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A Merger Agreement is a legally binding contract that spells out how two or more companies will combine into a single entity. In Indonesia, these agreements must follow the guidelines set by the OJK (Financial Services Authority) and comply with Law No. 40/2007 on Limited Liability Companies.

The agreement details crucial elements like share valuations, asset transfers, employee retention policies, and post-merger management structure. It also addresses mandatory requirements under Indonesian competition law, including obtaining clearance from the KPPU (Business Competition Supervisory Commission) when the merged companies' combined assets or sales exceed specified thresholds.

Consider using a Merger Agreement when your company plans to combine with another business through acquisition or consolidation. This formal agreement becomes essential during key moments like market expansion, industry consolidation, or when seeking operational efficiency through combined resources.

In Indonesia, the agreement is particularly crucial when dealing with regulated sectors like banking or telecommunications, where OJK approval is mandatory. It's also vital for transactions involving foreign investment, publicly listed companies, or when total combined assets exceed Rp 2.5 trillion - triggering KPPU notification requirements. Having this agreement in place early helps prevent disputes and ensures smooth regulatory compliance.

• Standard Merger Agreement: Used for straightforward business combinations, focusing on basic terms, asset valuations, and shareholder approvals
• Cross-Border Merger Agreement: Contains additional provisions for international transactions, including currency considerations and dual-jurisdiction compliance
• Industry-Specific Agreement: Tailored for regulated sectors like banking or telecommunications, incorporating OJK-specific requirements
• Simplified Merger Agreement: Designed for small-medium enterprise mergers with streamlined terms and documentation
• Conditional Merger Agreement: Includes specific performance targets or regulatory approval conditions before the merger takes effect

• Board of Directors: Initiate and negotiate key merger terms, sign the agreement on behalf of their respective companies
• Corporate Legal Teams: Draft and review Merger Agreement terms, ensure compliance with Indonesian company law
• External Law Firms: Provide specialized legal expertise, particularly for complex cross-border mergers
• Shareholders: Review and approve the merger terms through general meetings as required by OJK regulations
• Regulatory Bodies: KPPU and OJK officials review and approve the agreement when required by Indonesian law
• Financial Advisors: Assist in valuation, due diligence, and financial terms structuring

• Company Details: Gather complete legal names, registration numbers, and addresses of all merging entities
• Financial Information: Compile asset valuations, share prices, and detailed transaction structures
• Due Diligence: Complete thorough review of both companies' legal, financial, and operational status
• Regulatory Requirements: Check OJK and KPPU thresholds for mandatory approvals
• Stakeholder Approvals: Document required board resolutions and shareholder authorizations
• Integration Plan: Outline post-merger management structure, employee retention, and operational integration
• Timeline: Set realistic completion dates considering regulatory review periods

• Party Information: Complete legal names, registration numbers, and authorized representatives of merging entities
• Transaction Structure: Detailed description of merger type, share exchange ratios, and consideration
• Assets and Liabilities: Comprehensive list of transferred properties, obligations, and contracts
• Employee Provisions: Terms for workforce transition and employment continuity
• Regulatory Compliance: References to OJK and KPPU requirements, necessary approvals
• Conditions Precedent: Required shareholder approvals, regulatory clearances, third-party consents
• Governing Law: Explicit statement of Indonesian law application and dispute resolution mechanism
• Closing Mechanics: Detailed steps for completion and post-merger integration

A Merger Agreement differs significantly from a Acquisition Agreement in several key aspects, though both involve combining business entities. Understanding these differences is crucial for choosing the right document under Indonesian law.

• Legal Structure: Merger Agreements result in two companies becoming one unified entity, while Acquisition Agreements maintain the target company's separate legal existence under new ownership
• Regulatory Requirements: Mergers typically require more extensive OJK and KPPU oversight, especially regarding share consolidation and market competition
• Employee Impact: Merger Agreements must address complete workforce integration, while Acquisition Agreements often maintain existing employment structures
• Asset Treatment: Mergers automatically transfer all assets and liabilities to the surviving entity, while acquisitions allow for selective asset transfer and liability assumption
• Shareholder Rights: Merger Agreements typically involve share exchanges or consolidation, while Acquisition Agreements focus on purchase and sale of ownership interests