Corporate M&A 2026 Comparisons

Compared with 12 months ago, Indonesia’s M&A market appears to have moved from a period of “wait and see” caution towards a more selective execution of strategic transactions. Earlier market sentiment was shaped by macroeconomic uncertainty and domestic political developments, which contributed to a more measured pace of deal-making.

While overall transaction volumes appear to have remained relatively steady, aggregate deal value has been supported by several significant transactions, particularly in sectors aligned with Indonesia’s economic priorities, such as critical minerals; technology, media and telecommunications; and renewable energy/energy transition projects.

Investors continue to be disciplined and increasingly focused on regulatory compliance, environmental, social and governance (ESG) considerations and long-term strategic value, rather than purely opportunistic growth. Overall, the market remains active, but activity is more concentrated on high-quality, strategic transactions than it was a year ago.

Key M&A trends in Indonesia over the past 12 months include:

• Minority investments with enhanced governance protections: Investors have increasingly pursued minority stakes while negotiating shareholder arrangements that provide board representation, veto rights and reserved matters, enabling them to manage risk without acquiring full control.
• Greater use of contingent pricing and risk allocation mechanisms: Earn-outs, deferred consideration and escrow arrangements have become more common, particularly in technology and other growth sectors, as parties seek to bridge valuation gaps and manage post-closing exposure.
• Stronger focus on regulatory structuring at an early stage: Transactions are increasingly being structured with upfront consideration of foreign investment restrictions, sector-specific licensing requirements, and merger control notification to the Indonesian Competition Commission (KPPU), reflecting the importance of execution certainty.
• Increased emphasis on due diligence and downside protection: Buyers are showing greater discipline in legal, regulatory and commercial due diligence, with more attention given to representations and warranties, indemnity protection and conditions precedent.
• Growing attention to ESG and sustainability-related considerations: Environmental compliance, governance standards and broader sustainability issues are becoming more relevant in due diligence and investment decision-making, particularly in natural resources, infrastructure and energy transition-related sectors.

Significant M&A activity in Indonesia over the past 12 months has been concentrated in several key sectors:

• Natural resources and critical minerals: Transactions have been driven by Indonesia’s role in the global supply chain for nickel and other energy-transition minerals, attracting both strategic investors and global mining groups.
• Technology, media and telecommunications: The digital economy continues to generate deal activity, particularly involving digital platforms, fintech and telecommunications infrastructure.
• Energy and energy transition: M&A activity has increased in renewable energy, power generation and related infrastructure, reflecting Indonesia’s broader energy transition and sustainability initiatives.
• Financial services: Consolidation and strategic investment have occurred in banking, fintech and other financial institutions, often involving regional or international investors.
• Consumer and healthcare sectors: Investors continue to target businesses benefiting from Indonesia’s large domestic market and growing middle class, including healthcare providers and consumer-facing businesses.

The primary techniques/legal means for acquiring a company in Indonesia are as follows:

• Share acquisition: The most common structure in Indonesia is the acquisition of existing shares. The buyer acquires shares from existing shareholders and gains control of the target company. A key advantage is that the company remains the same legal entity, allowing licences, contracts and operations to continue without major changes, which is particularly important for regulated businesses.
• Subscription of newly issued shares: Investors may also subscribe to newly issued shares, increasing the company’s share capital while obtaining an ownership stake. This structure is commonly used for capital injections, strategic partnerships and minority investments, especially when the company requires additional funding.
• Merger: Merger is also a recognised acquisition method under Indonesian law, although in practice it is generally more process-driven and less frequently used than a conventional share acquisition. It may nevertheless be appropriate where the parties intend to combine businesses within a single surviving entity.
• Asset acquisition: In an asset acquisition, the buyer purchases specific assets (and sometimes liabilities) from the target company rather than acquiring the company itself. This structure is typically used when the buyer intends to acquire particular business assets instead of the entire entity.

