To make an acquisition, some interests must be considered, namely the interests of:
- The Company, minority shareholders, employees of the Company;
- Creditors and other business partners of the Company; and
- Society and healthy competition in doing business.
(see Article 126 paragraph [1] of Law No. 40 of 2007 concerning Limited Liability Companies Law or “UU PT”)
Based on Article 125 paragraph [1] of the UU PT, the acquisition (takeover) is carried out by taking over shares that have been issued and/or will be issued by a Limited Liability Company (“PT”).
In the book “Limited Liability Company Law” (p. 510), M. Yahya Harahap, S.H. states that according to law, the shares of the Company that can be taken over are shares that have been issued and paid up (geplaats en gestort aandeel).
However, it can also be for shares that have not been issued or that will be issued (aandelen in portefeulle) or portfolio shares (portfolio).
The way to take over the shares of this company can be done by:
- Through the Company’s Board of Directors, or
- Directly from the shareholders.
(see Article 125 paragraph [1] Limited Liability Company Law “UU PT”)
Through the Company’s Board of Directors
(1) The party who will take over conveys his intention (see Article 125 paragraph [5] of the Limited Liability Company Law “UU PT”);
(2) Prepare a Takeover Plan (see Article 125 paragraph [6] of the UU PT in conjunction with Article 26 paragraph [3] of PP No. 27 of 1998 concerning the Merger, Consolidation, and Takeover of Limited Liability Companies) which contains at least:
a. the name and domicile of the company that will take over and the company that will be taken over;
b. reasons and explanations of the Board of Directors of the Company who will take over and the Board of Directors of the Company that will be taken over;
c. the financial report as referred to in Article 66 paragraph (2) letter a for the last financial year of the company that will be taking over and the company that will be taken over;
d. procedures for appraising and converting shares of the Company which will be taken over to the exchanged shares if the payment for the Takeover is made in shares;
e. the number of shares to be taken over;
f. funding readiness;
g. the pro forma consolidated balance sheet of the Company that will take over after the Takeover which is prepared by generally accepted accounting principles in Indonesia;
h. how to settle the rights of shareholders who do not agree with the Takeover;
i. 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;
j. the estimated timeframe for the implementation of the Takeover, including the period for granting the power of attorney to transfer shares from the shareholders to the Board of Directors of the Company;
k. draft amendments to the articles of association of the Company resulting from the Takeover, if any.
(3) Obtaining the approval of the General Meeting of Shareholders (“GMS”) (see Article 127 paragraph [1] of the UU PT).
(4) Mandatory Announcement of the Summary of the Proposed Acquisition (see Article 127 paragraph [2] and paragraph [3] of the UU PT).
Before the GMS is held to discuss the Proposed Takeover, the Summary of the Proposed Takeover must first be “announced” by the Board of Directors of the Company that will take over and which will be taken over (Limited Liability Company Law p. 514):
- Announced in at least 1 (one) Newspaper;
- Announce in writing to the Company’s employees who will be taken over;
- The announcement at the latest 30 (thirty) days before the summons for the GMS;
The announcement must contain a “notification” that interested parties can obtain the Proposed Takeover at the Company’s office, from the date of announcement until the date the GMS is held.
(5) Creditors have the right to file objections (see Article 127 paragraph [4] of the UU PT).
(6) The Proposed Takeover Is Included in the Deed of Acquisition (see Article 128 of the UU PT).
(7) A copy of the Deed of Takeover is Attached to the Submission of Notification to the Minister (see Article 131 paragraph [1] of the UU PT).
Directly from Shareholders
According to M. Yahya Harahap (Limited Liability Company Law, p. 516), the basic provisions of the process of taking over shares directly from shareholders are different from the procedure for taking over shares through the board of directors.
For the takeover of shares directly from shareholders, the procedure is simpler, as described below:
Unnecessary Process
1. The party taking over does not need to convey the intention to carry out the takeover to the Board of Directors (see Article 125 paragraph [7] of the UU PT).
2. There is no need to draft a takeover plan (see Article 125 paragraph [7] of the Limited Liability Company Law). However, it is required in Article 125 paragraph [8] of the UU PT that a “mandatory” takeover takes into account the Company’s Articles of Association to be taken regarding:
- Transfer of rights to shares; and
- Agreements that have been made by the Company with other parties.
Process To Do
(1) Holding direct negotiations and agreements, namely between the parties who will take over and the shareholders while still taking into account the articles of association of the Company being taken over (see the explanation of Article 125 paragraph [7] of the UU PT);
(2) Announce the planned takeover agreement (see Article 127 paragraph [8] of the UU PT).
· Announced in at least 1 (one) Newspaper;
· Announce in writing to the Company’s employees who will be taken over;
· Announcement at the latest 30 (thirty) days before the summons for the GMS;
(3) Creditors may file objections (see Article 127 paragraph [4] of the UU PT);
(4) The takeover agreement is stated in the takeover deed (see Article 128 of the UU PT).
(5) A copy of the deed of transfer of rights to shares is attached to the submission of a notification to the Minister regarding the change in the composition of shareholders (see Article 131 paragraph [2] of the UU PT).
The last process that must be carried out in the context of the takeover is the announcement of the results of the takeover (see Article 133 paragraph [2] of the UU PT).
The Board of Directors of the company whose shares are taken over must announce the results of the takeover in 1 (one) or more newspapers within a period of no later than 30 (thirty) days from the effective date of the takeover.
