SSEK Legal Consultants partner Fahrul S. Yusuf and Michael S. Carl, a senior foreign legal advisor at the firm, have contributed the Indonesia chapter of the new Practical Law global guide to Public Mergers and Acquisitions. SSEK is one of the top M&A law firms in Indonesia, as ranked by leading independent legal directories including Chambers & Partners, IFLR1000, Legal 500 and Asia Law & Practice. SSEK was recognized as a Tier 1 M&A law firm in the 2015 M&A Rankings from Asian Legal Business, one of only four firms in Indonesia to receive the Tier 1 ranking.
The following is an excerpt from Public Mergers and Acquisitions in Indonesia.
Can a bidder compulsorily purchase the shares of remaining minority shareholders?
The acquirer does not have the right to compulsorily purchase the shares of any minority shareholders who do not accept the offer.
If a bidder fails to obtain control of the target, are there any restrictions on it launching a new offer or buying shares in the target?
There are no such restrictions.
What action is required to de-list a company?
The requirements to de-list are governed by Indonesia Stock Exchange (IDX) Rule No. I.I on De-Listing and Re-Listing (IDX Regulation). Under the IDX Regulation, de-listing can be done either:
- At the request of the IDX.
Under the IDX Regulation, voluntary de-listing is only possible after five years of listing on the IDX and after receiving shareholder approval.
- The procedure for a voluntary de-listing comprises the following steps:
- The listed company submits the de-listing plan to the IDX.
- Prior to convening a general meeting of the shareholders (GM) to approve the de-listing, the listed company must make the following information available to the public:
- the reason for and objective of the de-listing;
- the party or parties who will purchase the shares of the company; and
- the estimated share purchase price.
- After the GM has approved the de-listing, the company must publish information regarding the procedures for purchasing the shares.
- The listed company must submit a de-listing application to the IDX along with a:
- report of the share purchases; and
- an opinion from a legal consultant that the share purchase process has been completed in accordance with applicable regulations.
(Note that the company or some other appointed party must offer to purchase the shares of any dissenting shareholders.)
The pricing for the offer to dissenting shareholders must be the highest of:
- The nominal (par) value of the shares.
- The highest trading price in the regular market during the two years prior to notice of the GM at which the de-listing is approved, plus a premium equal to the interest that would have been earned over the two-year period calculated by multiplying the original initial public offering (IPO) price of the relevant shares by:
- the average rate of interest of the three-month Bank Indonesia Certificate (SBI); or
- the interest rate of any Indonesian government bond as of the date of the shareholder resolution approving the de-listing.
- The fair value as indicated by an independent appraiser.
De-listing at request of IDX
The IDX can request that a company de-list if one of the following conditions is satisfied:
- The company is in a condition or experiences an event that has a significant adverse impact on the continuity of the company's business, financially or legally.
- The shares of the company could only be traded in the negotiable market for at least the last 24 months due to the suspension of trading in the regular market or cash market.
What actions can a target's board take to defend a hostile bid (pre- and post-bid)?
Hostile bids are not recognised in Indonesia. In the case of a Voluntary Tender Offer, there are no formally recognized means by which the target's board can respond.
Are any transfer duties payable on the sale of shares in a company that is incorporated and/or listed in the jurisdiction? Can payment of transfer duties be avoided?
The transfer of shares in a public company is subject to a 0.1% final tax (0.6% in the case of founding shares) on the sale price for transactions settled through the stock exchange, while capital gains are treated as ordinary income for both resident and non-resident taxpayers settling over the counter. There are no stamp or other transfer duties.
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