M&A transactions in Indonesia are regulated by several authorities, depending on the nature of the transaction and the sector involved. The primary regulators include:

• The Ministry of Law (MoL): The MoL serves as the primary corporate authority responsible for administering company-related matters. Corporate actions arising from an M&A transaction, such as amendments to the articles of association (AoA), changes in shareholding structure and corporate restructuring, must be recorded with the MoL through the corporate registration system (Legal Entity Administration System).
• The Ministry of Investment and Downstream Industry (BKPM): This authority oversees foreign investment compliance, including adherence to the Positive List and foreign ownership limitations, as well as licensing matters for foreign-invested companies.
• The Indonesian Competition Commission (KPPU): The Indonesian Competition Commission (Komisi Pengawas Persaingan Usaha, or KPPU) reviews mergers, consolidations and acquisitions that meet certain asset or turnover thresholds to assess potential anti-competitive effects under Indonesian competition law.
• Financial Services Authority (OJK): The Financial Services Authority (Otoritas Jasa Keuangan, or OJK) regulates M&A involving public companies and financial institutions, including tender offers, disclosure obligations and change-of-control requirements.
• Sector-specific: Depending on the industry, additional approvals may be required from the relevant ministries or regulators, such as the Ministry of Communication and Digital Affairs, Ministry of Energy and Mineral Resources (MoEMR), or Ministry of Transportation.

In principle, business fields are open to foreign investment unless they are specifically restricted or reserved under Presidential Regulation (PR) No. 10 of 2021 regarding Investment Business Fields, as amended by PR No. 49 of 2021, generally known as Indonesia’s Positive List.

Indonesia’s Positive List categorises business fields into the following categories:

• business fields that are fully open to foreign investment – which allow foreign investors to hold up to 100% ownership subject to any applicable sector-specific regulations;
• business fields that are open to foreign investment subject to certain conditions – which may include foreign ownership caps, mandatory partnerships with co-operatives or micro, small and medium-sized enterprises, location requirements or specific licensing obligations; and
• business fields that are reserved for the government or for co-operatives and micro, small and medium-sized enterprises – which are therefore closed to foreign investment.

These restrictions are subject to the Standard Business Classification (Klasifikasi Baku Lapangan Usaha Indonesia, or KBLI) number that corresponds to the proposed business activity, and investors must review the relevant KBLI classification to determine the permitted level of foreign participation.

Business combinations in Indonesia are primarily governed by Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition; Government Regulation (GR) No. 57 of 2010 regarding Merger or Consolidation of Business Entities and Acquisition of Company Shares that May Result in Monopolistic Practices and Unfair Business Competition; and KPPU Regulation No. 3 of 2023 regarding the Assessment of Mergers, Consolidations, or Acquisitions of Shares and/or Assets that May Result in Monopolistic Practices and/or Unfair Business Competition (“KPPUR 3/2023”).

• Mandatory notification requirement: Indonesia applies a post-closing merger notification regime. Pursuant to KPPUR 3/2023, mergers, consolidations, and acquisitions of shares or assets that meet certain thresholds,either (i) combined assets exceeding IDR2.5 trillion, or (ii) combined annual sales exceeding IDR5 trillion, are required to be notified to the KPPU within 30 working days after the transaction becomes legally effective. For transactions involving banks, a higher asset threshold of IDR20 trillion applies. Failure to submit the notification within the required timeframe may result in administrative sanctions, including monetary fines imposed by the KPPU.
• Change of control requirement: A notification obligation arises if the transaction results in a change of control. A change of control generally exists where a party acquires more than 50% of the shares or voting rights in a company. However, a change of control may also arise where a party holds 50% or less of the shares but obtains the ability to exercise decisive influence over management or strategic decisions, for example through governance or veto rights.
• Scope of notifiable transactions: This notification requirement generally applies to transactions involving non-affiliated parties where the parties have assets in Indonesia or generate sales in Indonesia.

