Indonesia

M&A deals in Indonesia can be structured in one of the following six ways:

• acquisition of shares from existing shareholders;
• subscription for new shares;
• merger of companies;
• consolidation of companies;
• spin-off of companies; or
• acquisition of assets.

Indonesian law distinguishes between share acquisitions, asset acquisitions, mergers, consolidations, and spin-offs. Specific provisions within Law No. 40 of 2007 on Limited Liability Companies, as last amended by Law No. 6 of 2023 on the Ratification of Government Regulation in lieu of Law No. 2 of 2022 on Job Creation as Law (“Company Law”), also govern the acquisition of control of a private company.

Acquiring assets, while possible, is less common unless there is a strong business reason for it, such as the buyer wishing to selectively acquire assets or avoid liabilities associated with the target business. Asset acquisitions tend to be more complex, costly, time consuming, and less tax-efficient compared to share acquisitions. If an asset acquisition cannot be avoided, careful planning is necessary to address the formalities and timing of transferring assets and obtaining the operational licences needed by the target business.

Indonesia is currently one of the most active M&A markets in Southeast Asia. Deal activity is supported by stable GDP growth of around 5% per year, a large and young population, and a continued policy focus on investment facilitation and the downstreaming of natural resources.

Technology and the broader digital economy continue to be major drivers of M&A activity, particularly in the e-commerce, fintech, logistics, and digital infrastructure sectors. Financial services, including banks, multifinance companies, insurance, and digital finance, also account for a significant share of transactions, supported by capital and governance reforms that encourage consolidation. Consumer and retail assets, infrastructure, and energy-related businesses round out the core sectors attracting deal activity.

The investor landscape spans large domestic business groups, state-owned enterprises, regional strategic players, and international private equity and venture capital funds. Regulatory reforms introduced through Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021 (“Positive Investment List”), have opened up many sectors to full foreign ownership. In parallel, enhancements to risk-based licensing through the Online Single Submission – Risk-Based Approach (OSS-RBA) system have streamlined post-closing approvals. Transactions range from multibillion-dollar strategic acquisitions to mid-market private deals.

Over the past 12 – 24 months, the most significant trend in Indonesia has been regulatory tightening and modernisation across key regimes, including competition law, capital markets, financial services, investment licensing, and data protection. These regulatory developments directly influence how deals are structured and executed.

In the area of merger control, the latest regulation issued by the Indonesia Competition Commission (KPPU) has refined the post-closing notification regime. Filing thresholds are now more clearly tied to Indonesian assets and turnover, and notification is required for mergers, share acquisitions, consolidations, and certain asset acquisitions that create or enhance control and have a sufficient Indonesian nexus. The regulation also clarifies notification timing and procedural requirements, making the review process more predictable for transaction parties.

Under KPPU Regulation No. 3 of 2023, a merger filing to the KPPU is required when certain tests are cumulatively satisfied, as follows:

• Threshold test. The threshold test mandates a post-merger filing if the transaction meets one of the following conditions:
  • the combined asset value of the involved parties in Indonesia exceeds IDR 2.5 trillion (about USD 160 million); or
  • the combined sales or turnover value of the parties in Indonesia exceeds IDR 5 trillion (about USD 321 million).
• Control test. This test specifies that a post-merger fil­ing is necessary if the merged or surviving entity:
  • holds more than 50% of shares or voting rights in the company; or
  • holds 50% or less of shares or voting rights but has the capacity to influence the company’s management and/or policies.
• Affiliate exemption. Transactions between affiliated entities are exempt from the merger filing obligation in Indonesia. An affiliated transaction refers to any transaction:
  • between a company and its direct or indirect controller or controlled subsidiary;
  • between two companies under, either directly or indirectly, the common control of the same controller; or
  • between a company and its ultimate controller.
• Local nexus test. This test provides that a transaction is notifiable to the KPPU only if it is conducted between parties that have assets and/or turnover, whether directly or indirectly, in Indonesia.

Accordingly, where the relevant thresholds are met, the parties must submit a notification to the KPPU no later than 30 business days after the transaction becomes legally effective (effective juridically).

