
Merger, Consolidation, and Acquisition in Indonesia
The General Elucidation of Merger, Consolidation, and Acquisition
The table below illustrates the regulation of mergers, consolidations, and acquisitions, pursuant to prevailing laws in Indonesia.

General Description of Merger, Consolidation, and Acquisition
Source: Law No. 40/2007
The Mechanism of Merger, Consolidation, and Acquisition
With reference to GR No. 27/1998 on Merger, Consolidation, and Acquisition of Limited Liability Companies, a merger, consolidation, and acquisition can only be carried out by taking consideration of the interests of the following parties:
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interests of the company, minority shareholders and the employees of the company;
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public interest and healthy competition in doing business; and
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the interests of creditor.
As explained in the previous section, the act of merger, consolidation, and acquisition can only be carried out with the approval of the GMS. The GMS must be attended by shareholders who represent at least 3/4 (three-quarters) of the total shares with valid voting rights and approved by at least 3/4 (three-quarters) of the total votes. Specifically for public companies, if the required quorum is not reached, then the requirements for attendance and decision-making in GMS are stipulated in accordance with the prevailing laws and regulations on capital market.
The Mechanism of Merger
First, BoD of the merging companies must prepare a proposed merger plan and the plan must obtain the approval of BoC. The proposed merger plan must include the following information:
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name and domicile of the company that will carry out the merger;
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reasons and explanations of each of the company's directors who will carry out merger and merger requirements;
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procedures for converting shares of each company that will carry out merger of the shares of the surviving company;
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AoA amendment draft of the merged company;
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balance sheet, income statement covering the last 3 (three) financial years of all companies that will participate in the merger; and
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information which must be disclosed to the shareholders of each company, including how to resolve the status of the company's employees who will merge, how to resolve the company's rights and obligations to third parties, how to resolve the rights of shareholders who disagree with the merger of companies, composition, salary and other allowances for the directors and commissioners of the resulting company amalgamation, and the estimated time period for implementing the merger.
A plan of intended merger shall be submitted to the respective GMS for approval after first obtaining approval from the BoC of the respective companies.
Afterwards, a summary of the merger plan must be announced by the BoD in 2 (two) daily newspapers and announced in writing to company employees who will merge, no later than 14 (fourteen) days prior to the GMS summons each company. This summary must be requested for approval by the GMS of each company. Hence, the deed of merger draft which the GMS has approved should be finalized as deed of merger in the form of a notarial act.
Merger of Companies Followed by Amendments to the Articles of Association
Referring to GR No. 27/1998, a merger can be carried out following the amendments or without amendments of the AoA. If the merger of companies is carried out by making amendments to the AoA, then the merger shall take effect from the date of approval of the amendment to the AoA by the MoLHR. The BoD of the merging company must submit an application for approval of the deed of amendment of AoA to the MoLHR and register it in the company register and announce it in the supplement to the state gazette of the Republic of Indonesia after obtaining approval from the MoLHR.
Application for approval is submitted in writing to the MoLHR by attaching the deed of amendment to the AoA and the deed of merger. The application for approval shall be made no later than 14 (fourteen) days after the decision of the GMS. Approval will be given no later than 60 (sixty) days after the application is received, and the merging company will be dissolved, starting from the date of the MoLHR's approval of the amendment of AoA.
On the other hand, if the AoA’s amendment does not require the MoLHR’s approval, the merger will take effect from the date of the registration of deed of merger and the AoA’s amendment act in company registration list.
Merger of Companies without Amendments to the Articles of Association
In accordance with GR No. 27/1998, if the merger of companies is carried out without an amendment to the AoA, the merger will take effect from the date of signing the deed of merger. For a complete illustration, please see the following flowchart:

The Mechanism of Merger
Source: Law No. 40/2007
The Mechanism of Consolidation
Consolidation shall result in the consolidating companies ceasing to exist by operation of law. The founder of a consolidated company is a company that will consolidate itself, and the shareholders of the company to be established are the shareholders of the company that will consolidate.
