Yozua Makes

Publication Date

Spring 2013

Document Type


First Page



This article examines the extent to which the rules in Indonesia concerning the takeover of a publicly listed company: (1) facilitate an efficient exchange of shares in the capital market with fair protection for all stakeholders in a takeover transaction pursuant to Good Corporate Governance (“GCG”) principles; and (2) uphold principles and protection provided by the securities laws of more developed jurisdictions. These issues are addressed by analyzing the prevailing securities regulations and GCG rules in Indonesia. A comparative discussion of laws and regulations in Indonesia and the Netherlands follows. The article highlights several important findings from which the Indonesian legal system can learn from both European and Dutch takeover laws. First, Indonesia has been experiencing a trend toward a lower mandatory bid threshold requirement in order to facilitate a more active takeover market. The share percentage threshold for triggering a mandatory offer in Indonesia is lower than that of the Netherlands, although in Indonesia, control can be assessed by the degree of one’s influence within the company’s governance. In pricing the mandatory bid, the two countries adopt a different approach, but the Netherlands arguably adopts a more case-specific approach through the active involvement of its judiciary. Regarding disclosure of the control structure, the shareholding structure of the target company in the Netherlands is more advanced because it captures indirect structures, such as pyramid structures or cross ownership. Indonesia can also learn from its European counterpart in relation to the employee involvement in proceeding with a takeover deal. In the Netherlands, as in Indonesia, the employee does not have the authority to approve or disapprove a takeover; however, employees have the right to receive information, consultation rights, and a dispute settlement forum specifically for labor matters in the event of a change of corporate control. Indonesian law, on the other hand, prescribes that a takeover must take into account the employees’ interests without setting out further detailed rules. Finally, the role of the judiciary in Indonesia must be improved in order to provide a fair, orderly, and efficient capital market.

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