In order to file the notification, a filing fee is payable, calculated at 0.004% of either the Indonesian asset value or the Indonesian sales/turnover value of the buyer and the target on a combined, consolidated basis, whichever is lower. The filing fee is capped at a maximum of IDR 150 million (USD 8,900) and must be paid before the notification can be submitted and deemed complete.

At the same time, ongoing refinements to the risk-based licensing framework under the OSS-RBA system, together with the implementation of the Personal Data Protection Law (“PDP Law”), have introduced new compliance considerations in corporate transactions.

These developments are reflected in market behaviour. Technology and digital economy deals remain active but are now subject to greater scrutiny, particularly with respect to profitability and regulatory alignment. At the same time, M&A activity in the financial services sector has accelerated as institutions respond to increasing capital and compliance expectations. There has also been an increase in restructuring-led and opportunistic acquisitions in sectors under financial pressure, illustrating a more disciplined and risk-aware approach to dealmaking.

Assuming Indonesia maintains its current growth trajectory of around 5% per year and continues to implement incremental regulatory reforms, the M&A market is likely to show steady, selective expansion rather than explosive growth. Indonesia is also expected to remain among the top M&A destinations in the Association of Southeast Asian Nations (ASEAN) by deal value, supported by continued deal momentum through 2024 and into 2025, particularly in sectors that have benefitted from sustained investor interest supported by a maturing and increasingly active technology landscape.

Looking ahead, the next 12–24 months are likely to see a healthy M&A pipeline, characterised by increased regulator-driven consolidation in the financial services sector, continued but more selective deal activity in technology and digital services, increased attention to compliance with competition, data protection and consumer protection regimes, and a gradual rise in inbound strategic and private equity transactions targeting both domestic and regional businesses anchored in Indonesia.

The principal legal framework for most M&A transactions in Indonesia is set out in the Company Law. If the target company is publicly traded, the transaction is also subject to Law No. 8 of 1995 on Capital Markets (“Capital Markets Law”), together with relevant regulations issued by the Financial Services Authority (OJK) and the rules of the Indonesia Stock Exchange (IDX) for listed companies.

M&A transactions in Indonesia must also comply with the restrictions outlined in the Positive Investment List and industry-specific regulations. However, these restrictions typically do not apply to public companies.

In the Indonesian M&A landscape, cash is the predominant form of consideration, particularly for direct acquisitions and new rights subscrip­tions in public companies. In acquisitions involving the subscription of newly issued shares by non-public target companies, the consideration must be either cash or in kind. For direct acquisitions from existing sharehold­ers, the consideration can take the form of either cash or shares in another company.

Common mechanisms used to bridge value gaps include escrow agreements, holdbacks of a certain per­centage of the deal, and the carving out of non-performing loans.

Non-cash consideration is generally allowed in Indonesian M&A transactions, particularly in the context of private companies where shares may be issued for in-kind contributions or exchanged through share-for-share structures, subject to proper valuation, corporate approvals, and any sector-specific requirements.

In contrast, practical limitations apply in transactions involving public companies. Rights issues and many capital markets transactions are typically required to be settled in cash, and mandatory tender offers (MTOs) are almost always structured as cash offers to ensure equal treatment and liquidity for minority shareholders.

While there is no broad prohibition on the use of non-cash consideration, Company Law requirements on the full payment of shares and capital integrity, along with prudential and regulatory standards in certain sectors, can restrict the use of illiquid or speculative instruments as transaction currency.

Due diligence can be challenging in Indonesia because many companies do not maintain adequate legal records. Public information on Indonesian companies is also limited, and searches of public sources, such as registries, can be complicated and often yield unreliable results. For example, online litigation searches through the District Court Case Tracker Information System often provide outdated information.

Typically, investors aim to conduct a thorough due diligence exercise before making any investment. The due diligence process generally covers:

• The proper incorporation of the company and its subsidiaries, including their legal form.
• Insolvency, tax matters, pensions, insurance, intellectual property, information technology, accounts, assets, regulatory compliance, environmental issues, and litigation.

