• Yuliana Siagian

Merger in Indonesia: General Overview


1. The provisions on merger are regulated under Law 40 of 2007 on Limited Liability Company as lastly amended by Law Number 11 of 2020 on the Job Creation (the “Company Law”).


2. The Company Law defines merger as legal action carried out by one or more company (ies) to merge itself with other existing company which results the assets and liabilities of the merging companies to be assigned by law to the company which accepts the merger and subsequently the legal entity status of the merging company is terminated by law.

3. In addition, the Company Law further stipulates that after merger the following events will occur at the Effective Date of merger:

(a) the assets and liabilities of the merging companies shall be transferred by operation of law to the company which accepts the merger;

(b) the shareholders of the merging companies by operation of law shall become the shareholders of the company which accepts the merger; and

(c) the merging companies shall be terminated by operation of law without any liquidation.

4. The merger must take into account the interests of:

(a) the Company, minority shareholders, employees of the Company;

(b) creditors and other business partners of the Company; and

(c) society and healthy competition in carrying out business.

PROCEDURES OF MERGER

Merger Plan

5. Under the Company Law, the Board of Director (the "BOD") of the merging companies and the company which accepts the merger (the “Companies”) shall jointly draw up and prepare the merger plan, which at least shall contain:

(a) the name and domicile of the Companies;

(b) reason and explanation from the BOD of the Companies;

(c) procedures of the evaluation and conversion of shares in the merging companies into the shares of the company which accepts the merger. The shares conversion procedures should stipulate a fair value of a share in the merging companies in order to determine the share exchange ratio for the share’s conversion;

(d) the draft amendments to the articles of association (“AOA”) of the company which accepts the merger. This is only required if after the merger, the AOA of the company which accepts the merger will be amended;

(e) the financial statements of the Companies for the last three financial years which should at least consists of:

(i) a year-end balance sheet of the year which has just ended in a comparison with the previous financial year;

(ii) profit and loss statement of the respective financial year;

(iii) report on cash flow;

(iv) report on the changes in equity; and

(v) notes to the financial statements;

(f) plan regarding the continuance or cease of the business activities of the merging companies;

(g) the pro-forma balance sheet of the company which accepts the merger in accordance with the general accounting principle generally in Indonesia;

(h) method of the settlement on the status, rights and obligations of the members of the BOD, the members of board of commissioners (“BOC”), and the employees of the merging companies;

(i) method of settlement on the rights and obligations of the merging companies against the third parties;

(j) method of settlement on the right of shareholders who does not agree with the merger plan of the Companies;

(k) names, salaries, honorarium and allowances of the members of the BOD and the BOC of the company which accepts the merger;

(l) estimated period of the merger;

(m) report on the condition, development, and result achieved by the Companies;

(n) main activities of the Companies and the changes occurred during the respective financial year; and

(o) details of issues arising during the respective financial year which may affect the activities of the Companies.

Approval from the BOC for the merger plan

6. Subsequently, the merger plan shall be approved by the BOC of the Companies. The approval may be given in a meeting of BOC or circulating resolution in lieu of meeting of BOC. If meeting of BOC will be held, notice of meeting of BOC has to be made within the timeframe set out in the AOA of the Companies.

Newspaper and employees’ announcements

7. The BOD of the Companies shall made announcement in at least one Indonesian language newspaper with national circulation and also make written announcement to the employees of the Companies, which consist of the following information:

(a) the summary of the merger plan; and

(b) the notification the interested parties may obtain the merger plan at the office of the company as of the date of announcement until the date the general meeting of shareholders (the “GMS”) approving the merger plan.

Please note that the announcements shall be made at the latest 30 days before the notice of GMS to approve the merger plan.

The creditors’ objection

8. Each creditor of the Companies who has objection in respect of the merger plan may submit their objection to the respective company at the latest 14 days as of the date of the newspaper announcement (as referred to in paragraph 7 of this article (failing which, they will be deemed to have agreed to the merger).

9. If there is any objection from a creditor which cannot be settled by the date of the GMS to approve the merger, the objection must be raised at the GMS in order to be settled. The Company Law further stipulates that so long as a settlement of any such creditor objection has not been reached, the merger may not be carried out.