The BoD of the consolidating company must apply for legalization of the deed of incorporation of the consolidated company to the MoLHR within 14 (fourteen) days from the date of the decision of the GMS and register in the company register. It must also announce the consolidation in the Supplement to the state gazette of the Republic of Indonesia, after receiving approval of the MoLHR. Applications for the approval of the deed of incorporation are submitted in writing to the MoLHR by attaching the deed of consolidation. The MoLHR will ratify the application within 60 (sixty) days after the application is received.
The consolidated companies are dissolved as of the date on which the deed of incorporation of the consolidated companies is passed by the MoLHR. Since the signing date of the deed of consolidation, the merging company directors are prohibited from taking legal actions unless required to implement consolidation.

The Mechanism of Consolidation
Source: Law No. 40/2007.
The Mechanism of Acquisition
An acquisition shall be conducted by acquiring shares that have been issued and/or will be issued by the company through the BoD of the company or directly by the shareholders. An acquisition will result in the transfer of control over the company.
Where the acquisition is conducted by a company, the BoD is subject to a resolution of the GMS with the requisite quorum for attendance and satisfying requirements for adoption of a resolution of the GMS, prior to commission of the legal act of acquisition. Alternatively, in the event that an acquisition is conducted through the BoD, the acquiring company shall notify its intention to conduct an acquisition to the BoD of the company that is to be acquired.
The BoD of the acquired company and the company that plans to acquire shall prepare a draft plan of acquisition upon obtaining consent of the respective BoC. The draft plan must contain:
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the names and domicile of the company that is to acquire and the company that is to be acquired;
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the reasons as well as explanations of the BoD of the company that is to acquire and of the BoD of the company that is to be acquired;
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the financial statement of the latest accounting year of the company that is to acquire and the company that is to be acquired;
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the methods of assessment and conversion of shares of the companies that are to be acquired into its destination shares if the payment of the acquisition is conducted through shares;
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the amounts of shares that are to be acquired;
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the readiness of funding;
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the pro forma consolidated balance sheet of the company that is to acquire after acquisition that is prepared under the accounting principle of general applicability in Indonesia;
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the manner of settlement on the rights of the shareholders who do not approve the acquisition;
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the manner of settlement on the status, rights and obligations of the members of the BoD, the BoC, and employees of the companies that are to be acquired;
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the estimated period of the conduct of acquisition, including the period of the granting of power of transferring shares from the shareholders to the BoD of the company; and
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the draft amendments to the AoA of the acquiring company after acquisition, if any.
If the acquisition of a company is carried out by amending the AoA, then the acquisition shall take effect from the date of approval of the amendment of AoA by the MoLHR. If the acquisition of a company is carried out with an amendment of AoA which does not require approval of the MoLHR, the acquisition shall take effect from the date of registration of the deed of acquisition in the company register. Further, if the acquisition of the company does not result in an amendment of AoA, then the acquisition will take effect from the date of signing the acquisition deed.

The Mechanism of Acquisition
Source: Law No. 40/2007
Merger and Consolidation Conducted by Public Companies
The BoD of a public company which intends to participate in a merger or consolidation must make a statement to the OJK and the GMS that the merger or consolidation is conducted by considering the interests of companies, society, and fairness in business competition. This must be accompanied by a guarantee that the rights of shareholders and employees will be met.
A public company that carries out the merger or consolidation must announce a summary of the draft of business merger or business consolidation to the public no later than the end of the second working day after it has obtained the approval from the BoC and 30 (thirty) days prior to convening the GMS.
Submission of Corporate Action (Business Merger/Consolidation)
Article 2 OJK Reg. No. 58/2017 states that the statement of merger and/or consolidation which is included in the submission of corporate action must be submitted to the OJK electronically through the OJK licensing system. The parties who submit the corporate actions electronically are required to keep the proof of receipt of registration submission of corporate action electronically along with all documents that are an integral part of submitting the corporate actions.
This submission can only be made after obtaining access rights to use the OJK licensing system. The rights to access the OJK licensing system can be obtained after registration through the OJK licensing system.
The parties who submit the corporate action must provide adequate hardware, software, and internet network with computer and application specifications in accordance with the operational instructions for using the OJK licensing system and read and comply with the procedures for the use of the OJK licensing system based on the operational instructions.
Submission of corporate actions as well as additional information and/or documents is carried out by uploading all registration statement documents or corporate action submission documents through the OJK licensing system.
