INDONESIA Law and Practice Contributed by: Chandrawati Dewi, Gustaaf Reerink and Bilal Anwari, ABNR Counsellors at Law
2.6 Calculations of Jurisdictional Thresholds Jurisdictional thresholds are calculated based on assets and turnover that are exclusively in Indonesia (see 2.5 Jurisdictional Thresholds ). If the sales or assets are booked in a foreign currency, the figures need to be converted using Bank Indone - sia’s middle exchange rate on the closing date or the business day in Indonesia closest to the closing date. The thresholds should be based on book value (ie, audited financial statements of the relevant undertak - ings). However, if the undertakings do not record the assets and turnover that are exclusively in Indonesia in their audited financial statements, they need to submit a statement letter that includes the Indonesian sales and turnover figures and is signed by the authorised representative of the relevant undertaking. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds The jurisdictional threshold is calculated based on the combined Indonesian sales and assets of the previous fiscal year for: • each undertaking that carries out the merger, con - solidation or acquisition (of shares and/or assets); and • all entities, including the target and its controlled subsidiaries (if any), that directly or indirectly con - trol (or are controlled by) the ultimate parent of the undertaking(s) carrying out the merger, consolida - tion or acquisition – this includes the ultimate par - ent entity, which is the highest controller of a group of undertakings that is not controlled by any other undertaking. Therefore, the calculation of the jurisdictional thresh - old is on a group-wide basis – given that it does not only concern the transacting parties, but also includes the affiliates or subsidiaries of the transacting parties. For the avoidance of doubt, a seller’s turnover and assets generally do not need to be included in the cal - culation of the threshold. In the authors’ experience, in an acquisition resulting in joint control, the KPPU may require the notifying party to include the seller’s (and
its group’s) (as the existing controlling shareholders) turnover and assets in the threshold calculation. The jurisdictional thresholds are also met if only one party involved in the transaction meets the threshold. The merger control regulations do not specify how changes in business should be reflected in the thresh - old calculation. In practice, with regard to other acqui - sitions, the KPPU usually requires the notifying party to include the sales and assets of the newly acquired entities in the threshold calculation as though they had been part of the group for the entire reference period. As regards business closures or divestments during the reference period, in practice, the figures of the closed or divested entities usually do not need to be included in the threshold calculation. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions are subject to merger control if the transaction fulfils the criteria that are caught by Indonesian merger control rules. Further, it should be assessed whether both the transacting parties have nexus in the Indonesian market. A trans - action has nexus if at least two parties engaged in the transaction carry out business activities in or sales to Indonesia or have assets in Indonesia. Assets are movable or immovable objects, both tan - gible and intangible, that possess economic value. Whether a company has sales in Indonesia is not always easy to determine. Parallel sales could also trigger a notification requirement. The dual nexus requirement for foreign-to-foreign transactions is another major change introduced by Regulation 3/2023. Under the previous regime, foreign-to-foreign transactions could be notifiable if either party (or its affiliate/subsidiary) had nexus in Indonesia (single nexus). The KPPU’s current approach is that the dual nexus criterion is only met if both the acquirer (or its affiliates/ subsidiaries) and the target (or its subsidiaries) have assets or sales in Indonesia.
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