Under a new policy of the Business Competition Supervisory Commission (KPPU), parties will have to follow tighter rules on what documents must be submitted when notifying KPPU of mergers, acquisitions and consolidations, and will have to abide by a specific deadline for submitting any remaining documents.
Minimum Required Documents for the Initial Submission for the Acquisition Notification
When submitting an acquisition notification to KPPU, theoretically, the acquiring company is required to submit a notification form and the following documents within 30 working days after the acquisition becomes effectively legal and valid (Submission Period):
- acquisition summary
- articles of associations of the acquiring company and target company
- financial statements of the parties who conduct the transaction for the last three years
- company profiles of the acquiring company and target company
- change of ownership scheme of the acquiring company and target company before and after the transaction
- documents evidencing that the transaction is complete
- business plan of the parties who conduct the transaction
But in practice, under its previous policy, KPPU allowed companies to submit only the notification form before the end of the Submission Period (the other documents could be submitted later). However, in April, KPPU implemented a policy requiring more documents. Under this new policy, the companies cannot only submit a notification form but they are required to submit the following minimum required documents within the Submission Period:
- acquisition summary
- the last three years' financial statements of the parties who conduct the transaction
- change of ownership scheme of the acquiring company and target company between before and after the transaction
- documents evidencing that the transaction is completed
It remains to be seen how KPPU will enforce this policy given that the consequences if companies fail to submit the above documents within the Submission Period are not specified. However, it is possible that the KPPU would refuse to accept the filing, thus causing the notifying party to be regarded as failing to submit its notification by the deadline. The penalty for late filing is IDR 1 billion per day up to a maximum of IDR 25 billion.
Specific Deadline to Submit the Remaining Documents
In addition, unlike under its previous policy, KPPU now sets out a specific deadline for companies to submit the remaining required documents. The deadline is written on the notification submission receipt provided by KPPU. Under this new policy, it is possible to ask for an extension to this deadline, although given that the policy is still new, we do not know how this extension should work in practice.
Actions to Consider
Given the above policies, businesses that are required to submit merger filing (the acquiring party in the case of an acquisition) are advised to ensure that the minimum required documents are available well before the end of the Submission Period.
We will keep monitoring how the new policies are being implemented.