LEGAL PROCESS M&A

1. LEGAL PROCESS M&A • To more fully understand the world of M&As, it is necessary to understand the laws that regulate the process. • The legal requirement governing M&As in the US differ depending on whether a transaction is a friendly merger or a hostile deal. Within each of these categories the rules vary depending on whether the transaction are cash or stock financed.

2. LEGAL PROCESS M&A • The regulatory framework of each of these alternatives is: • Friendly merger – cash financed • Friendly merger – stock financed • Hostile deal – cash tender offer • Hostile deal – stock tender offer

3. LEGAL PROCESS M&A • Several laws regulate the field of M&A in the US. These laws set forth the rules that govern the M&A process. The three main groups of laws are securities law, antitrust laws, and state corporation laws.

4. Securities Exchange Act • The leading securities law for M&As is the Securities Exchange Act of 1934, of which the Williams Act is an amendment. • The SE Act of 1934 requires that an 8K filling must be made within 15 calendar days after the occurrence of certain specific events. Such events include the acquisition and disposition of a significant amount of assets including companies.

5. Williams Act • The Williams Act regulates tender offers, which are important to takeovers – particularly hostile deals. • The law is designed to provide shareholders with more information about bidders as well as the time to analyze this information.

6. Williams Act • The Williams Act had four major objectives: • To regulate tender offers • To provide procedures and disclosure requirements for acquisitions • To provide shareholders with time to make informed decisions regarding tender offers • To increase confidence in securities markets

7. LEGAL PROCESS M&A • The ability to merge with or acquire other firms is limited by antitrust legislation. Various antitrust laws are designed to prevent firms from reducing competition through mergers. • The two main antitrust laws in US, the Sherman Antitrust Act and the Clayton Act, were two of the early antitrust laws. • However, the interpretation of these laws has varied over the course of modern US history.

8. Sherman Antitrust Act • Which was originally passed in 1890, is the cornerstone of all US antitrust laws. • The first two sections of the laws its most important provisions : • Section 1, this section prohibits all contracts, combinations, and conspiracies in restraint of trade • Section 2, this section prohibits any attempts or conspiracies to monopolize a particular industry.

9. Sherman Antitrust Act • The Sherman Act made the formation of monopolies and other attempts to restrain trade unlawful and criminal offenses punishable under federal law. • The government or the injured party can file suit under this law, and the court can then decide the appropriate punishment

10. Clayton Act • The goal of the Clayton Act was to strengthen the Sherman Act while also specifically proscribing certain business practices. • The Clayton Act didn’t prohibit any activities that were not already illegal under a broad interpretation of the Sherman Act.

11. Clayton Act • Some of its more prominent provisions are: • Section 2, price discrimination among customers was prohibited except when it could be justified by cost economies • Section 3, tying contracts were prohibited • Section 7, the acquisition of stock in competing corporations was prohibited if the effect was to lessen competition • Section 8, Interlocking directorates were prohibited when the directors were on the boards of competing firms.

12. LEGAL PROCESS M&A • Takeover laws vary by nation. However, many, such as those in Europe and Asia, have similar characteristics to US laws that have been the focus of much litigation over two large merger waves.

13. LEGAL PROCESS M&A • State corporation laws play an important role in M&As. In particular, many state antitakeover laws provide protection against hostile takeover for corporations located within states. • These laws sometimes even cover corporations that are incorporated in a state other than the one that has passed a particular law.

14. LEGAL PROCESS M&A • State antitakeover laws are divided into four categories : fair price laws, business combination statutes, control share statutes and cash – out laws.

15. Legal M&A in INDONESIA • UU No. 40 Tahun 2007 tentang Perseroan Terbatas (PT), pasal 122 sampai dengan pasal 134 • Undang-undang No. 5/1999 tentang Larangan Praktek Monopoli Dan Persaingan Tidak Sehat, pasal 28 dan pasal 29 • Peraturan Pemerintah No. 27/1998 tanggal 24 Februari 1998 tentang Penggabungan, Peleburan dan Pengambilalihan Perseroan Terbatas.

16. Legal Process M&A in INDONESIA PP No. 27/1998 Keterangan • Usulan Rencana M & A Dibuat masing-masing Direksi dan disetujui masing-masing Komisaris (pasal 7-Penggabungan) (pasal 20-Peleburan) (pasal 26-Akuisisi) 3. Rancangan M & A Disusun bersama oleh Direksi perseroan-perseroan yang akan M & A (pasal 9-Penggabungan) (pasal 20-Peleburan) (pasal 28-Akuisisi) Isinya: - Usulan Rencana M & A - Penegasan penerimaan hak dan kewajiban (pasal 11) 4. Ringkasan Rancangan M & A Diumumkan di 2 S.K. harian dan tertulis kepada karyawan 14 hari sebelum panggilan RUPS (pasal 12-Penggabungan) (pasal 20-Peleburan) (pasal 29-Akuisisi) 5. Konsep Akte Merger Minta persetujuan RUPS (pasal 13:1-Penggabungan) (pasal 25-Peleburan 6. Akte Merger Notariil bahasa Indonesia (pasal 13:2-Penggabungan) (pasal 20-Peleburan) (pasal 31-Peleburan)

17. CASE STUDY