Know the Percentage of Shares Ownership that can be considered as the Controllers of a Public Company

Recently, it was reported that the insurance company belonging to the Lippo Group, PT Lippo General Insurance Tbk (LPGI) will be taken over by a Korean life insurance company, PT Hanwha Life Insurance Indonesia. Hanwha Life reportedly bought Inti Anugerah’s 42.79% stake in LPGI and LPLI’s 4.9% stake in LPGI. Thus, the total shares to be issued by the Company are 47.69%. Once the takeover plan is complete, Hanwha Life will become the new controller of LPGI and will carry out the mandatory tender.

Then the question is, what is the provision for the percentage of shares that are considered as controllers for a public company (perusahaan terbuka or “Tbk”) in Indonesia?

To answer this question, we will refer to Regulation Of The Financial Services Authority Number 9/POJK.04/2018 of 2018 on The Acquisition Of Publicly Traded Companies (“POJK 9/2018”). This regulation regulates the process that must be carried out by the prospective new controller before and after the acquisition process occurs.

Acquisition results in the transfer of control or changes in control of the public company. Article 1 point 4 POJK 9/2018 stated that  Controller of Publicly Traded Company, from this point onward is referred to as Controller, is any Party who either directly or indirectly: 

1. owns over than 50% (fifty percent) of all shares possessing voting rights which has been fully paid-up of a Publicly Traded Company’s shares; or 
2. has the ability to determine, either directly or indirectly in any way, the management and/or policy of Publicly Traded Companies.

Thus, the percentage of shares that can be considered as controlling shareholders is more than 50% of all fully paid shares.

Any prospective new Controller which is undertaking negotiation that may lead to an Acquisition, may announce the negotiation on Acquisition plan.  In case of a prospective new Controller decided to announce the negotiation on Acquisition, then said announcement shall at a minimum be undertaken through:

1. 1 (one) Indonesian language daily newspaper which is circulated nationally; or
2. the website of Stock Exchange.

The information which should be contained in the announcement as referred to in paragraph (2) must at least encompass:

1. the name of the Publicly Traded Company to be acquired;
2. the estimated number of shares to be acquired;
3. the identity of prospective new Controller, which encompass the name of prospective new Controller, address, phone number, electronic mail, as well as business activities, if the prospective new Controller is a business entity;
4. the amount of securities already owned by the prospective new Controller, in case of already possessing the securities of the Publicly Traded Company to be acquired; 
5. purpose of control;
6. the plan, deal or decision to cooperate between Parties within an Organized Group under the framework of controlling a Publicly Traded Company, if the Acquisition is undertaken by an Organized Group and there is a plan, deal or decision made by Parties within the said Organized Group;
7. the method and process for Acquisition negotiation; and
8. the substance of Acquisition negotiation.

If you wish to consult and require legal assistance related to corporate actions, including acquisition, whether as the acquiring party or the acquired party, you can contact us via ask@bplawyers.co.id or 082112341235.