In the event that a business merger or business consolidation is carried out by a public company with a subsidiary company, at the time of submitting the business merger statement or business consolidation statement to the OJK.
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the subsidiary's financial statements have been consolidated with the financial statements of the public company which have been audited by a public accountant; and
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the subsidiary company is owned directly by the public company as much as 100% (one hundred percent).
If both parties to a merger or business consolidation are public companies, the companies:
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are not obliged to submit an annual financial report, if the latest annual financial report that has been submitted to the OJK is less than 6 (six) months old at the time the business merger statement or business consolidation statement becomes effective; or
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must submit an interim financial report that has been audited by a public accountant, if the latest annual financial report that has been submitted to the OJK will be more than 6 (six) months old when the business merger statement or business consolidation statement becomes effective, with the period between the interim financial statement date and the effectiveness of the business merger statement or business consolidation statement not exceeding 6 (six) months.
Where the business merger is carried out between public companies, the business merger statement shall be submitted to the OJK by the public company accepting the business merger, and if the business consolidation is carried out between public companies, submission of business consolidation statement to the OJK, shall be conducted by one of the public companies conducting business acquisition.
The public company is obliged to announce the changes and/or additional information no later than 2 (two) business days prior to the GMS for business merger or business acquisition. The announcement is mandatory and must be done at least through:
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1 (one) Indonesian daily newspaper nationally circulated or stock exchange website; and
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public company’s website.
Statement of business merger or statement of business consolidation can be effective with due observance of the provisions as follows:
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on the basis of the passage of time, namely:
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20 (twenty) days from the date the statement of business merger or statement of business consolidation is received completely by OJK;
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20 (twenty) days from the date of the last amendment submitted by the public company or requested by the OJK to be satisfied; or
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on the basis of an effective statement from the OJK that no further changes and/or additional information is required.
Companies that are formed as a result of business merger or business consolidation are required to submit a report to OJK outlining the results of the implementation of the business merger or business acquisition, no later than 5 (five) business days after the effective date of the business merger or business acquisition. If the GMS does not approve the plan for business merger or business consolidation, the statement of business merger or statement of business consolidation can only be submitted back to OJK at least 12 (twelve) months after the GMS is held.
Merger, Consolidation, and Acquisition of Banks
According to GR No. 28/1999, merger, consolidation, and acquisition of banks can be carried out by
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the bank's initiative, which must obtain permission from the management of BI;
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request from BI; or
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temporary special agency initiatives for banking restructuring.
Additionally, mergers, consolidations, and acquisitions of banks are carried out by considering interests of the bank, creditors, minority shareholders and bank employees, the public and fair competition in conducting bank business.
In order to obtain a merger or consolidation license, the following requirements must be fulfilled:
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obtained approval from the GMS for a bank that is a limited liability company or a similar meeting for a bank with other legal structures;
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at the time of the merger or consolidation, the total assets of the bank resulting from the merger or consolidation shall not exceed 20% (twenty percent) of the total assets of all banks in Indonesia;
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the capital of the bank resulting from the merger or consolidation must comply with the capital adequacy ratio stipulated by BI; and
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the nominees for the appointed members of the BoD and BoC are not included in the list of persons who have committed despicable acts in banking.
In order to obtain acquisition license, the following requirements must be fulfilled:
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obtained the approval of the GMS from the bank to be acquired or a similar meeting from a bank which is a legal entity not a limited liability company;
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the party making the acquisition is not listed in the list of people who have committed despicable acts in the banking sector; and
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in the event that the acquisition is carried out by a bank, the bank is required to comply with the provisions concerning equity participation by the bank which are regulated by BI.
Procedures for Bank to Conduct Merger, Consolidation, and Acquisition
Every BoD of the bank who will conduct merger, consolidation, or acquisition and accept the merger, consolidation, or acquisition must prepare a proposed merger, consolidation, or acquisition plan. In the event that a bank is planning to merge as a group in 1 (one) group or between groups, the proposed merger plan contains a consolidated balance sheet and a proforma balance from the bank resulting from the merger. Meanwhile, the acquiring party conveys its intention to carry out the acquisition to the BoD of the acquired bank. The merger and consolidation draft must contain confirmation from the bank that will accept the merger concerning the acceptance of the transfer of all rights and obligations from the bank that will merge itself.
