Two Schemes of Cooperation with Investors To Develop Your Business
Both methods are closely related to the legality and legal compliance aspects of the company which must be maintained.
The Covid 19 pandemic has caused business actors to rethink their business strategies. The different business strategies causes Business Actors to require funding from other parties or investors. However, business actors or companies that are already established are not that easy in obtaining funds, there are schemes related to legal aspects that need attention. There are two ways that Business Actors can choose if they are going to get funds from potential investors. Both methods are closely related to the legality and legal compliance aspects of the company which must be maintained.
- Shares Sale and Purchase Scheme
The first scheme is the simplest, purchasing and selling shares. If the Business Actor uses this scheme, the funds provided by investors will not go to the Company, but will be given directly to shareholders who sell their shares to investors. This scheme is often used when shareholders need a certain amount of funds or want to partner with new partners in their business.
By using this share sale and purchase scheme, investors can take a share of share ownership in the company according to the number of shares they buy. Usually, before investors enter using this scheme, shareholders who will sell their shares offer theirs first to other shareholders. When the other shareholders do not accept the offer, then the other parties or investors will buy the shares. However, the offering of shares to other Shareholders is not always mandatory in accordance with the provisions of Article 43 of Law Number 40 of 2007 concerning Limited Liability Companies (UUPT), namely if the sale and purchase is for reorganization or restructuring that has been approved by the General Meeting of Shareholders (GMS), there is no need to offer the shares.
In addition, Article 57 of UUPT states that the necessity or nonnecessity of this share offering can be stated in the Articles of Association of the Company. Thus, companies that will receive financial assistance from investors using a share sale and purchase scheme must first look at the provisions of the Articles of Association and the provisions of Article 43 of UUPT regarding the obligation to offer the shares to be sold to other shareholders.
In this scheme, there will not be a change in the number or value of shares that have been issued by the company. It is important for business actors to know that the procedure for selling and purchasing shares with investors still has to follow all the provisions of changes to shareholders in accordance with what is stipulated in the UUPT.
- Shares Issuance Scheme
The main thing that distinguishes between the first and second schemes is that the investment funds will go directly to the Company. The issuance of new shares means that it will increase the amount of capital that enters the Company. Apart from that, another difference is the share dilution will happen when the Shares Issuance scheme is implemented.
Share dilution is a decrease in the share ownership of existing shareholders as a result of the issuance of new shares, and these shareholders do not deposit any more capital for new shares issued. In fact, Article 43 of the Company Law stipulates provisions so that the rights of Shareholders are protected, and there is no dilution if the Company issues new shares which will be taken by third parties. However, because in this case, the Company requires funding from investors, share dilution will occur.
Another thing that needs to be considered in issuing new shares is to evaluate the company value. One of the elements that can be used in assessing a company is from the amount of profit it has during its operation to what assets the company already owns. This functions to determine the number of new issued shares which will be owned by investors.
The examples of issuing new shares to investors that cause share dilution are as follows. PT Bahagia Selamanya has two Shareholders namely Bagus and Tio. Their share ownership portions are 70% Bagus and 30% Tio. Then the company needs capital from investors, and there is Hendra who will buy 10% of the total shares of the Company.
So, with the issuance of new shares given to Hendra, there will be a dilution of shares belonging to Bagus and Tio. Thus, the share ownership portion changed to Bagus 63%, Tio 27% and Hendra 10%.
Conclusion
Business Actors can determine from the two schemes mentioned above if there are investors who will invest. The two schemes clearly have different legal consequences and implementation procedures. Business Actors can make choices between the two schemes based on the investment funds needed by the Company.
Before deciding to make an investment, you must deepen the vision, objectives and be careful in understanding the opportunities and threats that exist. Do not let any legal aspects be overlooked after you make your decision. BP Lawyers can assist you in conducting due diligence and legal aspects, providing legal opinions, and providing legal advice so that you can make the best decisions for your business. Please contact us via ask@bplawyers.co.id or 082112341235