INDONESIA Law and Practice Contributed by: Melissa Butarbutar, Ken Prasadtyo, Kevin Yehezkiel and Cindy Caroline, TnP Law Firm
tion. Typically, the new controller is only required to disclose the key terms of the agreement to the extent required in the mandatory tender offer statement. However, in some cases, the OJK may request for the full version of the transac - tion documents to be disclosed to the OJK while the mandatory tender offer statement is being reviewed by the OJK.
The main purpose of the establishment and utili - sation of special or ad hoc committees in certain deals is not necessarily to address a conflict of interest. Instead, if a conflict of interest arises in a particular deal, the Company Law stipulates that the conflicted members of the board of directors must not represent the company, meaning that they are not allowed to act in their capacity as members of the board of directors. If all mem - bers of the board of directors are conflicted, the board of commissioners must then represent the company. If, in that eventuality, all members of the board of commissioners are also conflicted, then the shareholders may appoint another party to represent the company. 8.3 Business Judgement Rule While the board of directors is obliged to fulfil its fiduciary duty, the Company Law also acknowl - edges the concept of “business judgement rule” as the “protection” for the members of the board of directors in performing their fiduciary duty, particularly for the issuance of new shares and merger transactions. Therefore, the members of the board of directors are not held liable for losses incurred under certain circumstances: • when such losses are not attributable to the directors’ fault or negligence; • when the directors have managed the com - pany with good faith and prudence in the interest of the company and in accordance with the purposes and objectives of the com - pany; • when there is no conflict of interest against the directors, either directly or indirectly, with respect to the actions taken that resulted in losses to the company; and • when the directors have taken a preventive measure to avoid the occurrence of subse - quent losses.
8. Duties of Directors 8.1 Principal Directors’ Duties
In a business combination in Indonesia, the board of directors must fulfil its fiduciary duty in managing the company, acting in good faith and in the best interest of the company. The duties of the board of directors are not solely owed to the company’s shareholders but to the entire company, including all of its stakeholders. For this purpose, the board of commissioners supervises the actions of the board of directors to ensure the fulfilment of fiduciary duty by all members of the board. 8.2 Special or Ad Hoc Committees In the Indonesia’s M&A climate, the concept of special or ad hoc committees is not explicitly introduced, but there is no prohibition against the establishment of special or ad hoc commit - tees in business combinations. Although this practice is generally applied on case-by-case basis, some boards of directors prefer to estab - lish special or ad hoc committees for certain deals to assist them in identifying potential tar - gets and in managing, negotiating and finalising the deals. However, the authority of the special or ad hoc committees is limited to assisting the board of directors, as the final decision will then be made solely by the board of directors.
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