Prior to the summons for the GMS of each bank, the BoD is obliged to announce a summary of the merger, consolidation or acquisition plan no later than 30 (thirty) days before the GMS in 2 (two) daily newspapers with wide circulation and 14 (fourteen) days prior to the GMS to bank employees in writing. For rural banks whose assets are less than Rp10.000.000.000.- (ten billion rupiah), the announcement can be made in other ways.
After obtaining the approval of the GMS to conduct a merger, consolidation, or acquisition, the directors of each bank must jointly submit an application for a merger, consolidation, or acquisition permit to BI with a copy to the MoLHR. Approval or rejection of the application for a merger, consolidation, or acquisition license shall be granted by BI within 30 (thirty) days from receipt of the complete application. If within the time limit of 30 (thirty) days, BI has not given a response to the application for a permit, BI is deemed to have approved the application for a merger, consolidation, or acquisition license. If the application is rejected, applicants of the license must be notified of the rejection in writing along with the reasons. Copies of approval or rejection are submitted to the MoLHR.
In the event that amendments to the AoA of the merger or acquired bank require approval of the MoLHR, the BoD of the bank resulting from the merger or acquisition shall submit an application for approval of the amendment of the AoA to the MoLHR, at the same time as submitting the application for a merger or acquisition permit to BI. The MoLHR can only approve the amendment to the AoA of the bank resulting from the merger, consolidation, or acquisition after obtaining a copy of the merger, consolidation, or acquisition permit from BI. Approval or rejection of the MoLHR for the application is granted no later than 14 (fourteen) days after the merger, consolidation, or acquisition permit is obtained from BI.
Meanwhile, if the amendments to AoA of the bank arising from the merger or acquisition do not require the approval of the MoLHR, then within a period of 14 (fourteen) days from the GMS, the BoD of the bank arising from the merger or acquisition must report the merger deed and the deed of amendment of the AoA to the MoLHR.
The BoD of the bank resulting from the merger or acquisition must announce the results of the merger or acquisition in 2 (two) daily newspapers with wide circulation no later than 30 (thirty) days from the date of the merger or acquisition.
In addition, within a maximum period of 30 (thirty) days after the consolidated deed of incorporation obtained the approval of the MoLHR, the BoD of the consolidated bank must register the deed of incorporation of the consolidated bank in the company register and announce it in the supplement to the state gazette of the Republic of Indonesia.
Acquisition of banks conducted without obtaining permission from the management of BI are declared invalid, and the party conducting the acquisition is prohibited from taking actions as a shareholder of the bank. The relevant bank is prohibited from recording the acquisition and/or granting rights as shareholder to the party conducting the acquisition
Procedures for Institutional PMV/PMVS to Conduct Merger, Consolidation, and Acquisition
PMV or PMVS can carry out merger, consolidation, and acquisition. Merger or consolidation can only be carried out by PMV or PMVS in the same legal entity. PMV or PMVS that will carry out a merger, consolidation, or acquisition must submit the merger, consolidation, or acquisition plan to OJK for approval. The request for approval is submitted by the PMV or PMVS directors, along with these documents:
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the plan deed to the minutes of the GMS;
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merger, consolidation, or acquisition plan;
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ownership registration plan;
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plan for deed of transfer of rights over shares, in the event that the share acquisition is carried out directly from the shareholders, for PMV or PMVS that will conduct the acquisition;
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the latest PMV or PMVS audited financial report;
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pro forma financial report from PMV or PMVS resulting from a merger, consolidation, or acquisition;
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shareholder’s data;
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shareholders' statement letter stating that the money used to buy PMV or PMVS shares does not come from loans, money laundering activities, and financial crimes, for PMV or PMVS that will carry out the acquisition; and
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business plan of PMV or PMVS after a merger, consolidation, or acquisition has been carried out.
In order to give approval or rejection as referred above, OJK shall examine the documents submitted for the request of approval, conduct analysis in regards to the feasibility of the proposed merger, consolidation, or acquisition and compliance of regulatory provisions legislation in PMV or PMVS business field. Hence, approval or rejection of applications for merger, consolidation, and acquisition shall be granted no later than 30 (thirty) business days after receipt of the complete application documents.