Approval from the shareholders for the merger plan

10. If the GMS will be held to approve the merger, the Board of Directors of the Companies shall send the notice for the GMS to its shareholders. The notice of the respective GMS may be in a form of registered letter or newspaper announcement and contains the date, place, and the agenda of the proposed GMS and notification that the materials for the proposed GMS is available in the company’s office as of the date of the notice until the date of the GMS. The notice for GMS shall be delivered at the latest 14 days before the date of the GMS, excluding the date of the notice and the date of the GMS.
11. The GMS for approving merger has to meet the quorum and voting requirements as stipulated in Article 89 of the Company, unless the AOA stipulates higher quorum and voting requirement. The quorum and voting requirements are as follows:

(a) the GMS regarding the merger shall be held if it is attended or represented by at least ¾ of the total shares having voting rights and the resolution approving the merger shall be valid if it is approved by a deliberation to reach consensus or at least ¾ of the total votes cast;

(b) if the quorum for the GMS as described in paragraph 11 (a) of this article cannot be met, a second GMS may be held if it is attended or represented by at least 2/3 of the total of shares having voting rights and the resolution approving the merger shall be valid if it is approved by at least ¾ of the total votes cast;

(c) if the quorum for the second GMS as described in paragraph 11 (b) of this article cannot be met, the second GMS shall be opened and then closed by taking minutes of GMS that explain the second GMS cannot be carried out because the quorum was not reached. The respective company may file an application to the head of the district court in the company’s domicile so that he stipulates a quorum for the third GMS.

12. The notice for the third GMS shall state that the second GMS has taken place and failed to establish a quorum, and a third GMS is to be held with a quorum having been set by the head of the district court. The order of the head of the district court regarding such quorum is final and binding.

13. Notice for a second and third GMS shall be made at the latest 7 days before the date of the second or third GMS. The second and third GMS shall be held at the fastest ten days and at the latest 21 days as of the date of the preceding GMS.

14. The shareholders of the Companies may also adopt a unanimous circulating resolution for the merger plan in lieu of GMS. However, as described in paragraph 9 of this article, if there has been an objection from a creditor which has not been settled before the vote to approve the merger is taken, a GMS must be held to discuss the objection before the vote is taken.

15. The GMS resolution shall then be restated into notarial deed before an Indonesian public notary within 30 days after the execution date of the GMS resolution.

Right of Shareholder
16. Any shareholder who does not agree with the decision of GMS on merger, is entitled to have his shares bought back by the relevant company under reasonable price.

17. The shares bought back by the company as described in paragraph 16 of this article shall not exceed the limitations for the buy back shares as set out in the Company Law. If the shares of the shareholders who requested buy back exceeds the limitations, the company shall endeavor so that the remaining shares is bought by third party.

18. The implementation of the right of shareholders to have its shares bought by the company shall not cease the merger process.

Approval from the One Single Submission for merger

19. For merger carried out by foreign investment companies, it will require a prior approval from the One Single Submission. The application for the approval on merger shall be submitted to One Single Submission.

Merger Deed

20. The merger plan which has been approved by each GMS of the Companies then shall be incorporated into a deed of merger drawn up in Indonesian language deed before a notary.

Submission to Minister of Law and Human Rights (the “Minister”)

21. The company which accepts the merger shall submit the deed of GMS resolution and deed of merger to the Minister to obtain approval and/or notification receipt from the Minister. The effective date of the merger shall be on the date of the approval, notification receipt from the Minister, or later date as stipulated on the merger deed (the “Effective Date”).

Newspaper announcement after the merger

22. The BOD of the company which accepts the merger shall announce the merger in at least one Indonesian language newspaper having national circulation. The announcement shall be made at the latest 30 days as of the Effective Date.

Advice for MERGER & ACQUISITION in Indonesia


This article was prepared and drafted by Yuliana Pertiwi Siagian, the partner of NP Consultant Indonesia (www.np-consultant.com).


NP Consultant Indonesia is an Indonesia law office offering the highest quality standard of Indonesian law expertise. Practice areas include mining, energy and natural resources, corporate and commercial, M&A, investment, immigration, employment, real estate, due diligence and compliance, litigation, family law (divorce, prenuptial agreement, inheritance), and others.

For advice on merger and acquisition in Indonesia, kindly contact:


1. Yuliana Pertiwi Siagian

(yuliana@np-consultant.com/+62811 – 8013 – 088)


2. Gesiu Nicholas Manurung

(gesiu@np-consultant.com/ +62813 – 1143 – 9048)


NP Consultant Indonesia

18 Office Park, 25th Floor, Suite A 2 Jl. TB Simatupang Kav. 18 South Jakarta DKI Jakarta 12520 Indonesia Office Phone: +6221 – 2780 – 6577






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