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KPPU Issues Two New Regulations on Mergers and Aquisitions
M&A Guidelines Revision and Separation of Guidelines on the Imposition of Fines for Delays in Notifying the KPPU
Commission for the Supervision of Business Competition ("KPPU") Regulation No. 4 of 2012 on Guidelines for the Imposition of Fines for the Delay in Notifying a Merger, Consolidation or Acquisition ("Regulation") has been issued to set out the procedures and to separate this issue into a separate regulation (whereby, previously, the matter was addressed as part of Regulation No. 10 of 2011). The Regulation has been in force since 27 August 2011.
Article 2(1) reiterates the requirement to notify the KPPU of a merger, consolidation of acquisition within 30 days of the effective date of the merger, consolidation or acquisition. Article 2(2) specifies that the effective date is:
Where both parties are limited liability companies:
· Merger requiring AoA amendment: the date of approval of the amendment of the Articles of Association by the Minister of Law and Human Rights.
· Merger not requiring AoA amendment: the date of receipt of the notification by the Minister of Law and Human Rights.
· Consolidation: the date of deed of establishment ratification by the Minister of Law and Human Rights.
Where one of the parties is not a limited liability company:
Notification has to be made within 30 days of the signing of the ratification of the merger, consolidation or acquisition by the parties, while the effective date is the date on which ownership of shares is transferred (closing date).
Where the acquisition of shares occurs through a stock exchange:
Notification has to be made within 30 days of the public disclosure of the takeover of the listed company.
Article 3 sets out the types of monitoring the KPPU can undertake to detect the occurrence of mergers, consolidations and acquisitions, which comprise of reports from the media, reports from the public or any other valid source.
Article 4 sets out the contents of a KPPU reports of a delay to notify a merger, consolidation or acquisition. And, according to Article 5(2) a determination on whether such delay has indeed occurred is made by means of a meeting of the KPPU.
Following an internal KPPU preliminary examination a report is prepared (Article 6), a panel is formed (Article 7), and a hearing is conduced (Article 8). The public hearing consists of examining the report, witnesses, experts, government agency information and documentary evidence. Furthermore, the hearing is divided into a preliminary examination (Article 9) and an examination (Article 10).
Article 11 specifies how a decision is issued by the KPPU, with the deliberation being private, but the outcome being publicly announced (within 7 working days of the conclusion of the examination).
Article 12 reiterates the fines that can be imposed, which are Rp. 1,000,000,000.00 (one billion Indonesian Rupiah, approx. $100 thousand) for each day of delay, up to a maximum of Rp. 25,000,000,000.00 (twenty five billion Indonesian Rupiah, approx. $2.5 million)
Second Amendment of KPPU Guidelines on Notification of Mergers, Consolidations and Acquisitions (Article 29)
KPPU Regulation No. 3 of 2012 on Guidelines for Completing Mergers, Consolidations or Acquisitions that Might Result in Monopolistic Practices and Unfair Competition ("Amendment") has been issued as an implementation of Article 29 (1) of Law No. 5 of 1999 on the Prohibition on Monopolistic Practices and Unfair Business Competition. The Amendment effectively replaces Regulation No. 13 of 2010 and its first amendment, Regulation No. 10 of 2011, with the intention of further fine-tuning the corporate restructuring notification procedures. The Amendment has been in force since 27 August 2011.
Specifically, the Amendment added a further definition to the types of acquisitions: an acquisition by means of subscription to newly issued shares (capital increase). And a new chapter regarding remedies, providing the parties with a possibility to negotiate the remedies with the KPPU so as to ensure that if the transaction proceeds there will not be a substantial lessenting of competiton.
Source: Commission for the Supervision of Business Competition Regulation No. 3 of 2012 on Guidelines for Completing Mergers, Consolidations or Acquisitions that Might Result in Monopolistic Practices and Unfair Competition; Commission for the Supervision of Business Competition Regulation No. 4 of 2012 on Guidelines for the Imposition of Fines for the Delay in Notifying a Merger, Consolidation or Acquisition
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