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Merger Procedures in Indonesia

Diterbitkan Minggu, 22 Desember 2024

Definition

Merger is a legal action taken by one company or more to merge with another existing company which results in assets and liabilities of the merging companies being transferred to the company that receives the merger and the status of merging companies ceases due to law.

Legal Consequences:

  • Legal consequences to assets and liabilities. The assets and the liabilities being transferred to the surviving company.
  • Legal consequences to shareholders. By the law, the shareholders of the merging company shall be shareholders in the surviving company
  • Legal consequences to the merging company is that the merging companies will cease as a company since the date of merger.

Requirements of Merger

Merger action shall be in observance to interests of

  • Company, minority shareholders, and employees
  • Creditors and other business partners
  • Community and fair competition in doing business

Merging Plan

  • Creating merging plan. Board of Directors of the merging company and the surviving company shall prepare the merger plan. The proposed merger plan needs approval from the Board of Commissioners and subsequently also from The General Meeting of Shareholders.
  • Contents of Merger Plan needed:
  1. Name and domicile from each company that will do the merger
  2. The reasons and as explanation from Board of Directors which will perform the merger and the merger’s requirements.
  3. Procedures of evaluation and conversion of shares of the merging company to the surviving company.
  4. The draft of articles of association amendment of the surviving company.
  5. financial statement which covering the last 3 (three) accounting year from each of the Company
  6. further plan or termination of business activities of the Company which will perform the Merger
  7. pro forma Balance Sheet of the surviving Company in accordance with the prevailing accounting principle in Indonesia;
  8. settlement procedures of the status, rights and obligations of the member of the Board of Directors, the Board of Commissioners, and employees of the merging Company
  9. settlement procedures of the rights and obligations of the Company that will perform the Merger with a third party
  10. settlement procedures of the rights of shareholders who are disagree with the Company’s Merger
  11. name of members of the Board of Directors and Board of Commissioners of the surviving Company as well as their salary, honorarium, and remuneration
  12. time estimation related to the performance of Merger ;
  13. report on the condition, progress, and achievement from each Company that will perform the Merger
  14. main business activity of each Company which will perform the Merger, and any changes occur during the current accounting year; and
  15. detail of issues arising during the current accounting year which are affecting the Company’s activity which will perform the Merger.
  • Merger Plan after having obtained approval from the Board of Commissioners of each Company shall be submitted to respective GMS for approval
  • Other regulation than the provision of this law shall also apply for certain Company which will perform a Merger other provided that it shall be required to obtain prior approval from the relevant institution in accordance with prevailing regulation

Notarial Deeds

  • The plan of Merger which has been approved by the GMS shall be set forth into the deed of Merger which is drawn up before the notary in Indonesian language

Effective date of the Merger

  • The copy of the deed of Merger of the Company shall be attached to the application to obtain approval from the Minister
  • Or notification to the Minister regarding the amendment of articles of association
  • The Board of Directors of the surviving Company shall announce the result of such Merger in 1 (one) Newspaper or more, within the latest period of 30 (thirty) days as of the effective date of the Merger. This also apply to the Board of Directors of the Merging Company.

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