In the context of M&A, employment matters in Indonesia are primarily governed by the following:

• Law No. 13 of 2003 regarding Manpower, as amended most recently by Law No. 6 of 2023 regarding Enactment of Government Regulation in Lieu of Law No. 2 of 2022 regarding Job Creation into Law;
• Law No. 40 of 2007 regarding Limited Liability Companies, as amended from time to time (“Company Law”); and
• GR No. 35 of 2021 regarding Fixed-Term Employment Agreements, Outsourcing, Working Hours, and Rest Periods, and Termination of Employment (“GR 35/2021”).

Key Labour Considerations in M&A Transactions

• Mandatory announcement: An employer that is going to carry out an M&A transaction is required to notify its employees and creditors, in writing, at least 30 days before the general meeting of shareholders (GMS) that will approve the proposed corporate action is set to occur, of the proposed transaction as required under Article 127(2) of the Company Law.
• Statutory compensation: Employer and employee each hold the right to not continue their employment relationship due to an M&A as stipulated under Article 154A(1)(a) of the Company Law. In this regard, employees are entitled to statutory compensation under GR 35/2021, which may include severance pay, long-service pay and compensation of rights.

At present, Indonesia does not have a standalone national security review regime generally applicable to acquisitions. However, acquisitions involving sensitive or regulated sectors may still be subject to government or regulator scrutiny under the applicable investment, licensing and sector-specific regulatory framework.

The most significant recent legal development in Indonesia is the reform of merger control under KPPU Regulation No. 3 of 2023. The regulation modernised the notification regime, expressly covering acquisitions of shares and/or assets, clarified the role of change of control, and refined the Indonesian nexus for offshore transactions. In the public company M&A space, OJK Regulation No. 45 of 2024 is also important, particularly in relation to issuer/public company governance, disclosure and go-private/delisting matters.

There have been no fundamental overhauls of Indonesia’s takeover regime in the past 12 months. The takeover rules for public companies continue to be primarily governed by OJK Regulation No. 9/POJK.04/2018 on the Takeover of Public Companies (“OJKR 9/2018”), which regulates change-of-control transactions, mandatory tender offers and disclosure requirements.

In Indonesia, stakebuilding prior to a formal takeover offer is not common. In practice, acquisitions of control of Indonesian public companies are more commonly implemented through negotiated transactions rather than incremental stakebuilding in the market.

In general, the shareholding composition of a company is maintained by the company, and all changes must be reported to the MoL via the AHU system so that the updated shareholding composition is reflected in the official corporate registry.

For public companies, additional disclosure requirements apply. Under OJK Regulation No. 4 of 2024 on Reports on Ownership or Changes in Ownership of Shares in Public Companies, any party that directly or indirectly holds at least 5% of voting shares, or otherwise qualifies as a controlling shareholder, must report its share ownership and any subsequent changes in ownership to the OJK. The report must be submitted within five business days from the date of the transaction.

There are sectors that impose additional disclosure and approval obligations for changes in share ownership, particularly the following sectors:

• Mining sector: For mining companies holding IUP or IUPK licences, changes in share ownership must generally be reported to and approved by the MoEMR, particularly where the transfer results in a change of control. The government may also require Indonesian participants to divest, which further affects share ownership changes.
• Electricity sector: In the electricity sector, share transfers involving companies holding electricity supply licences (IUPTL) may also require notification or approval from the MoEMR, particularly where the transfer affects control of the licence holder.
• Oil and gas sector: For oil and gas upstream activities, a change in participating interests or ownership structure generally requires approval from SKK Migas and the MoEMR, particularly where it affects the rights and obligations under a production sharing contract.

Under the Company Law, the AoA of a limited liability company may require that any transfer of shares or change in shareholding is subject to approval by the shareholders through a GMS. While the Company Law prescribes statutory minimum quorum and voting thresholds, companies are permitted to stipulate more stringent quorum or approval requirements in their AoA. In practice, where the AoA impose higher thresholds, those provisions will prevail.

These requirements may affect the implementation of stakebuilding transactions, particularly where shareholder approval is required and the shareholder base is large or dispersed.

