The takeover or acquisition of a controlling interest in any privately-held Indonesian company must now be approved by its shareholders, be published in an Indonesian newspaper and requires settlement of objections that creditors may have. This is the result of the enactment of the new Company Law (Law 40/2007) that was signed into law in August. In line with the previous company law, acquisition of control is not defined. Either a 50% plus one share test will be applied, or the control test that applies to takeovers of listed companies: 25% share ownership, or the ability, directly or indirectly, to appoint and dismiss the members of the board of directors and board of commissioners or to amend the articles of association. The requirements apply whatever the size of the company or the industry it is engaged in.
An abridged takeover plan must be published in a newspaper and submitted to all employees. A complicated objection procedure applies: any creditor (which may include employees) may file objections to the board of directors, but if these are not settled they must be submitted to the shareholders meeting that must approve the acquisition. No further details are provided.
Law 40/2007 requires implementing regulations to be issued. In particular, acquisitions where the company itself is involved in the takeover are subject to a different regime. It is hoped that these will address what the takeover plan will have to address and whether the identity of the purchaser and seller will have to be disclosed. Law 40/2007 also does not deal with how creditor objections must be dealt with.
Law 40/2007 raises a number of other issues that will be dealt with in following issues of this publication.
Theodoor Bakker/Emir Nurmansyah
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