Budiardjo, Nugroho, Reksodiputro

Ali Budiardjo, Nugroho, Reksodiputro

Merger, Consolidation, Acquisition (“MCA”)

 When to decide which transaction?

Ali Budiardjo, Nugroho, Reksodiputro

 Other forms of control

 Interests that must be take into account:

Ali Budiardjo, Nugroho, Reksodiputro

Study Case/ Quiz No. 1 (1 Person)

1) PT DEF membeli saham milik Nn. X (20%) – apakah ini akuisisi?

5) PT DEF membeli seluruh saham Ny. Z (70%) – apakah ini akuisisi?

Ali Budiardjo, Nugroho, Reksodiputro

Study Case/ Quiz No. 2 (2 Persons)

Susunan Pemegang Saham PT ABC:

1) PT DEF membeli saham Z (40%) – apakah ini akuisisi?

2) PT DEF membeli saham X (30%) dan Y (40%) – apakah ini akuisisi?

3) PT DEF membeli saham X (30%), PT GHI membeli saham Y (30%), PT JKL

4) PT DEF mau membeli saham Z, namun X dan Y menolak – apakah

Ali Budiardjo, Nugroho, Reksodiputro

The Basics: Acquisition

• Acquisition Through Shareholders vs Acquisition Through

• Shares Acquisition vs Business Acquisition

Ali Budiardjo, Nugroho, Reksodiputro

Ali Budiardjo, Nugroho, Reksodiputro

Share acquisition Through Shareholders

Ali Budiardjo, Nugroho, Reksodiputro

Share acquisition Through Board of Directors

Ali Budiardjo, Nugroho, Reksodiputro

Ali Budiardjo, Nugroho, Reksodiputro

Business acquisition vs Shares acquisition

Ali Budiardjo, Nugroho, Reksodiputro

Legal Due Diligence (LDD)

 What is legal due diligence?

 What are the documents/ aspects to be examined in an LDD

 Vendor Due Diligence?

Legal Due Diligence (LDD)

 How to protect the Target Company’s data?

 Product of LDD exercise?

 How to protect the Purchaser’s interest?

Ali Budiardjo, Nugroho, Reksodiputro

Study Case/ Quiz No. 3 (2 Persons)

• PT A wants to acquire 100% shares in PT B

• First things first?

Ali Budiardjo, Nugroho, Reksodiputro

Study Case/ Quiz No. 3 (2 Persons) - continued

• After conducting due diligence, the lawyers obtain information as

• What would you recommend?

• Shares/ Business Acquisition?

Ali Budiardjo, Nugroho, Reksodiputro

Ali Budiardjo, Nugroho, Reksodiputro

Ali Budiardjo, Nugroho, Reksodiputro

Sample of Announcement to Employees

Ali Budiardjo, Nugroho, Reksodiputro

Sample of Post-Acquisition Announcement