Company Merger in Indonesia

Company Merger - Who is it for and What are the Benefits

A company merger is a process in which two or more companies combine their businesses to form a single entity. In Indonesia, company mergers are regulated by Law No. 40 of 2007 on Limited Liability Companies (“Company Law”).

In Indonesia, a company merger must be approved by the shareholders of each company involved, as well as by the Ministry of Law and Human Rights. The companies must also obtain approval from other relevant authorities, such as the Indonesian Competition Commission.

After the merger is approved, the companies must complete a number of legal procedures, including the transfer of assets and liabilities, transferring market shares, and the registration of the new entity with the relevant government authorities.

It is important to note that a company merger occurs to have significant legal and financial implications, and it is therefore important for companies to seek the advice of legal and financial professionals before proceeding with a merger.

Steps to Merge Your Company with Lets Move Indonesia

The acquirer and the target company prepare an M&A proposal in newspapers.
The target company conducts an extraordinary general meeting of shareholders with the presence of 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.
Any relevant industry regulator gives approval (depending on the business nature of the target company)

Frequently Asked Questions

How many types of Company mergers can be done in Indonesia?

There are several types of company mergers in Indonesia, including:

Merger by Acquisition: In this type of merger, one company acquires another company assets and liabilities, and the acquired company is dissolved.
Merger by Consolidation: This type of merger involves the synergy of two companies that combine to form a new entity.
Merger by absorption: This type of merger involves a company that absorbs another company’s assets and liabilities, and the absorbed company is dissolved.

What regulations stipulate Company mergers in Indonesia?

Company mergers in Indonesia are stipulated through the Law No 40 of 2007.

How long does it take to merge companies in Indonesia?

From a law perspective, mergers would take at least 30 days to achieve completion. However, the process may also be longer due to negotiations and due diligence processes.

What is Due Diligence?

Legal due diligence consists of an examination of the legal affairs of the target company in order to uncover any risks and provide detailed information regarding the company’s legal situation. A legal due diligence exercise often improves the bargaining power of the buyer.

Requirements to Obtain Company Merger and Acquisition

1. Identity and contact details of new Company Directors and Commissioner:

For Indonesian individuals, KTP, NPWP, email and phone number.
For Foreign Individuals, a valid passport, email and phone number.

2. Identity and contact details of current Company Directors and Commissioner:

For Indonesian individuals, KTP, NPWP, email and phone number.
For Foreign Individuals, a valid passport, email and phone number.

3. Identity and contact details of current Company Directors and Commissioner:

For Indonesian individuals, KTP, NPWP, email and phone number.
For Foreign Individuals, a valid passport, email and phone number.
If Indonesian Company, scan copy Deed of Establishment along with SK, Tax ID, NIB, Business License
If Foreign Company, scan copy Article of Association and/or Business License of Company