Acquisition through Directors and Shareholders

Acquisition is a legal act which carried out by a legal entity or individual to take over the company’s shares which results in the transfer of control of the company (Article 1 number 11 of Law 40/2007). If the acquisition is carried out by a legal entity in the form of a company, the Board of Directors prior to the acquisition must be based on a GMS decision that meets the quorum of attendance ¾ of the total shares and is approved by the number of votes issued (except the statutes stipulate greater) (Article 125 paragraph (4) Law 40/2007).

The acquisition can be done in 2 (two) ways, namely through the Company’s Board of Directors or directly from the Shareholders. In the event that an acquisition is carried out through the Company’s Board of Directors, the party who will take over expresses its intention to make an acquisition to the Board of Directors of the Company to be taken over (Article 125 paragraph (5) of Law 40/2007).

The Board of Directors of the Company to be taken over and the Company which will take over with the approval of the Board of Commissioners each compile the acquisition plan that contains (Article 125 paragraph (6) of Law 40/2007):

  1. Name and place of domicile of each party
  2. Reasons and explanations of the respective Directors of the Company
  3. Financial report for the last financial year of each party
  4. Procedures for valuation and conversion of shares of the company to be taken over against exchange shares if payment is made with shares
  5. The number of shares to be taken over
  6. Funding readiness
  7. The consolidated balance sheet of the company’s performance that will take over after the acquisition, compiled with accounting principles generally accepted in Indonesia
  8. How to settle the rights of shareholders who do not agree to the acquisition
  9. How to settle the status, rights and obligations of members of the Board of Directors, Board of Commissioners and employees of the company to be taken over
  10. Estimated time period for the acquisition, including the period of authorization to transfer shares from shareholders to the company’s Board of Directors
  11. The draft amendments to the amendments to the issuance company if any.

The company directors of each party that will make the acquisition must announce a summary of the acquisition plan in 1 (one) newspaper and announce in writing to the company employees who will make the acquisition within 30 (thirty) days before calling the GMS (Article 127 of the Law 40/2007).

The acquisition design must be approved by the GMS of each party, if it has been approved,  it will be poured into an acquisition deed made before a notary in the Indonesian language (Article 128 of Law 40/2007). A copy of the acquisition deed must then be attached to the submission of notification to the Minister concerning amendments to the articles of association (Article 131 paragraph (1) of Law 40/2007).

Acquisitions take effect from the date of the Articles of Association approval by the Minister if the acquisition is made by amending the articles of association which must be approved by the Minister based on Article 21 paragraph (2) of the Company Law, whereas if the amendment does not require ministerial approval, the acquisition takes effect from the date of registration in the list of companies, but if there is no change in the articles of association, the acquisition takes effect from the date of signing of the acquisition deed (Article 32PP 27/1998).

Company directors whose shares are taken over must announce the results of the acquisition in at least 1 (one) newspaper within a period of no later than 30 (thirty) days from the date of the acquisition (Article 133 paragraph (2) of Law 40/2007).

In acquisition, it is carried out directly from the shareholders, then it must pay attention to the provisions of the articles of association of the company taken over regarding the transfer of rights to shares and agreements made by the company with other parties (Article 125 paragraph (8) of Law 40/2007). Shareholders are also required to announce a plan for acquisition of at least 1 (one) newspaper and to announce in writing to company employees who will make an acquisition within 30 (thirty) days prior to the invitation to the GMS (Article 127 paragraph (8) of Law 40/2007 )

Then, the deed of takeover of shares carried out directly by the shareholders must be stated in a notary deed in Indonesian (Article 128 paragraph (2) of Law 40/2007) and the deed of transfer of rights to shares must be attached to the delivery of notification to the Minister of changes in shareholders ( Article 131 paragraph (1) of Law 40/2007).

The last stage is the company directors whose shares are taken over must announce the results of the acquisition in at least 1 (one) newspaper within 30 (thirty) days at the latest from the date of the acquisition (Article 133 paragraph (2) of Law 40/2007).

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