In most jurisdictions, warranty and indemnity provisions or price adjustment mechanisms in negotiated acquisition documentation are not substitutes for due diligence. This is particularly true in Indonesia, where enforcing claims can be slow and difficult.

Warranty and indemnity insurance is not yet standard practice in the Indonesian M&A market, but its use has been increasing, particularly in mid- to large-cap transactions involving international sponsors or cross-border elements. In such deals, both buyers and sellers are often already familiar with transactional risk insurance from other jurisdictions, and regional or global insurers have shown a willingness to underwrite Indonesian risks.

By contrast, in purely domestic and smaller-scale transactions, parties more commonly continue to rely on traditional contractual protections, such as warranties, indemnities, and price adjustment mechanisms, without the use of insurance.

Indonesia does not have a single, overarching “national security screening” regime similar to some other countries. Instead, foreign buyers are subject to foreign investment rules, capital requirements, and sector-specific approvals, which together function as a control framework.

The Positive Investment List sets foreign ownership limits and conditions by business line. Many sectors are now fully open to 100% foreign ownership; others remain restricted or require local partnerships. Foreign buyers must ensure that the target’s activities fall within permitted foreign ownership ranges and that the post-closing structure complies with those limits.

Foreign-owned companies must also meet minimum capital requirements. Recent regulations have given the authorities more flexibility to set lower thresholds for certain sectors and risk profiles, with the policy aim of attracting more small and medium-sized foreign investors, but the principle that foreign-owned companies should be “large scale” remains.

In regulated sectors such as banking, insurance, multifinance, payment systems, telecoms, and natural resources, specific laws require prior approval for changes in control, fit-and-proper tests for controllers and key management, and in some cases, ongoing ownership caps. These approvals are mandatory regardless of competition law thresholds.

Finally, foreign acquirers must comply with risk-based licensing and OSS-RBA processes. Changes in shareholding and controllers must be registered and licences updated after closing. In practice, early engagement with relevant regulators is critical to avoid timing surprises.

Public M&A transactions in Indonesia are subject to both capital markets disclosure obligations and general corporate announcement requirements. Public companies must promptly disclose material information or facts, including proposed mergers, acquisitions, divestments, and changes of control, to the OJK and the IDX, and publish such information to ensure equal access for the market. The timing is strict where disclosure is generally required immediately, and no later than the start of the next trading session after the information becomes known.

In a takeover of a public company, the acquirer must announce the proposed takeover and submit a takeover statement to the OJK, in accordance with OJK Regulation No. 9/POJK.04/2018. If the takeover triggers an MTO, the acquirer must publish detailed tender offer information through the IDX and at least one widely circulated newspaper, and comply with a prescribed timetable for the offer process. Voluntary tender offers are subject to similar transparency standards.

Accordingly, mergers, consolidations, and certain acquisitions involving public companies must comply with the public announcement procedures under OJK Regulation No. 74/POJK.04/2016, as amended by OJK Regulation No. 58/POJK.04/2017. These rules require publication of an abridged merger or consolidation plan in a daily newspaper and on the company’s website at least 30 days prior to the relevant shareholders’ meeting, thereby providing creditors and employees with the opportunity to raise objections. A further public announcement must then be made once the transaction becomes legally effective.

Public takeovers in Indonesia are primarily regulated by the capital markets regime, including OJK Regulation No. 9/POJK.04/2018, OJK Regulation No. 45 of 2024, and the Company Law. A takeover occurs when a party acquires control of a public company, typically by obtaining more than 50% of the voting rights or otherwise securing effective control over management and policy decisions. A prospective acquirer must prepare and publicly announce the takeover plan, submit a takeover statement and supporting documents to the OJK, and implement the acquisition in accordance with the approved structure.

Following the acquisition of control — subject to limited exemptions — the new controller must conduct an MTO for the remaining shares held by public shareholders. The MTO must be publicly announced, kept open for the required period, and follow strict pricing, funding, and settlement requirements. Voluntary tender offers, including those made to increase shareholding or support delisting, follow similar disclosure and procedural rules.