Additional hurdles may arise in regulated sectors, where changes in share ownership may require prior approval from the relevant regulatory authorities.

In the case of public companies, capital markets regulations also apply. In certain circumstances, an exemption from the mandatory tender offer requirement may apply where a new controller acquires shares gradually by purchasing no more than 10% of the shares within any 12-month period, subject to the applicable regulatory conditions.

Indonesian law does not contain a specific regulatory framework governing the use of derivative instruments in M&A transactions, nor does it generally prohibit their use in structuring investments.

In practice, certain financial instruments with derivative characteristics may be used in acquisition structures, particularly where parties seek flexibility in timing or valuation. These may include instruments such as convertible bonds, exchangeable bonds, warrants, medium-term notes or long-term notes, which allow the holder to convert the instrument into shares at a later stage. However, the regulatory implications of such instruments are typically assessed based on their legal effect. Where the instrument ultimately results in the acquisition of shares or a change of control, the relevant corporate, capital markets or competition law requirements may apply.

Indonesian law does not generally impose a standalone filing or reporting obligation merely because an acquisition structure involves derivative or derivative-like instruments. Instead, the regulatory analysis typically depends on the legal effect of the instrument, in particular whether it results in an acquisition of shares, a change of control, or a disclosure-triggering event under the applicable capital markets rules.

From a competition law perspective, merger control issues would generally arise only when the exercise, conversion or settlement of the relevant instrument results in an acquisition of shares or assets that meets the applicable thresholds and gives rise to control or the relevant competitive effect under the KPPU framework.

From a securities law perspective, where the relevant instrument is issued by or converted into securities of a public company, disclosure and/or filing requirements may arise under the applicable OJK capital markets regime, including in relation to capital increases, convertible instruments and changes in share ownership following conversion.

Indonesian law does not generally require shareholders acquiring shares in a private company to disclose the purpose of their acquisition or their intentions regarding control of the company.

In the context of public companies, disclosure obligations arise primarily under the capital markets transparency regime administered by the OJK. Under OJK Regulation No. 4 of 2024 on Reports of Ownership or Changes in Ownership of Shares in Public Companies, any party that directly or indirectly holds at least 5% of the voting shares of a public company must report such ownership to the OJK and disclose it to the public. Any subsequent change in that ownership must also be reported within the prescribed reporting period. These obligations apply to both direct and indirect ownership structures and extend to controlling shareholders.

These rules focus on transparency of ownership rather than disclosure of intentions. Indonesian law does not impose a general obligation requiring shareholders to disclose the purpose of their acquisition or their strategic intentions regarding control, except in specific transactional contexts such as tender offers.

Disclosure obligations in Indonesia differ between private companies and public companies.

For private companies, the Company Law requires the prospective acquirer to publish an announcement of the proposed acquisition in at least one nationally circulated Indonesian daily newspaper no later than 30 days before the GMS approving the transaction. This announcement forms part of the statutory corporate procedure for acquisitions, mergers and consolidations and serves to notify creditors and other stakeholders.

For public companies, disclosure obligations are primarily governed by capital markets regulations administered by the OJK. Where a transaction constitutes material information, the issuer must disclose the information to the public once the information becomes material or confidentiality can no longer be maintained. If the acquisition results in a change of control, the new controlling shareholder must subsequently conduct a mandatory tender offer in accordance with the applicable OJK regulations.

Indonesian capital markets regulations require issuers and public companies to disclose material information that may affect securities prices or investment decisions. The timing of such disclosure is therefore determined primarily by regulatory requirements.

In practice, however, parties to acquisition transactions typically manage disclosure carefully during the negotiation phase. Transactions are often kept confidential while negotiations remain preliminary or non-binding, on the basis that a material event triggering disclosure has not yet occurred.

Accordingly, while market participants may seek to preserve confidentiality during the early stages of negotiations, the timing of disclosure ultimately remains subject to the applicable capital markets regulations once the transaction becomes material.

