OJK Regulates the Merger and Consolidation of Publicly Traded Companies

The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) recently issued Regulation No. 74/POJK.04/2016 on the Merger and Consolidation of Publicly Traded Companies (“Regulation 74/2016”) in a bid to simplify the current provisions, as well as to enhance the transparency of any plans to undertake either of the aforementioned measures.[1]
 
With these goals in mind, Regulation 74/2016 sets out a new set of guidelines for the merger and consolidation of publicly traded companies, areas which were previously regulated under the now obsolete Capital Market Supervisory Board Decree No. KEP-52/PM/1997 (“Rule IX.G.1”).
 
Statement of Merger or Consolidation
 
In general, publicly traded companies (perusahaan terbuka) may undergo mergers or consolidations. Such publicly traded companies include issuers (emiten) which have organized initial public offerings of their equity securities and public companies (perusahaan publik).[2]
 
If either of these ends is the ultimate goal, then publicly traded companies are required to submit various documents to the OJK, which are collectively referred to as a Statement of Merger or Consolidation (“Statement”). Any such Statement should comprise of: (1) A proposal describing the merger or consolidation (“Proposal”); and (2) Various additional documents.[3]
 
Proposals
 
Proposals are to be jointly prepared by the Board of Directors (“BoD”) of each of the companies which is involved in any merger or consolidation, and should also be officially approved by their Boards of Commissioners (“BoC”).[4] In general, a Proposal must contain the following information at a minimum:[5]