As we post in previous article, each investor, both Indonesian citizens, and foreigner nationals can conduct business activities in Indonesia by forming a business entity whether in the form of a limited liability company or representative office for foreign investor. It’s certainly going to take time to set up a business entity, given that there are a lot of licenses that need to be obtained. But no worries, we came up with a solution for you!
Corporate Action – Acquisition
Acquisition is an easy way to start/expand a business without having to manage business licenses from scratch, as new businesses do. An acquisition is the takeover of a company by another corporation by purchasing all or part of the shares of the company it wants to acquire. Benefits of acquisitions include, but are not limited to:
- An increase in the rate of growth is faster in business now than doing growth internally.
- Reduce the level of competition by buying several business entities to combine market forces and competition restrictions.
- Entering new markets of sales and marketing is now impenetrable.
- Providing managerial skills, namely the existence of managerial assistance in managing the assets of business entities.
- There is great control over the shares and assets of the acquired company.
- There is no need to take care of many requirements, especially those relating to legal entities.
Is it possible for Foreign-Owned Company to Acquire Indonesian Company?
The answer is Yes, but not in all business sectors. Some sectors are fully open for foreign investment, meaning foreign investors can own absolute or full shares of 100% (one hundred percent) as in trading sectors. However, in some business sectors, such as mining, construction, there are arrangements for the amount of shares that must be owned by foreign investors together with Indonesians. To find out what types of businesses can or cannot be fully owned by investors, you can find out from the Indonesia government website, oss.go.id. If you need assistance in determining whether your business can be wholly owned by you or your parent company, you can still book a free consultation with us.
Things to Consider Before Making an Acquisition
Prior to making an acquisition through shares sale transaction, Investors are encouraged to do a number of things to ensure the condition of the company to be acquired, such as by doing legal due diligence.
Legal Due Diligence is a series of activities conducted to review the company’s condition from a legal perspective. The legal counsel will audit all legal documents of the company and the legality of the company’s business license. Company data and documents will be mapped, analyzed and entered into as legal review reports.
This legal review report will make it easier for investors to know the condition of the company they want to be acquired. Investors can therefore analyse the potential benefits and problems that will arise if the acquisition is carried out.
Upon Completion of The Acquisition
Investors who have acquired the company may make adjustments so that the acquired company, meets the investor’s business expectations in a certain way.
- Maintain or renew the company’s board of director and commissioner (company restructuring), including employees working in the company.
- Adjusts the company’s operational system;
- Make adjustment to company regulations;
- Develop the business in accordance with the scope of the company’s business.
Thus the general overview of the most effective way to set up business in Indonesia, should you have any queries regarding the acquisition of the company specifically and require our services to control your acquisition process, feel free to connect with us at info@pnpclawyer.com