In Indonesia, legal due diligence in a negotiated business combination typically involves a comprehensive review of the target company’s legal, regulatory and operational status to identify potential risks and liabilities. The review generally covers key areas such as corporate documents, shareholding structure, material contracts, financing arrangements, employment matters, licences and permits, regulatory compliance, ongoing litigation or disputes, asset ownership, and any restrictions on the transfer of shares.

For companies operating in regulated sectors, the scope of due diligence is usually expanded to address sector-specific regulatory requirements. This may include verification of compliance with licensing regimes, foreign ownership restrictions under the Positive List, reporting obligations to sectoral regulators, and other regulatory approvals required for a change in control.

Depending on the nature of the business, due diligence may also consider ESG compliance, particularly in sectors such as natural resources, infrastructure and energy, where regulatory scrutiny and investor expectations are increasingly significant.

Indonesian law does not specifically regulate standstill or exclusivity arrangements in M&A transactions. Such provisions are generally governed by the principle of freedom of contract under Indonesian civil law.

In practice, exclusivity undertakings are commonly requested by prospective buyers at an early stage of the transaction, particularly during the negotiation of a term sheet or letter of intent and the due diligence process. These provisions typically prevent the seller from engaging with competing bidders for an agreed period to provide deal certainty. Standstill arrangements may also be used in certain transactions, particularly involving public companies, where a potential acquirer agrees not to increase its shareholding during the negotiation period. The duration of such arrangements is typically subject to negotiation between the parties.

In Indonesia, tender offers for public companies are primarily governed by OJKR 9/2018 and OJK Regulation No. 54/POJK.04/2015 on Voluntary Tender Offers (“OJKR 54/2015”). The terms and conditions of a tender offer are generally disclosed through the tender offer statement and public announcement submitted to and reviewed by the OJK.

In practice, tender offer terms are not typically documented in a definitive agreement with the target company. Instead, the legally operative terms are those disclosed in the tender offer documentation in accordance with the applicable OJK regulations. Mandatory tender offers arise automatically following a change of control and must follow the prescribed regulatory framework, while voluntary tender offers may include certain conditions, subject to OJK review.

The timeframe for completing an acquisition in Indonesia depends on the size, complexity and regulatory profile of the transaction. In a typical private M&A transaction, the process generally ranges from three to six months, including negotiation of key terms, due diligence, preparation and execution of transaction documents, satisfaction of conditions precedent and closing. The process may take longer where sector-specific approvals, foreign investment considerations or complex restructuring steps are involved.

In the case of public company transactions, the overall timeline is generally longer due to the additional regulatory and procedural requirements, including disclosure obligations, takeover-related compliance and, where applicable, the mandatory tender offer process following a change of control.

In Indonesia, the mandatory tender offer regime applies to acquisitions of publicly listed companies that result in a change of control. Under the applicable capital markets regulations, a party that becomes the new controlling shareholder of a public company is generally required to conduct a mandatory tender offer to acquire the remaining shares held by public shareholders.

A change of control is typically presumed where a party acquires more than 50% of the voting shares of a company, although a change of control may also arise where a shareholder obtains the ability to determine management or strategic decisions, even with a lower shareholding.

Certain shareholders may be excluded from the mandatory tender offer process under the applicable OJK regulations, including parties acting in concert with the new controller and other controlling shareholders.

In Indonesia, cash consideration is the most commonly used form of payment in M&A transactions, particularly in private acquisitions. Share-based consideration or share swaps are less common but may arise in group restructurings or transactions involving listed companies. In public company transactions, cash is generally preferred, particularly where a change of control triggers a mandatory tender offer under capital markets regulations.

To address valuation uncertainty, parties commonly use mechanisms such as earn-outs, deferred consideration and escrow arrangements.

In Indonesia, the acquisition of a private company does not trigger any obligation to conduct a takeover offer. By contrast, where an acquisition results in a change of control of a public company, the new controlling shareholder must conduct a mandatory tender offer in accordance with OJKR 9/2018.

