ENGLISH EDITION
GENERAL PROCEDURES FOR ACQUISITION OF A COMPANY
Acquisition means a legal action conducted by a legal entity or an individual to acquire the shares of a company, resulting in the changes of control. An acquisition can be conducted by way of acquiring the shares issued (existing shares) or new shares to be issued by the company from the Board of Directors (BOD) of the company or directly from the shareholders. The process for shareholder-initiated acquisitions (directly from shareholders) is more straightforward compared to the BOD-initiated acquisitions.
The Company Law (Law Number 40 of 2007 Concerning Limited Liability Company) establishes general procedures for acquisitions, as follows:
- Preparation of an Acquisition Plan
An acquisition proposal (further to be reduced into an acquisition plan) must be prepared if the BOD of the target and acquiring company initiate the acquisition. However, please note that the requirement for preparing the acquisition plan does not apply to the shareholder-initiated acquisitions.
- Approval from the Board of Commissioners and General Meeting of Shareholders
The acquisition plan needs to be approved by the respective board of commissioners. Each company’s BOD must then convene a General Meeting of Shareholders (GMS) to approve the acquisition plan in accordance with its respective Articles of Associations and the Company Law.
- Announcement of Acquisition.
Before the transaction is approved by the GMS, the BOD must publish an announcement of the summary of the acquisition plan in at least 1 national newspaper and make an announcement in writing to the employees at least no later than 30 days prior to the date of calling the GMS.
- Objection of Creditors
Creditors may submit objections within 14 days as of the publication of announcement. The acquisition cannot be implemented until the objections of the creditors have been settled.
- Deed of Acquisition
The acquisition plan approved by the GMS must then be executed and reduced into the Indonesian notarial deed of acquisition.
- Notification to the Ministry of Law and Human Rights (MOLHR)
Amendments to the shareholding compositions following the acquisition needs to be notified to the MOLHR and a copy of the deed of acquisition must be included in the application.
- Announcement of Acquisition Results
At the last stage, the BOD must publish the announcement on results of the acquisition in 1 national newspaper no later than 30 days after the effective date of the acquisition.
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Prepared by co-writer Grace Dwayne, Universitas Padjajaran – Paralegal
Reference :
Law Number 40 of 2007 Concerning Limited Liability Company