PMV or PMVS that has received merger, consolidation, or acquisition approval from OJK must carry out the merger, consolidation, or acquisition not later than 60 (sixty) business days from the date of the OJK approval letter. In the event that the realization of the proposed merger, consolidation, or acquisition is not in accordance with the time period, the OJK approval letter shall be invalid.
The PMV or PMVS which accepts the merger or consolidation must report the merger or consolidation in writing to the OJK no later than 10 (ten) business days from the date of receipt of approval or notification of amendments to the AoA from the competent authority. Meanwhile, the PMV or PMVS which has been acquired must report the acquisition in writing to the OJK no later than 10 (ten) business days from the date of the acquisition deed executed before a notary public.
A report on the merger or consolidation must be submitted by the directors of PMV or PMVS along with these documents below:
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For merger
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deed of amendment to the AoA of PMV or PMVS that receiving the Merger that has been approved or recorded by the competent authority;
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deed of Merger that has been approved or recorded by the competent authority;
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detailed list of Branch Offices along with their complete address; and
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documents stating that the merged PMV or PMVS does not have tax debt from the competent authority.
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For consolidation
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deed of minutes of GMS;
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deed of Consolidation that has been approved or recorded by the competent authority;
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deed of incorporation of PMV or PMVS resulting from consolidation that has been approved or recorded by the competent authority;
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list of ownership;
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detailed list of branch offices along with complete addresses; and
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documents stating that the merging PMV or PMVS does not have tax debt from the competent authority.
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For acquisition
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deed of amendment to AoA that has been approved or recorded by the competent authority;
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deed of acquisition.
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Prior to the approval of a business license, PMV or PMVS are prohibited from carrying out venture capital business activities. Hence, if PMV or PMVS does not report to OJK within a predetermined period, PMV or PMVS will be subjected to administrative sanctions in the form of warnings, freezing of business activities or revocation of business licenses.
Notification of Merger, Consolidation, and Acquisition to KPPU
In accordance with Article 29 Law No. 5/1999 jo. Article 5 GR No. 57/2010, the merger, consolidation and acquisition with certain asset value and/or sales value are required to be notified to KPPU no later than 30 (thirty) business days from the effective enforcement of such merger, consolidation, or acquisition. Reporting to KPPU aims to avoid the formation of monopoly in regards to business activities and unfair business competition. If the entrepreneurs do not submit a written notification to KPPU, they will be subject to a sanction in the form of an administrative fine of Rp1.000.000.000,- (one billion rupiah) for each day of delay, provided that the overall administrative fine is not higher than Rp25.000.000.000,- (twenty five billion rupiah).
The detail provisions regarding notification of merger, consolidation, and acquisition to KPPU will be further elaborated in Section below.
Legal Protection for Minority Shareholders, Employees, and Third Parties in the event of Merger and Acquisition
Merger and acquisition of a limited liability company can also have legal consequences which could affect the company. The legal consequences may impact the shareholders, employees, and third parties (creditor).
Protection for Shareholders
Shareholders who do not agree with the resolution of the GMS regarding the merger/acquisition may only use their rights as referred to in Article 62 Law No. 40/2007, in which the shareholders can request the company to purchase their shares at a fair price. In principle, the company is obliged to buy it. If the shares requested to be purchased by the company exceed the limits of the provisions for share buyback by the company, the company is obliged to ensure that the remaining shares are purchased by a third party.
Protection for the Company’s Employees
The legal consequence of the acquisition is the transfer of control of the company. As such, the status of the employees in the company which has been taken over is dependent on the willingness of the employees to continue their employment or the willingness of the employer to accept the employees.
If one of the parties is not willing, then this can be the reason for termination of employment. According to Article 154A (1) Law No. 13/2003, the termination of employment may occur due to the reason the company is merging, consolidating or in the process of being acquired, and the company or the employee is not willing to continue the employment relationship, or the employer are not willing to accept the employee.
Upon the termination of employment, the employee is entitled to severance pay and/or service pay and compensation money that are stipulated further under GR No. 35/2021. In fact, every worker is obliged to receive proper protection.
