[Last updated: 1 June 2022, unless otherwise noted]

4.1 Triggering a "Takeover"

Under OJK Regulation No. 9/POJK.04/2018 dated 27 July 2018 on Takeovers of Public Companies, ("Regulation 9/2018"), a "takeover" of a public company is defined as an action directly or indirectly causing changes to the controller(s) of the public company. The controller of a public company is defined as the party(ies) that:

• owns more than 50% of the total issued and paid up share capital, directly or indirectly; or
• has the ability to directly or indirectly determine, in any manner whatsoever, the management and/or the policies of the public company.

Regulation 9/2018 provides examples of documents or information evidencing control of the management of public companies. These documents or information include:

• an agreement between the shareholders that provides a shareholder with more than 50% of the voting rights in the public company
• a document that provides, or information that shows, the authority of a shareholder to regulate the financial and operational policies of the public company based on the articles of association or an agreement
• a document that provides, or information that shows, the authority of a shareholder to appoint or dismiss most members of the Board of Directors and the Board of Commissioners
• a document that provides, or information that shows, that a shareholder has the majority voting rights in the Board of Directors and Board of Commissioners meetings, and hence controls the public company
• a document that provides, or information that shows, other authority that indicates control over the public company

Any actions that result in a change in the controller(s) of a public company will trigger a mandatory tender offer. An increase in an investor's shareholding, where the investor is already considered to be in control of a public company, does not constitute a change in control requiring a tender offer to be made (please see below).

4.2 Takeover to be followed by mandatory tender offer ("MTO")

Unless the takeover falls under an exemption, it must be followed by an MTO for all of the remaining shares, except for the:

• shares owned by the selling shareholder(s);
• shares owned by another party(ies) that the acquirer has offered to purchase under the same terms and conditions;
• shares owned by other parties that are also undertaking a (different) tender offer on the shares of the  target company (a competing tender offer);
• shares owned by the principal shareholder(s), i.e., shareholders directly or indirectly holding 20% shares of the public company; and
• shares owned by other controlling shareholders of the target company.

The MTO process (submission of MTO statement to OJK, information disclosure, etc.) must start within two working days after the takeover announcement and must be implemented in accordance with Regulation 9/2018. The timeline for an MTO is as illustrated below.

4.3 Requirement to divest

Under Regulation 9/2018, if, as the result of the MTO being made after the takeover, the new controller owns more than 80% of the total paid-up capital of the target company, the new controller must, within two years after the completion of the MTO, transfer some of its shares to the public so that at least 20% of the total paid-up capital of the target company are owned by the public.

Regulation 9/2018 also stipulates that if, as a result of the takeover, the new controller owns more than 80% of the total paid-up capital of the target company, the new controller must, within two years after the completion of the MTO, transfer to the public at least the same amount of shares as it purchased during the MTO so that these shares are owned by the public.

The distinction between these two scenarios is that, in the first, the new controller does not obtain more than 80% in the initial takeover. In the latter scenario, the new controller does obtain more than 80% in the initial takeover.

4.4 Voluntary tender offers

A tender offer could be made without acquiring an initial controlling stake in a public company. Under OJK Regulation No. 54/POJK.04/2015 on Voluntary Tender Offers, a voluntary tender offer ("VTO") is defined as an offer made through the mass media to acquire equity securities through the purchase or exchange of other securities. Aside for acquiring shares, this VTO provision is also relevant for a "go private" process, which is discussed below.