Corporate Action

(MCAS)
Law of business organizations – bu yetty
Nicolette Johnson
FH UI KKI 2017
Merger
• Merger consolidation acquisition → MERGER
• Implementing regulation → GR No. 27/1998 regarding MCA
• Relevant regulations → GR No. 28 1998 regarding MCA for bank + bI BOD Decree
no 32/51KKEP/DIR/1999; SOE (GR 43/2005- must be approved by president)
• Prior law no 1/1995 (40/2007) → governed by contractual arrangements based
on civil + commercial code
• Splitsing
• Art 1(9-12)
• Art 122-137
• Law no 40/2007
Merger
• A legal action taken by one company or more to merge itself with
another existing company which results in the assets and liabilities of
the merging company transfer by operation of law to the company
that receives the merger and subsequently the legal entity status of
the company that receives the merger ceases by operation of law
Consolidation
• A legal action taken by 2 companies or more to consolidate by way of
establishing one new company which by operaiont of law acquires the
assets and liabilities of the companies that consolidate and the legal
entity status of the companies that consolidate ceases by operation of
law
Consolidation
Acquisition/takeover :
• A legal action taken by a legal entity or an individual to take over
shares of company which results in the transfer of control over the
company
• It is not just an ordinary shares purchase, it is an acquisition
• Basically it is a transaction of selling shares
Why do MCAS?
1. Synergy
2. Increase profit
3. Efficiency
4. Mitigate business risk
5. Avoid bankruptcy
6. Avoid company dissolution
Pros & Cons
Takeover advocates say
• Companies that are taken over
are made more profitable and
productive
• Proceeds from the sale of non-
core subsidiaries help pay off
debt or enhance the company
Takeover opponents say
• Takeover threats force managers
to spent time on defense rather
than vital business activities
• The only people who benefit
from takeovers are investment
banker's brokerage firms, and
takeover artists
Requirements of MCAS art 126
1. Must consider :
1. The interest of company, minority shareholders and employees
2. The interest of societies and g (avoid monopoly) fair business dealing
3. The interest of creditors
2. Respect right of minority shareholders to sell their shares with
proper price (art 62 para 1)
Objection From?
1. Minority shareholder
2. creditor
Legal Consequences of M/C :
• Merging companies to cease by
operations of law
• Assets and liabilities of the
merging companies are
transferred by law to the
surviving/receiving company
• The shareholders of the merging
companies shall, by operation of
law, be the shareholders of the
surviving company
• Consolidating companies to cease
by operation of law
• Assets and liabilities of the
consolidating companies are
transferred by law to the new
company
• The shareholders of the
consolidating companies shall, by
operation of law, be the
shareholders of the new company
Procedures/ steps of M/C : art 123-
134
1. merger plan
1. Both bods of the merging and surviving PT prepare a plan (MC)
2. Content of the plan – 15 elements – mandatory
3. The plan must be approved by the supervisory board
4. GMS approval for the plan – qorum and voting
5. Approval by the relevant institution
6. Announcement – newspaper and the employee
7. Creditors objection to the plan – 14 days – silent – constitute as approval
2. Deed of MCAS -> notarial + Bahasa
3. Approval by / notification to MOJHR -> for company record
4. Publication -> result of MCAS in a newspaper – 30 days
Through BOD VS directly
to the shareholder?
Procedures/ steps of Acquisition :
• Through BOD : • Directly to SH
1. Acquiring Co notify the intention to 1. Approved by GMS -> quorum +
targeting Co
voting
2. Conduct due diligence
3. Prepare acquisition plan 2. Sign in the deed of transfer of
4. Approval by the boc of the plan -> the shares
deed 3. Registration
5. Approval by the GMS 4. publication
6. Signing the acquisition
7. Approval by relevant institution
8. Approval or notify the MOJHR
9. Registration in the company registry
10. publication
Effective of MCAS ?
• Merger and acquisition :
1. Amendment of aoa
1. Must be approved by the minister -> the date of the ministry approval
2. No need approval -> registration date in the company registry
2. No amendment of aoa -> date of the signing of the deed (MA)
• Consolidation :
1. Deed of the establishment of the new company is approved by the minister
Splitsing / spin off/ division :
• A legal action that is performed by a company to split a business
which results in the transfer by operation of law of all the assets and
liabilities of the company to 2 companies or more, or the transfer by
operation of law of part of the assets and liabilities of the company to
1 company or more
• A corporate divesture in which a division of a corporation becomes an
independent company and stock of the new company is distributed to
the corporation’s shareholders -> SPIN OFF – blacks law dictionary
Method
• Absolute division (pemisahan murni) →
• The whole assets and liabilities of PT are, by operation of law, transferred to 2
or more PT, and the dividing PT cease to exist – art 135 (1)
• Partial division (pemisahan tidak murni) →
• Part of assets and liabilities of PT are, by operation of law, transferred ot one
or more pT, and the dividing PT remains existing – 135 (2)
Splitting of Shareholders
3 types of merger
1. Horizontal → one firm acquires another firm that produces and sells
an identical or similar product in the same geographic area →
eliminates competition
2. Vertical → one firm acquires either a customer or a supplier
3. Conglomerate → firms that are involved in totally unrelated
business activities
Types of Mergers