Competing bids are allowed, and each bidder must meet the same disclosure and regulatory requirements. The target’s board must act in the best interests of the company and all shareholders. Deal protection mechanisms (such as exclusivity clauses, no-shop provisions, matching rights, and break fees) may be used, but they must not prevent shareholders from considering a better offer.

Minority shareholders are protected through the MTO regime, the material transaction and conflict of interest rules under OJK Regulation No. 17/POJK.04/2020, and general Company Law safeguards. Although Indonesia does not yet have a broad statutory squeeze-out or sell-out mechanism, dissenting shareholders in mergers and other major corporate actions may exercise appraisal-type rights, including the right to request that their shares be bought at a fair price.

M&A disputes in Indonesia are most commonly resolved through arbitration, reflecting concerns over the length, predictability, and transparency of court proceedings in Indonesia. In addition, foreign court judgments are not directly enforceable in Indonesia. The choice of arbitration is typically negotiated between the parties, with arbitration in Singapore often being accepted by Indonesian sellers. However, Indonesian sellers may also prefer arbitration seated in Indonesia, often before the Indonesian National Arbitration Board (BANI).

Although Indonesia is a signatory to the New York Convention, and foreign arbitral awards are in principle enforceable, the enforcement process in practice can be challenging. The award must be registered and enforced through the Indonesian courts, and obtaining injunctions or specific performance against an Indonesian party can be difficult.

With respect to governing law, M&A documentation, such as a Share Purchase Agreements, is typically governed by a well-recognised international law, such as English, New York, Delaware, or, increasingly, Singapore law. This choice of governing law generally does not present any issues under Indonesia’s conflict of laws rules.

Emerging technologies are a major driver of M&A opportunities in Indonesia. The country’s digital economy is already very large and continues to grow at double-digit rates, supported by high mobile/internet penetration, a young population, and robust adoption of digital services.

Fintech is a leading segment. Digital payments, e-wallets, online lending, and embedded finance are expanding rapidly, prompting banks, telecom groups, and large ecosystems to acquire or invest in fintech platforms. This is contributing both to consolidation within the fintech sector and to vertical integration into broader financial services and digital groups.

Artificial intelligence and data-driven businesses are increasingly attractive targets, including in cybersecurity, logistics optimisation, and customer engagement solutions. This trend is being further accelerated by government policies supporting the development of data centres, cloud infrastructure, and 5G deployment.

At the same time, emerging technologies present heightened regulatory and execution challenges. The PDP Law and financial sector consumer protection regulations impose stricter obligations relating to data processing, cybersecurity, and customer treatment. In parallel, regulatory frameworks governing cryptoassets and digital finance continue to evolve and may entail tighter tax and licensing treatment.

As a result, technology-driven M&A transactions increasingly require enhanced regulatory due diligence, careful transaction structuring, and robust post-closing integration planning to effectively manage data, licensing, and conduct-related risks.

Beyond regulatory approvals and disclosure obligations, a number of additional considerations frequently arise in Indonesian corporate M&A transactions. Transactions must be structured with regard to foreign investment restrictions under the Positive Investment List, which sets out the sectors open to foreign ownership and the applicable limitations. Changes in shareholding or control may also trigger licence updates or reissuance through the OSS-RBA system, making regulatory mapping an important early step in the deal process.

From a governance standpoint, public company transactions may fall within the scope of material transaction, affiliated party, or conflict of interest rules, which can require fairness opinions, independent shareholder approval, or enhanced disclosure. For private companies, completion usually involves notarial deed amendments, filings with the Ministry of Law, and corporate approvals from shareholders and directors.

Indonesia’s merger control regime is another factor. Under KPPU rules, qualifying mergers, share acquisitions, and certain asset acquisitions must be notified post-closing, provided the transaction meets the required Indonesian asset or turnover thresholds and results in a change of control. As a result, careful planning around transaction structure, regulatory timing, and sector-specific considerations remains essential when executing M&A deals in Indonesia.