Mandatory tender offers must be conducted on prescribed terms and generally cannot be made subject to additional conditions, as the regulatory framework is designed to ensure equal treatment of minority shareholders.

Voluntary tender offers are governed by OJKR 542015. In this context, the offeror may include certain conditions, although the terms of the offer remain subject to review and supervision by the OJK.

Under Indonesian capital markets regulations, a mandatory tender offer may not include a minimum acceptance threshold. The purpose of the offer is to provide the new controlling shareholder with an opportunity to acquire the remaining shares held by minority shareholders following a change of control. In practice, attention is often given instead to the maximum number of shares that may be acquired, particularly where foreign ownership limits or sector-specific restrictions apply.

By contrast, voluntary tender offers allow greater flexibility. The bidder may include conditions in the offer, including a minimum acceptance threshold, subject to review by the OJK.

In private M&A transactions in Indonesia, a business combination may be made conditional on the bidder obtaining financing, subject to the parties’ contractual agreement.

In public company transactions, however, tender offer regulations require the bidder to demonstrate the availability of funds before launching the offer. As a result, tender offers are generally not structured as conditional on financing in practice.

Acquisition financing remains common, although transactions in certain regulated sectors may be subject to additional prudential or regulatory requirements.

In Indonesia, bidders may seek contractual deal protection measures such as exclusivity, non-solicitation undertakings and, in some cases, match rights. Break-up fees are not prohibited but remain relatively uncommon in domestic transactions and are more frequently seen in cross-border deals. Mechanisms such as force-the-vote provisions are rarely used, as key corporate actions must ultimately be approved by shareholders through the GMS under the Company Law. In public company transactions, such arrangements must also comply with OJK regulations designed to protect minority shareholders.

There have been no significant regulatory changes directly affecting interim periods in recent years. However, transaction timelines may be influenced by regulatory approvals or notifications to authorities such as the KPPU, the OJK and relevant administrative systems.

Where a bidder does not acquire full ownership, additional governance rights are typically agreed in a shareholders’ agreement. These commonly include the right to appoint directors or commissioners, veto rights over certain strategic matters, enhanced information rights, and transfer restrictions such as rights of first refusal, tag-along and drag-along rights.

Parties may also agree on pre-emptive rights for new share issuances and approval rights over key corporate actions, such as amendments to the AoA or material transactions. Such rights are contractual in nature and must remain consistent with the Company Law and the authority of the company’s corporate bodies.

Under the Company Law, a shareholder is permitted to grant a written power of attorney to another person to attend and vote on their behalf at a GMS, subject to any limitations set out in the company’s AoA and applicable regulations, particularly for public companies.

Indonesian law does not provide a statutory squeeze-out or short-form merger mechanism allowing a bidder to compel minority shareholders to sell their shares after a tender offer. Where a bidder seeks to acquire the remaining shares, full ownership is typically achieved through negotiated share purchases or subsequent corporate actions, such as a merger or, in the case of public companies, a going-private or delisting transaction. These processes require compliance with the Company Law and applicable OJK regulations, including shareholder approval and the protection of minority shareholder rights, such as appraisal rights in certain circumstances.

In practice, certain transactions may include a pre-closing condition requiring an irrevocable undertaking from the principal shareholder of the target company to approve the transaction at the GMS. Such undertakings are commonly used to provide greater certainty that the necessary shareholder approval will be obtained.

In Indonesia, a bid becomes public through the announcement of a tender offer in accordance with the applicable OJK regulations.

In the case of a mandatory tender offer which arises following a change of control of a public company, the new controlling shareholder must announce the tender offer to the public and submit the tender offer statement to the OJK. The announcement typically includes key information such as the identity of the bidder, the offer price, the number of shares subject to the offer and the offer period.

A voluntary tender offer is initiated at the bidder’s discretion and becomes public once the tender offer announcement is made and the relevant documents are submitted to the OJK.

In both cases, the process is subject to OJK supervision to ensure transparency and compliance with capital market regulations.

