INDONESIA Law and Practice Contributed by: Melissa Butarbutar, Ken Prasadtyo, Kevin Yehezkiel and Cindy Caroline, TnP Law Firm
• another controller of the public company. 6.3 Consideration In the Indonesian market, cash remains the com - mon form of consideration in M&A transactions, especially those involving public companies. However, current practices show that various forms of consideration are used, depending on the scale of the deals. If the acquisition is car - ried out through the issuance of new shares by the company, the Company Law allows the sub - scription to be made in either cash or in-kind contributions. On the other hand, if the acquisi - tion is made directly from the existing sharehold - ers, the consideration can take the form of either cash or shares in another company. Additionally, other forms of consideration may also be taken for tax efficiency purposes. To bridge the value gaps between the sellers and the purchasers, some of the most common tools include escrow agreements, the carving out of non-performing loans and other unconsidered assets, or main - taining the company’s cash by prohibiting the dividend distribution to shareholders. 6.4 Common Conditions for a Takeover Offer There is no requirement for a takeover offer in the acquisition of a private company. However, if the acquisition involves a public company, the new controller must make a mandatory tender offer to the holders of the remaining minority stakes in the public company. Apart from the exemption of shares to be offered in the mandatory tender offer as elaborated in 6.2 Mandatory Offer Threshold , OJK Regulation No. 9/2018 prohibits the new controller from set - ting out certain offer conditions or restrictions to the shareholders of the public company partici - pating in the offer. On the other hand, in the case of a voluntary tender offer, OJK Regulation No.
54/2015 explicitly allows the prospective new controller to include certain offer conditions in the voluntary tender offer, although there is no further elaboration on the extent to which such conditions can be offered. However, they will be subject to the OJK’s review and approval. 6.5 Minimum Acceptance Conditions In the case of mandatory tender offers, there are no minimum acceptance conditions. The purpose of a mandatory tender offer is for the new controller to purchase the remaining minor - ity stakes in the public company; therefore, the minimum acceptance concept is not applicable. Instead, a common practice is to set the accept - ance condition based on the maximum number of shares the new controller can purchase in the mandatory tender offer to the extent there are regulatory restrictions that prohibit the new con - troller from acquiring all of the shares tendered in the mandatory tender offer (eg, foreign share - holding restrictions). The same practice goes with a voluntary tender offer; however, given the nature of a voluntary tender offer, which provides flexibility for the new controller to set out cer - tain offer conditions (as elaborated above), the new controller is permitted to set out a minimum acceptance condition in the voluntary tender offer as the one of the offer conditions. 6.6 Requirement to Obtain Financing While in some industries that are supervised by the OJK, parties that intend to acquire shares in companies engaged in those industries are prohibited from obtaining financing to finance the acquisition, in other industries, it is common for prospective purchasers to secure third-party financing to acquire shares in the target com - pany. This approach is generally pursued by prospective purchasers involved in deals that include a voluntary tender offer or rights issue, where a statement of fund sufficiency is required
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