INDONESIA Law and Practice Contributed by: Jufrian Murzal and Enos Martryn Budiman, Murzal and Partners
5. Negotiation Phase 5.1 Requirement to Disclose a Deal Disclosure obligations in Indonesia differ between pri - vate companies and public companies. For private companies, the Company Law requires the prospective acquirer to publish an announcement of the proposed acquisition in at least one nationally circulated Indonesian daily newspaper no later than 30 days before the GMS approving the transaction. This announcement forms part of the statutory cor - porate procedure for acquisitions, mergers and con - solidations and serves to notify creditors and other stakeholders. For public companies, disclosure obligations are primarily governed by capital markets regulations administered by the OJK. Where a transaction con - stitutes material information, the issuer must disclose the information to the public once the information becomes material or confidentiality can no longer be maintained. If the acquisition results in a change of control, the new controlling shareholder must subse - quently conduct a mandatory tender offer in accord - ance with the applicable OJK regulations. 5.2 Market Practice on Timing Indonesian capital markets regulations require issuers and public companies to disclose material informa - tion that may affect securities prices or investment decisions. The timing of such disclosure is therefore determined primarily by regulatory requirements. In practice, however, parties to acquisition transac - tions typically manage disclosure carefully during the negotiation phase. Transactions are often kept confi - dential while negotiations remain preliminary or non- binding, on the basis that a material event triggering disclosure has not yet occurred. Accordingly, while market participants may seek to preserve confidentiality during the early stages of negotiations, the timing of disclosure ultimately remains subject to the applicable capital markets regulations once the transaction becomes material.
5.3 Scope of Due Diligence In Indonesia, legal due diligence in a negotiated busi - ness combination typically involves a comprehensive review of the target company’s legal, regulatory and operational status to identify potential risks and liabili - ties. The review generally covers key areas such as corporate documents, shareholding structure, mate - rial contracts, financing arrangements, employment matters, licences and permits, regulatory compliance, ongoing litigation or disputes, asset ownership, and any restrictions on the transfer of shares. For companies operating in regulated sectors, the scope of due diligence is usually expanded to address sector-specific regulatory requirements. This may include verification of compliance with licensing regimes, foreign ownership restrictions under the Pos - itive List, reporting obligations to sectoral regulators, and other regulatory approvals required for a change in control. Depending on the nature of the business, due dili - gence may also consider ESG compliance, particular - ly in sectors such as natural resources, infrastructure and energy, where regulatory scrutiny and investor expectations are increasingly significant. 5.4 Standstills or Exclusivity Indonesian law does not specifically regulate stand - still or exclusivity arrangements in M&A transactions. Such provisions are generally governed by the princi - ple of freedom of contract under Indonesian civil law. In practice, exclusivity undertakings are commonly requested by prospective buyers at an early stage of the transaction, particularly during the negotiation of a term sheet or letter of intent and the due diligence process. These provisions typically prevent the seller from engaging with competing bidders for an agreed period to provide deal certainty. Standstill arrange - ments may also be used in certain transactions, par - ticularly involving public companies, where a potential acquirer agrees not to increase its shareholding during the negotiation period. The duration of such arrange - ments is typically subject to negotiation between the parties.
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