Under the Company Law, the issuance of new shares generally requires approval from the GMS. Where the share issuance forms part of a transaction resulting in a change of control, the proposed acquisition must also be announced in at least one nationally circulated Indonesian newspaper prior to the GMS. This announcement serves to notify creditors and other stakeholders as part of the statutory transparency requirements for control transactions.

In Indonesian public company transactions, bidders are generally required to disclose their financial capability and the source of funds in the relevant tender offer documentation. However, there is no general requirement for bidders to include full pro forma financial statements solely for purposes of a takeover offer. Pro forma financial information may nevertheless be required in other contexts, such as mergers or material corporate actions, depending on the nature of the transaction and the applicable OJK requirements.

Where financial statements are required, they are generally expected to be prepared in accordance with Indonesian Financial Accounting Standards (SAK/PSAK), which are closely aligned with, and in many respects converged with, IFRS. In practice, financial statements used for regulated capital markets purposes are typically audited by a public accountant registered with the OJK.

In private M&A transactions in Indonesia, there is generally no requirement to publicly disclose the full transaction documents. Agreements such as share purchase agreements typically remain confidential between the parties, subject only to limited reporting obligations to regulators or shareholders.

In public company transactions, disclosure obligations are more extensive under OJK regulations. While the full agreements are not usually required to be published, material information must be disclosed through public announcements and regulatory filings. In certain transactions, such as material or affiliated transactions, additional disclosures such as summaries, fairness opinions and supporting reports may also be required.

Under the Company Law, directors must perform their duties in good faith, with due care and full responsibility for the benefit of the company. In the context of a business combination, the board of directors is responsible for ensuring that the transaction is commercially sound, legally compliant and aligned with the company’s interests.

Directors’ duties are owed to the company as a legal entity rather than directly to shareholders or other stakeholders, although the broader interests of the company may involve consideration of various stakeholders. The board of commissioners oversees the board of directors and ensures that these duties are properly discharged.

The Company Law does not require boards of directors to establish special or ad hoc committees in business combinations. However, such committees are sometimes formed in public company transactions as a matter of good corporate governance, particularly where the transaction involves affiliated parties or potential conflicts of interest.

Directors with a conflict of interest must disclose the conflict and abstain from participating in the relevant deliberations and decisions. In these circumstances, companies may establish committees composed of independent members to review the transaction and support regulatory compliance.

Indonesian law does not expressly codify the “business judgement rule” as a standalone doctrine. However, similar principles are reflected in the Company Law, which provides that directors must act in good faith, with due care and in the best interests of the company. In practice, courts generally defer to the board’s commercial judgement and do not second-guess business decisions solely because they later prove unsuccessful. Judicial review typically focuses on whether directors complied with their fiduciary duties, followed proper procedures and avoided conflicts of interest or bad faith.

Directors may nevertheless be held personally liable if they are found to have acted negligently, in bad faith or in violation of applicable laws.

In business combination transactions in Indonesia, directors commonly seek independent external advice to support their decision-making. This typically includes legal advice from external counsel and financial analysis from investment banks or financial advisers. In public company transactions, directors may also obtain a fairness opinion from an independent appraiser registered with the OJK, particularly in transactions involving potential conflicts of interest or material corporate actions. Additional advice from tax or industry specialists may also be sought where relevant.

Conflicts of interest involving directors, commissioners, shareholders or advisers may be subject to judicial or regulatory scrutiny in Indonesia. Under the Company Law, directors and commissioners must disclose any conflict of interest and may be held personally liable if the company suffers losses due to bad faith, negligence or undisclosed conflicts. The Company Law also requires the company to maintain a special register recording share ownership held by directors and commissioners and their immediate family members to promote transparency.

For public companies, conflict-of-interest transactions are subject to stricter regulation under OJK rules, which may require enhanced disclosure, fairness opinions and, in certain cases, approval from independent shareholders.

Hostile tender offers are not expressly prohibited under Indonesian law and may theoretically be pursued through a voluntary tender offer under OJKR 54/2015, which allows a bidder to make an offer directly to the shareholders of a public company.

