Merger is a legal action conducted by one or more company to merge with another existing company causing the assets and liabilities of the merging company transferred by law to the surviving company. Moreover, the legal entity status of the merging company will be ended by law. In relation to investment activity, the Government through the Regulation of Chairman of BKPM Number12 of 2009 (“Perka BKPM 12/2009”) required the surviving investment company to acquire the License for Merger on Investment Company before it can re-implement the production activity/commercial operation of the merger company
Merger on the Investment Companies
Based on Article 26 paragraph 1 of Perka BKPM 12/2009, merger could be done:
- Between foreign investment companies;
- Between domestic investment companies;
- Between foreign investment company and domestic investment company.
Licensing on the Merger of Investment Company
If the merging company does not have business activity that is still under construction, then the surviving company shall acquire the License for Merger on Investment Company before conducting the production activity/ commercial operation.
In the case that the merging company has more than 1 (one) business activity and one of the business activity is still under construction, then upon the activity that has acquired Business License, the surviving company shall propose the License for Merger on Investment Company. While upon the under constructed activity, there will be two possibilities, as follows:
- If the activity is in the surviving company, then it could simply use the Principle License/ Extension Principle License that has been already acquired by the surviving company in implementing its activity;
- If the activity is in the merging company, then in the implementation of the activity, the surviving company shall propose an application for Principle License/ Extension Principle License.
For the activity that is still under construction but does not require fiscal facilities, the surviving company could conduct a Registration or directly propose an application for Business License/ Extension Business License when it’s ready to produce/commercially operated
Besides referring to Perka BKPM 12/2009 in the merger of investment company, merging company shall also comply with the provisions of the legislation in relation to the prohibition of monopoly practice and unfair business competition as well as the Law regarding Limited Liability Company No. 40 year 2007.