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AGENDA OF DISCUSSION
Introduction to acquisition
Acquisition deals flow
Roles of legal due diligence
Workflow of legal due diligence
Preparing due diligence checklist
Key areas for legal due diligence review
Frequent findings
Preparing legal due diligence report
How LDD Report will affect the deal?
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INTRODUCTION TO ACQUISITION
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INTRODUCTION TO ACQUISITION
ACQUISITION RATIONALE
Enhance, build and preserve markets
Achieve rapid business growth
Secure new resources
Develop globally-competitive companies
Establish a new business unit
Supporting tools for core business unit
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ACQUISITION DEALS FLOW
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ACQUISITION DEALS FLOW
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ACQUISITION DEALS FLOW
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ROLES OF LEGAL DUE DILIGENCE
Transaction structuring
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LEGAL DUE DILIGENCE WORKFLOW
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Obstacles to Due Diligence in Indonesia
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LEGAL DUE DILIGENCE CHECKLIST / QUESTIONS
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
Establishment
Capital structure (eg. change of capital structure, minimum capital requirement
for PMA Co)
Shareholding composition
Company management
Authorities of management and corporate approval
Domicile of the company
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
Operating Licenses
Validity
Compliance
Possibility of license revocation
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
Assets
Types of assets
Ownership title
Land compensation?
Encumbrances
Property rights
List of property owned, occupied, leased
Supporting documents of ownership, occupation or leasing
Physical checking to BPN Lurah for land properties
Appraisal or valuation of assets
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
Disputes
Court searches in PN, PTUN, PHI, P Niaga, BANI, PN Jakarta Pusat
Court search cannot reach potential disputes
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KEY AREAS FOR LEGAL DUE DILIGENCE REVIEW
Environment
AMDAL Documents / approval
AMDAL requirement time line
RPL RKL documents
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FREQUENT FINDINGS
Corporate Matters
The shares have been transfered to other parties
Unreported amendment to the AoA
Lack of deed of shares transfer
Absence of spousal consent
Lack of corporate approval for certain transaction (eg. Loan, establishment of
subsidiary, assets encumbrance, assets divestment)
Absence of shareholder registry
Absence of annual general meeting of shareholders
No BoD for certain period of time
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FREQUENT LDD FINDINGS
General matters
Discrepancy in assets ownership (eg. Land)
No financial statement
Liabilities in the financial statement
disputes
Target company has not submited any annual tax return
Lack of compliance documents
Wrong business model (legally)
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FREQUENT LDD FINDINGS
Contractual
Long-term contract with onerous provisions and no possibility to adjust
Contract with its affiliated party
Contracts with no-perfect provisions
Agreement to pay royalty to un-disclosed party
Exclusife offtake agreement or marketing agreement
Business contract contradicts with the laws and regs
One-sided services agreement
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PREPARING LEGAL DUE DILIGENCE REPORT
Golden rules:
Findings
Legal consequences
Proposed action
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HOW LDD REPORT WILL AFFECT THE DEAL?
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HOW LDD REPORT WILL AFFECT THE DEAL?
Buyer Seller
Get discount as much as possible Get selling price as high as possible
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HOW LDD REPORT WILL AFFECT THE DEAL?
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The contents of this presentation are intended for informational
purposes only and are not in the nature of a legal opinion or
advice. They may not encompass all possible regulations and
circumstances applicable to the subject matter and readers are
encouraged to seek legal counsel prior to acting upon any of the
information provided herein.
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Lawyer/Consultant Biographies
DendiAdisuryo
Practice Description
He specializes and has practical experience in energy and mining projects
and the banking/finance sector. He also has broad experience in
assignments related to foreign capital investments and corporate
restructuring.
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