In some circumstances, industrial relations disputes can occur between entrepreneurs and workers. Nevertheless, during the settlement of such disputes, entrepreneurs and workers must carry out its daily obligations. Entrepreneurs can also take action to suspend workers who are in the process of terminating employment relationship, by continuing to pay wages along with other rights commonly received by workers. The implementation of the obligations is carried out until the completion of the process settlement in such appropriate levels.
According to the Elucidation of Article 157A Law No. 13/2003, the term of “appropriate level” can be defined as dispute resolution at several levels as follows:
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bipartite level;
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mediation or conciliation or arbitration level; or
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industrial relations level.
Protection for Creditors
In practice, the status of the creditor’s receivables from the acquired limited liability company is the responsibility of the new shareholders. As explained under Article 126 (1) (b) Law No. 40/2007, the legal action of merger, consolidation, acquisition, or spin-off must take into account the interests of creditors and other business partners in the company. This provision is then clarified in its elucidation, that merger, consolidation, acquisition, or spin-off cannot be carried out if it is detrimental to certain parties, including creditors.
Prior to the merger and acquisition, the BoD of the company is obliged to announce the merger and acquisition plan in 1 (one) newspaper and notify the employees in writing no later than 30 (thirty) days before calling the GMS. With this announcement and notification, all relevant parties to the company will be aware that there will be an acquisition by the new shareholders.
In the framework of providing legal protection to creditors, the creditors are also given a chance to raise objections before the GMS decides on the legal action. Creditors may submit objections to the company at the latest 14 (fourteen) days after the announcement regarding merger, consolidation, or acquisition according to the draft made by the BoD. A creditor that fails to file an objection within the given time period shall be deemed to have approved the merger, consolidation, or acquisition. If the BoD fails to resolve the creditor’s objection until the date of GMS, such objection must be brought to the attention of the GMS for settlement. If the settlement has not been reached, then the merger, consolidation, or acquisition shall not be conducted.
Abolition or Elimination of NPWP due to Merger
The head of the tax service office can do the NPWP write-off on taxpayers who have not met the subjective and/or objective requirements in accordance with the provisions of laws and regulations in the field of tax. The elimination of NPWP can be done in the event that the corporate taxpayer is liquidated or dissolved due to termination or business merger.
The application for the elimination of NPWP is submitted by the taxpayer, representative, or the taxpayer's proxy. In the event that a Taxpayer has a branch NPWP, the application for the elimination of the central NPWP is also an application for the elimination of all branch NPWP.
Application for the elimination of NPWP can be made electronically or in writing, and with supporting documents attached which show the state of the business condition. This must include a photocopy of the company’s dissolution deed or similar document that has been legalized by the competent authority in accordance with the provisions of laws and regulations. For a taxpayer who is a permanent establishment/bentuk usaha tetap who has ceased its business activities in Indonesia, in the form of a photocopy of the said business termination document.
Procedures for Elimination of NPWP
Applications for NPWP removal can be done by filling out and submitting the NPWP elimination form and uploading the digital copies of supporting documents, on the registration application which is available on the website of the Directorate General of Taxation.
Written application for NPWP elimination can be submitted directly to the tax office where the taxpayer is registered or by post with proof of delivery of a letter or courier service company with proof of delivery of a letter to the tax service office where the taxpayer is registered. Based on the request, the head of tax office will issue and submit the receipt of a letter to the taxpayer in the event that the application meets the requirements. Meanwhile, if the application does not meet the requirements, the head of the tax service office will return the application directly, for applications submitted directly or return the application and will notify the taxpayer in writing by submitting an application returning letter, for applications submitted by post, courier company or services courier with proof of delivery.
The head of tax office will issue a decision no later than 6 (six) months after the issuance of electronic receipt or proof of receipt of letters submitted by individual taxpayers and no later than 12 (twelve) months of issuance of electronic receipt or proof of receipt of letters submitted by corporate taxpayers. If the head of tax office does not issue a decision within the specified time period, the taxpayer's application is deemed granted and the head of tax office must issue a decree on the abolition of taxpayer identification number no later than 1 (one) month after the decision issuance period ends.















