Elisabeth Maria Kurniawati,S.H.,M.H.

Setiarto & Pangestu Law Firm

CV (Maria)
Formal Education:
 Under Graduate from Gadjah Mada University;
 Post Graduate from University of Pelita Harapan;
Registered association:
 PERADI (Advocate);
 HKHPM (Capital Market);
 AKPI (Curator).
 Managing Partner at Setiarto & Pangestu Law Firm;
 Contact to: maria@snp-lawfirm.co.id
 Purpose of Merger
 General Consideration
To expand market share. Both to generate a complete
production chain, as well as to expand product distribution in
one area or expand the distribution area.
 Financial Consideration
To increase earnings and improve image in the market and
achieve a stability and security.
 Human Resources Consideration
For companies which is lack of/have weaknesses its human
resources can be aided by the merging companies whose
human resources is better.
Purpose of Merger
• Growth or diversification;
• Synergy and Raising funds;
• Tax considerations;
• Increasing the liquidity of the owner;
• Protecting themselves from takeover.
 Legal Basis of Merger
1. Law No. 40 of 2007 regarding Company Law (Article 122-123);
2. Government Regulation No. 27 of 1998 regarding Mergers, Consolidations
and Acquisition (24 February 1998) (Article 7-19);
3. Government Regulation No. 43 of 2005 regarding Merger, Consolidation,
Acquisition and Change of Form of State-owned Enterprises (25 October
2005) (Article 12);
4. Bank Indonesia Board of Directors Decision No. 32/50/KEP/DIR regarding
Procedures and Requirements for Purchasing Commercial Bank Shares (14
May 1999);
5. Bank Indonesia Regulation No. 5/25/PBI/2003 regarding the Fit and Proper
Test (11 November 2003);
6. Law No. 5 of 1999 regarding Prohibition of Monopolistic Practices and Unfair
Business Competition (Article 29);
7. Government Regulation No. 57/2010 regarding Merger or Consolidation and
Acquisition of a Company’ Shares That Caused Monopolistic and Unfair
Competition
 Definition of Merger
Pursuant to Article 1 paragraph (9) Law No. 40 of
2007, Merger means legal action taken by one or
more Companies to merge with another existing
Company with the result that the assets and
liabilities of the merging Companies transferred by
operation of law to the surviving Company and
thereafter the merging Companies’ status as legal
entities shall ceases by operation of law.
 DEFINITION
 A Mergerof corporations consists in the uniting
of two or more corporations by the transfer of
property of all to one of them, which
continues in ex-istance, the others being
swallowed up or merged therein. (Blacks law
Dictionary 2nd Edition)
Change of Control as the Result of Merger
BEFORE

PT. AA
AFTER

PT. AA

(Surviving Company)
PT. BB

(Merging Company)
 Results of Merger
1. Merger shall cause the Merging Company cease by
operation of law.
2. The expiry of the Company shall occur without any prior
liquidation.
3. In the event of the expiry of the Company occur without
any prior liquidation:
a. The assets and liabilities of the merging Company shall
pass in law to the surviving Company;
b. Shareholders of the merging Company shall by operation
of law become shareholders of the surviving Company;
c. The merging Company shall expire by operation of law as
from when the Merger comes into effect.
TYPE OF MERGER
• Horizontal Merger
 The same industry;
 For the the synergies and potential gains in market share are much greater
for merging firms in such an industry;
 Ex: Merger Coca-Cola and Pepsi Beverage, Trans TV and Trans 7.

• Vertical Merger
 Different type of industry;
 Connected (Upstream- Downstream type of Business);
 Ex: PT Gudang Garam and PT Surya (Paper company).

• Conglomerate Merger
 Unrelated business activities between companies.
 The aim can be for the product extensions or market extensions;
 Ex: Bakrie (Esia) and PT KTM (Holland Bakery).
TYPE OF MERGER
• Congeneric Merger (Connected ; Supplier –
Producer)
Same industry but not in the same line industry
in relation to the customer;
• Ex: Bank Danamon (surviving company), Bank
Tiara, PT Bank Duta Tbk, PT Bank Rama Tbk,
PT Bank Tamara Tbk, PT Bank Nusa Nasional
Tbk, PT Bank Pos Nusantara, PT Jayabank
International dan PT Bank Risjad Salim
Internasional
Points to Note of conducting
Merger
• The company itself;
• Minority shareholders;
• The company’s employees;
• Creditors;
• Other business partner of the company;
• Healthy business competition;
Shareholder of the Merger Company
 In a merger, the shareholders of the merging companies
become the shareholders of the company resulting from the
merger. The merging companies are then ceases without first
being liquidated.

