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Mergers and acquisitions occur when the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. A merger occurs when two separate entities combine forces to create a new, joint organisation. Meanwhile, an acquisition refers to the takeover of one entity by another. Mergers and acquisitions may be completed to expand a company’s reach or gain market share in an attempt to create shareholder value. (Source: Investopedia)
According to Global Legal Insights the majority of Merger & Acquisition (M&A) deals in Indonesia are led by foreign investors, which should come as no surprise as Indonesia continues to improve the ease of doing business for Foreign Direct Investment. But the domestic market is also worth looking at. Using data from Statista, InCorp Asia are reporting that USD 2.3 billion changed hands in 2020 and 2022 could break the all-time high of USD 4.6 billion set in 2016 for domestic mergers and acquisitions.
The technology, media, and telecom (TMT) sectors are the shining stars in the merger and acquisition space in Indonesia — startups are hungry for venture capital to foster growth, with notable success stories being Traveloka, Tokopedia, and Gojek. Within the traditional business sectors, logistics, banking, and finance are all seeing merger and acquisition deals taking place at a growing rate.
Foreign investments in Indonesia have to be done through a PT PMA (PT Penanaman Modal Asing) which is an Indonesian version of a Limited Liability Company. There are however, some restrictions as to what industries and sectors foreigners can invest in, which are outlined in something called the Positive Investment List.
Positive Investment List
Indonesia has recently changed its Negative Investment List to a Positive Investment List, underscoring the government’s intention to attract more investment by identifying and clarifying those business sectors open for investment. There are 245 business fields in the Priority Sector, 89 business fields in Designated Business or Partnership with Cooperatives and Micro, Small, and Medium Enterprises (MSMEs); and 46 business fields in the Businesses Subject to Certain Requirements or Limitations. There are 6 sectors closed or restricted to investment from both domestic and foreign entities.
Based on Indonesia’s Company Law, here are the most preferred types of M&A transactions we can assist with.
Merger In Indonesia
All assets and liabilities are legally transferred to the acquired entity. The remaining firms are legally liquidated.
Consolidation In Indonesia
All entities are legally liquidated, all assets and liabilities are legally transferred to a newly formed entity
Share or Asset Acquisition In Indonesia
A legal entity acquires shares of assets in a company resulting in a change of control in the acquired entity. There are strict proceeds under the Indonesian Company Law such as Public acquisition announcement, Sale and purchase agreement, and Deed of transfer, to name a few.
*At this point, it is important to note, M&A-related regulations vary between sectors and could either take precedence or complement existing general M&A laws and regulations.
Mark embarked upon a career in the Australian corporate sector garnering extensive experience in the development of corporate, strategic, business planning, human resources, industrial relations, community development and trade facilitation in agricultural and community enterprises and private and government organisations across a comprehensive range of industry sectors. He studied at Doctorate level investigating Chaos and Complexity theory as a platform for interpreting responses to the effects of globalisation on business and communities, and in the design of organisational and learning and development responses.
Fifteen years ago, after a brief sabbatical, he studied law. Completing a 5-year degree program in 3 years, he was admitted into the Western Australian jurisdiction in March 2013. His interests include Employment law, Maritime Law, International Public Law, Arbitration, World Trade Organisation Law, Indonesian Law and Advocacy.
In 2013 he was awarded Professional Certificate in Arbitration from Adelaide University and is eligible for membership of both Institute of Arbitrators and Mediators Australia and Chartered Institute of Arbitrators.
Marks Indonesian connection
In addition to the above Mark has enjoyed a long private career in Indonesian/Australian trade as the founder of ITMA. In1988 Mark entered a commercial relationship. Wahyu Mulyo Group, a privately held Industrial group in Surabaya. He later became an integral part in this large family-owned firm. It was during this period Mark unparalleled gained understanding of the Indonesian legal and commercial jurisdictions.
After moving to Bali in 2019 Mark joined Seven Stones Indonesia (SSI) as a Consultant. Upon his return from Australia following Covid, he has accepted an appointment as a Director of SSI and heads up the Legal Division.
With extensive experience in international commerce both with clients from both in common law and civil law jurisdictions Marks provide legal support to Indonesia’s growing international foreign investment community.
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VOA LIST EXPANSION
Who can apply for VOA:
Please find below details of the latest immigration regulations:
Single Entry Visitor Visas (B211A, B211B and B211C) issued after 16 April 2022, for both 60-days, can no longer be extended and you’ll need to apply for a new onshore visa, which we can process for IDR 4,500,000.
Single Entry Visitor Visas (B211A, B211B and B211C) issued before 16 April 2022, can be extended one more time for an additional 60-days. After the 60-days, you’ll need to apply for a new onshore visa. We can process this one time extension for IDR 2,500,000/ person and a new visa for IDR 4,500,000.
Your visa validity begins from the date of your arrival in Indonesia if you’re using the Denpasar Immigration Office.
And if you’re using the Ngurah Rai Immigration Office, your visa validity begins from the date your E-Visa was issued.
If arrival was before April 16 2022, the visa can be extended just one more time and is then valid for an additional 60-days. We can process this one time extension for IDR 2,500,000/ person.
Please note the visa cannot be extended more than one time but you can apply for a new onshore visa, which we can process for IDR 4,500,000.
If arrival was after April 16, 2022 the visa cannot be extended but you can apply for a new onshore visa, which we can process for IDR 4,500,000.
Visas on Arrival (VOA) can only be granted a one-time extension for 30-days, which we can process for IDR 950,000.
Please note this information was correct at the time of publication and may change without prior notice. Seven Stones Indonesia is not responsible for any updates and changes to these regulations.