This content is from: Local Insights

New rules on takeover of public companies

Freddy KaryadiOene Marseille

Through its Decree No KEP-264/BL/2011, the Indonesian Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) has revised Rule IX.H.1 on Takeovers of Publicly Listed Companies. Other than the introduction of the beneficial owner concept applicable to the new controller, there have not been many changes to the terms of takeover, procedures and requirements to carry out tender offers, and requirement to make divestment after completion of a tender offer which causes the new controller to own more than an 80% shareholding.

Meanwhile, the new rule introduces the possibility for Bapepam and LK to extend the period for mandatory divestment of the shares, if:

(i) the Composite Stock Price Index (Indeks Harga Saham Gabungan) on the stock exchange falls more than 10% for three consecutive trading days;

(ii) the stock exchange where the shares of the public company listed and traded is closed;

(iii) are trading of the public company in the stock exchange is suspended;

(iv) there occur natural disasters, wars, riots, fires, and/or strikes, which significantly influence the business survival of the public company;

(v) the stock price at the time of divestment is never equal or higher than the price of the Mandatory Tender Offer; and

(vi) the new controller has exerted efforts to divest the shares, but the obligation cannot be satisfied.

The deferral of obligation to divest the shares as mentioned in points e) and f) may be given by Bapepam and LK under the following procedure:

(i) The new controller submits the application letter to defer the obligation to divest the shares to Bapepam and LK no later than one business day after the expiration of the period of obligation to divest the shares.

(ii) Application relating to point e) above must be accompanied by the data and information regarding the shares price which prove that the shares price at the time of re-transfer has never been equal or higher than the price of the Mandatory Tender Offer.

(iii) Application relating to point f above, shall be accompanied by the explanation regarding:

(a) efforts that have been made with regards to the implementation of the obligation to divest the shares; and

(b@03 Main text:) difficulties that were suffered in the implementation of the obligation to divest the shares.

The deferral of obligation to divest the shares may be granted for a six-month period after the date of issuance of the approval by Bapepam and LK.

The Decree became effective on May 31 2011.

Oene Marseille and Freddy Karyadi

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