In practice, however, hostile takeovers are extremely rare. Most Indonesian public companies have concentrated ownership structures, with founding families or large conglomerates holding controlling stakes. As a result, acquisitions without the support of the controlling shareholder are generally difficult to execute.

In Indonesia, the use of defensive measures by directors in takeover situations is generally limited. The board does not have broad authority to unilaterally block a takeover, as significant corporate actions, such as the issuance of new shares, material transactions or changes to the capital structure, typically require approval from the GMS under the Company Law and the company’s AoA.

As a result, shareholder approval and ownership structure play a key role in determining the outcome of takeover attempts.

Defensive measures available to the board of directors in Indonesia are generally limited. The board does not have unilateral defensive tools such as poison pills. Instead, any defensive action typically requires approval from the GMS.

In practice, defensive measures may include proposing corporate actions such as a rights issue, the issuance of new shares, or a private placement to a friendly investor (a “white knight”), which may affect the company’s control structure. More broadly, takeover outcomes often depend on the support of controlling shareholders rather than tactical board defences.

In adopting defensive measures, the board of directors must act in good faith and with due care in accordance with the Company Law. Any action that may potentially impede a takeover must be justifiable as an objective measure taken to protect the interests of the company.

If such actions lack a reasonable basis or result in losses to the company, the directors may be held personally liable. Accordingly, the use of defensive measures is constrained by the duty of care and must adhere to principles of accountability.

In Indonesia, the board of directors generally cannot unilaterally prevent a business combination. Strategic transactions such as mergers or acquisitions require approval from the GMS under the Company Law.

The board may evaluate the proposed transaction and provide recommendations, particularly if it considers that the transaction may not be in the best interests of the company. However, once the required legal procedures and shareholder approvals are satisfied, the board does not have the authority to block the transaction.

Litigation in connection with M&A transactions in Indonesia is relatively uncommon, particularly in private deals. Most disputes are typically resolved through renegotiation, commercial adjustments or termination of the transaction prior to closing, without escalating into court proceedings. In cross-border transactions, parties may also rely on arbitration or other alternative dispute resolution mechanisms.

Where disputes arise, they most commonly occur between signing and closing, particularly in relation to the satisfaction of conditions precedent or changes in circumstances affecting the transaction. Post-closing disputes may also occur, typically involving breaches of representations and warranties, purchase price adjustments or indemnity claims.

The COVID-19 pandemic led to the termination or renegotiation of a number of pending M&A transactions due to changing economic conditions. Most cancellations were resolved commercially rather than through litigation.

The pandemic also increased attention to material adverse effect or material adverse change clauses. Since then, such clauses are typically drafted with greater clarity, including more detailed provisions on the scope of triggering events, long-stop dates and the conduct of the target company before closing.

Shareholder activism has not yet emerged as a dominant force in Indonesia, largely due to the concentrated ownership structures of most companies, where controlling shareholders typically hold a majority stake. As a result, strategic decisions such as mergers and acquisitions are generally determined through majority voting at the GMS.

Nevertheless, minority shareholders in public companies may raise concerns relating to corporate governance, transparency, conflicts of interest, affiliated transactions and transaction fairness. Minority shareholders may also exercise appraisal rights or pursue legal action where there are allegations of governance breaches.

While shareholder activism rarely determines the outcome of M&A transactions, it may generate public scrutiny or regulatory attention, particularly in public companies.

In Indonesia, shareholder activists generally do not play a significant role in encouraging companies to pursue mergers, spin-offs or major divestitures. Strategic decisions of this nature are typically initiated by management and controlling shareholders.

In practice, corporate restructurings such as spin-offs or divestitures are more commonly driven by regulatory requirements, business strategy or ownership restrictions rather than activist shareholder campaigns.

Interference by activist shareholders in announced transactions is relatively uncommon. Due to concentrated ownership structures, minority shareholders typically lack sufficient voting power to block a transaction once the required quorum and majority approval at the GMS have been obtained.