Merger And Acquisition Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian law that sets out the terms and conditions for the merger or acquisition of a business entity in Indonesia. The agreement must comply with Law No. 40 of 2007 on Limited Liability Companies and other relevant Indonesian regulations, including foreign investment restrictions where applicable. It covers crucial elements such as purchase price, conditions precedent, representations and warranties, regulatory approvals, and closing mechanisms, all structured to meet Indonesian legal requirements while protecting the interests of all parties involved.

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What is a Merger And Acquisition Agreement?

The Merger and Acquisition Agreement serves as the primary transaction document for corporate combinations and takeovers in Indonesia. It is essential for any business acquisition, merger, or consolidation subject to Indonesian law, requiring careful consideration of local regulatory requirements, including those set by the Investment Coordinating Board (BKPM), Financial Services Authority (OJK), and Competition Commission (KPPU). The agreement must address specific Indonesian law requirements regarding foreign ownership restrictions, mandatory language provisions, and sector-specific regulations. It typically includes detailed provisions on purchase price mechanisms, conditions precedent focusing on local regulatory approvals, representations and warranties tailored to Indonesian business practices, and closing mechanics that comply with local corporate law requirements.

What sections should be included in a Merger And Acquisition Agreement?

1. Parties: Identification of all parties to the agreement, including their legal status and registration details as required under Indonesian law

2. Background: Recitals explaining the context of the transaction and the parties' intentions

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including Indonesian legal and regulatory terms

4. Sale and Purchase: Core transaction terms including the assets or shares being acquired and the purchase price structure

5. Purchase Price and Payment: Detailed terms of consideration, payment mechanisms, and any adjustments, including compliance with Indonesian foreign exchange regulations

6. Conditions Precedent: Prerequisites to closing, including required regulatory approvals from Indonesian authorities

7. Pre-Completion Obligations: Parties' obligations between signing and closing, including conduct of business requirements

8. Completion: Closing mechanics, deliverables, and timing requirements

9. Representations and Warranties: Comprehensive warranties covering Indonesian law compliance, permits, licenses, and local business practices

10. Indemnification: Indemnity provisions and liability allocation between parties

11. Covenants: Ongoing obligations of the parties, including post-closing requirements

12. Termination: Circumstances under which the agreement may be terminated and consequences

13. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

14. General Provisions: Standard boilerplate clauses adapted to Indonesian law requirements

What sections are optional to include in a Merger And Acquisition Agreement?

1. Employee Matters: Required for transactions involving significant employee transfers or labor law implications

2. Tax Matters: Detailed tax provisions when specific tax structures or implications need to be addressed

3. Foreign Investment Provisions: Required when the transaction involves foreign investors and compliance with Indonesian foreign investment regulations

4. Anti-corruption Compliance: Detailed provisions for high-risk sectors or when required by foreign investors

5. Transition Services: Required when post-closing operational support is needed

6. Intellectual Property Rights: Detailed IP provisions for technology-heavy or brand-focused transactions

7. Real Estate Matters: Required when the transaction involves significant real estate assets

8. Environmental Compliance: Required for industries with significant environmental impacts or risks

9. Competition Compliance: Detailed provisions when the transaction requires KPPU approval or has significant competition law implications

What schedules should be included in a Merger And Acquisition Agreement?

1. Purchase Price Calculation: Detailed methodology for calculating final purchase price and adjustments

2. Disclosed Information: List of documents and information disclosed during due diligence

3. Properties Schedule: Details of all real estate and leased properties

4. Material Contracts: List and copies of key contracts being transferred

5. Intellectual Property: Schedule of all IP rights being transferred

6. Employee Information: Details of employees, benefits, and employment terms

7. Permits and Licenses: List of all governmental permits and licenses

8. Completion Deliverables: Detailed list of documents and items to be delivered at closing

9. Form of Resignation Letters: Template resignation letters for departing directors/commissioners

10. Corporate Structure: Pre and post-closing corporate structure charts

11. Required Regulatory Approvals: List of required government and regulatory approvals

12. Warranty Deed: Detailed warranties and indemnities

13. Tax Deed: Specific tax-related warranties and indemnities

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Publisher

Genie AI

Cost

Free to use

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