 In practice, consolidations are less common than mergers in

Indonesia. One reason for this is that a consolidation creates a
new company that requires new licenses, unlike in a merger.
Upon completion of a merger, the surviving company may
change its name and amend its Articles of Association (AoA) to
conform with its post-merger business activities.
STEPS OF MERGER
 Each company’s BOD prepare the draft of merger plan
and obtain the approval from each BOC;
 Announce the summary of merger plan in newspaper and
in writing to the employee of the company in the merger
(no later than 30 days before the invitation of GMS)
 Objection from Creditor (14 days after the
announcement)
 GMS resolution (See Article 87 paragraph (1) and Article
89 of Law No. 40 of 2007)
STEPS OF MERGER
• Approved by GMS, the merger plan poured into Deed of
Merger before an Indonesian Notary
• Report the copy of Deed of Merger to MOLHR (If there is
no change in AoA)
• Obtain an approval from MOLHR (if there is a change in
AoA) (EFFECTIVE DATE)
• Announce the result of merger no later than 30 days from
the effective date
The Plan of Merger Will Contains of
 name and domicile of each Company;
 the reasons and as explanations from the Board of Directors of the
Company which will perform the Merger, and the Merger
requirements;
 procedures of evaluation and conversion of the shares of the merging
Company to the surviving Company, if any;
 plan of articles of association amendment of the surviving Company ,if
any;
 financial statement as referred to in Article 66 paragraph (2) letter a,
which covering the last 3 (three) accounting year from each of the
Consolidating Company;
 further plan or termination of business activities of the Company
which will perform the Merger;
 pro forma Balance Sheet of the surviving Company in accordance with
the prevailing accounting principle in Indonesia;
The Plan of Merger Will Contains of
 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;
 settlement procedures of the rights and obligations of the Company that will
perform the Merger with a third party.
 settlement procedures of the rights of shareholders who are disagree with the
Company’s Merger;
 name of members of the Board of Directors and Board of Commissioners of the
surviving Company as well as their salary, honorarium, and remuneration;
 time estimation related to the performance of Merger ;
 report on the condition, progress, and achievement from each Company that will
perform the Merger;
 main business activity of each Company which will perform the Merger, and any
changes occur during the current accounting year; and
 detail of issues arising during the current accounting year which are affecting the
Company’s activity which will perform the Merger.
 Issues in Mergers
No Item Issues
1. Corporate Structure Results in one company surviving

 All assets and liabilities of the merging companies will

be transferred to the surviving company, and the other
merging companies will be dissolved, by operation of
law, on the merger date (without prior liquidation).

2. Effective Date of The effective date is the date all necessary approvals from
Restructuring the Ministry of Law and Human Rights are received. If no
approval is required for the amendments, the effective
date shall be since the registration of the Deed of Merger
and the amendment of the Articles of Association in the
company register (Article 14 GR No. 27 of 1998)

3. Creditors and Minority Creditors and the minority shareholders have the right to
Shareholders object to a merger
No Item Issues
4. Licenses All licenses are theoretically transferred to the surviving
company, although certain registration may be required to
perfect the licenses.

5. Timing Anticipated timing is a minimum of three months (at the

soonest)
MERGER ON RELATES
REGULATIONS
Foreign Company (PT PMA)

If the merging company will have foreign

shareholder person or company, the merging
company can change the status of the acquired
company into a foreign company. Therefore, it
shall subject to Law No. 25 of 2007 regarding the
Capital Investment and the regulation of Capital
Investment Coordinating Board (BKPM).
BANKING REGULATION
 The Merger must obtain BI’s approval;
 The amount of asset of the Surviving Bank shall not
more than 20% of the total Asset of all of Indonesian
Bank;
 The capital of the Surviving Company shall fulfill
the ration of capital that is stipulated by the Bank
Indonesia.
BUMN (State-Owned Enterprises)
 GR No. 43 of 2005 requires that a business
combination of state-owned enterprises be
stipulated in a government regulation as propose
by the Minister of BUMN and considered by the
Minister of Finance and approved by the
Indonesian President.
KPPU
 acquisition of companies of shares which cause its
assets value and/or sales value to exceed a certain
amount, must be reported to the Commission at the
latest within a period of 30 (thirty) days after the
merger or acquisition takes places.;
 The asset is up to: Rp.2,5 Trillion; and/or
 The selling price is up to:Rp.5 T;
 If for banking sector, if the asset value exceed Rp.20 T
 Rights of the Shareholders Whom
Disagree Over the Merger

Article 126 paragraph (2) granted a rights to the Shareholders who do not
agree with the General Meeting of Shareholders with regard to the Merger.

The rights as referred to in this Article is the rights as set forth in Article 62
Company Law, which is each shareholder is entitled to request the Company
that the shareholder’s shares be bought at a fair price, if the shareholder
concerned does not approve of actions by the Company which harm that
shareholder or the Company.
 Effective Date of the Merger
(Article 14 GR No. 27 of 1998)
1. If the merger of the company is conducted by amending the Articles of
Association as referred to in Company Law, the merger shall prevail from
the approval date of the Articles of Association by the Minister.
2. If the merger of the company is conducted accompanied by changes in
the Articles of Association which does not require approval of the
Minister, then the merger shall prevail since the receipt for the
notification of the amendment to the Articles of Association is issued by
the Minister.
3. If the merger of the company did not result in a change of Articles of
Association, then the merger shall prevail since signing the Deed of
Merger.
 General Meeting of Shareholders' Quorum
for Merger

General Meeting of Shareholders (“GMS”) may be held if more than ½ (one

half) of the total number of shares with voting rights are present or
represented in the GMS, unless a larger quorum is specified by Statute or by
the articles of association.

GMS to approve Merger may only be held if in the meeting at least ¾ (three
quarters) of the total number of shares with voting rights are present or
represented in the GMS and the resolution shall be lawful if approved by at
least ¾ (three quarters) of the number of votes cast, unless the articles of
association specify a quorum to be present and/or provisions concerning the
requirements for adoption of GMS resolutions which are higher.
 Legal Consequences of Merger

1. the Merging Company will cease (Article 122 paragraph (1));

2. Employee Working Relation
• If the Worker is not willing to continue: 1 PMTK (Article 163
(1);
• If the Company is not willing to continue: 2 PMTK (Article 163
(2).
 THANK YOU
Setiarto & Pangestu
2nd Floor, Zona A, Unit 2
Jl. H.R Rasuna Said Kav.B-6
Jakarta Selatan 12910
www. snp-lawfirm.co.id
maria@snp-lawfirm.co.id