Indonesia has quietly become one of Southeast Asia’s most active markets for corporate transactions. With a GDP exceeding USD 1 trillion and projections placing it among the world’s top four economies by 2050, it is no surprise that investors both regional and global, are looking more seriously at acquiring established businesses here. A well-executed company acquisition can offer faster market entry, an existing customer base, and operational infrastructure that would otherwise take years to build.
That said, acquiring a company in Indonesia is not a straightforward process. It involves layers of regulation, sector-specific restrictions, and procedural requirements that can catch unprepared investors off guard.Coming in without a clear picture of the regulatory landscape is one of the costlier assumptions an investor can make.
Two Types of Company Acquisition in Indonesia
When it comes to acquiring a business in Indonesia, the law recognises two primary approaches: share acquisitions and asset acquisitions. Each carries its own legal implications, and choosing the right structure can significantly affect how smoothly the transaction proceeds.
A share acquisition involves purchasing shares in an existing company, effectively taking over its rights, liabilities, contracts, and operational history. This is governed primarily by Law No. 40 of 2007 on Limited Liability Companies, as amended by the Job Creation Law (Law No. 6 of 2023). The transaction becomes legally effective once the Ministry of Law and Human Rights (MoLHR) has been notified.
An asset acquisition, on the other hand, involves purchasing specific assets of a company — whether tangible (machinery, property) or intangible (intellectual property, licences). For tangible assets, a sale and purchase agreement is executed followed by a physical handover. Intangible assets require a deed of assignment. This route can be appealing when a buyer wants to avoid inheriting unknown liabilities, though it comes with its own set of due diligence requirements.
Neither approach is inherently superior. The right choice depends on the target company’s profile, the sector it operates in, and the buyer’s risk appetite. This is precisely where working with experienced corporate lawyers becomes invaluable.
Foreign Investment Rules and the PT PMA Framework
For foreign investors, the acquisition process triggers additional regulatory considerations. Under Indonesian law, any company with even a single foreign shareholder is legally classified as a PT PMA (Penanaman Modal Asing), a foreign-owned limited liability company, regardless of the percentage of foreign ownership.
This means acquiring a minority stake in an Indonesian-owned company (PT PMDN) can still prompt a full regulatory reclassification of the target. The company must convert to PT PMA status and comply with all applicable foreign investment rules, including minimum capital requirements.
Under BKPM Regulation No. 5 of 2025, the minimum paid-up capital for PT PMA registration has been reduced from IDR 10 billion to IDR 2.5 billion (approximately USD 150,000). While this is a welcome reduction in the entry threshold, the total investment value per business activity code (KBLI) must still exceed IDR 10 billion per project location, excluding land and buildings. Additionally, regulated sectors such as banking, mining, and telecommunications may impose higher capital thresholds.
The Positive Investment List, regulated under Presidential Regulation No. 10 of 2021, determines which business sectors are open to foreign ownership and at what percentage. Before proceeding with any acquisition involving foreign capital, it is critical to verify that the target company’s business activities are permitted under this list.
The Role of Due Diligence in a Company Acquisition
One of the most important and sometimes underestimated stages of any company acquisition in Indonesia is legal due diligence. This is the process by which the buyer investigates the legal, regulatory, financial, and operational standing of the target company before committing to a transaction.
A thorough legal due diligence exercise typically examines:
- Corporate structure and ownership: Share composition, any pledges on shares, and the validity of the company’s establishment documents
- Licences and permits: Whether the company holds the necessary business licences and whether these licences can be transferred or maintained post-acquisition
- Material contracts: Key agreements with suppliers, customers, distributors, and employees
- Pending litigation or disputes: Existing or potential legal proceedings that could affect the value of the acquisition
- Tax compliance: Outstanding tax obligations that the buyer may inherit
- Land and asset ownership: Validity of land titles and ownership documents for key assets
- Personal data compliance: Under Law No. 27 of 2022 on Personal Data Protection, companies undergoing acquisition are required to notify data subjects about the transfer of their personal data, both before and after the transaction
Skipping or rushing due diligence is one of the most common mistakes investors make, particularly in cross-border acquisitions. Historical liabilities that surface after closing can be costly and difficult to unwind.
Related Article:Mergers and Acquisitions in Indonesia:Legal Process for Foreign Investors
Regulatory Approvals and Sector-Specific Requirements
While Indonesia’s Omnibus Law (enacted in 2020) significantly streamlined the investment approval process — removing the need for prior BKPM approval in most cases — certain sectors still require additional regulatory clearance.
For publicly listed companies, acquisitions are regulated and supervised by the Otoritas Jasa Keuangan (OJK) under OJK Regulation No. 9/POJK.04/2018. If an acquisition results in a change of control in a public company, a mandatory tender offer obligation may be triggered.
In the banking and financial services sector, prospective controlling shareholders must pass a fit and proper test conducted by OJK. Similar requirements apply to insurance companies, multi-finance companies, and pension funds.
In oil and gas, a notification to the Minister of Energy and Mineral Resources is required if a share transfer results in a change of indirect control over an oil and gas company.
The general process for a company acquisition in a non-regulated sector typically follows this sequence:
- Execution of a confidentiality or non-disclosure agreement
- Signing of a term sheet or letter of intent
- Conduct of legal, financial, and technical due diligence
- Negotiation and execution of a share purchase agreement (SPA) or asset purchase agreement
- Satisfaction of conditions precedent (such as shareholder approvals and regulatory notifications)
- Closing and transfer of shares or assets
- Post-closing notifications to MoLHR and other relevant bodies
In practice, this timeline varies considerably depending on the complexity of the transaction and the responsiveness of the parties involved.
Competition Law: KPPU Notification Requirements
For larger transactions, Indonesian competition law adds another compliance layer. Under KPPU Regulation No. 3 of 2023, a company acquisition must be notified to the Indonesian Competition Commission (KPPU) within 30 business days of the date the transaction becomes legally effective, if either of the following thresholds is met:
- The combined value of assets in Indonesia exceeds IDR 2.5 trillion (approximately USD 167.5 million); or
- The combined annual sales value in Indonesia exceeds IDR 5 trillion (approximately USD 333 million)
For banking businesses, the asset threshold rises to IDR 20 trillion. The KPPU will then assess whether the transaction creates monopolistic practices or unfair competition. The review period is up to 90 business days from the date of notification.
It is worth noting that KPPU has been actively enforcing late filing penalties, including fining companies that fail to meet the 30-business-day deadline. This applies to both domestic and foreign-to-foreign transactions, as long as both parties have assets or sales in Indonesia. Investors should not assume that a foreign transaction falls outside KPPU’s reach without a careful assessment.
Common Pitfalls to Avoid
Even experienced investors make missteps when entering the Indonesian M&A market. A few of the more common ones are worth highlighting:
Underestimating sector restrictions. The Positive Investment List is regularly updated. A business activity that was fully open to foreign ownership in a previous year may now be subject to caps or conditions. Always verify KBLI classification before proceeding.
Overlooking licence transferability. Some licences are issued to specific legal entities and cannot be automatically transferred upon acquisition. If the target company holds critical operational licences, due diligence must confirm whether those licences survive a change of control.
Ignoring personal data obligations. The Personal Data Protection Law has been in full effect since October 2024. Companies going through an acquisition are legally obliged to notify affected data subjects about any transfer of personal data. Failure to do so carries regulatory risk.
Assuming post-acquisition integration is straightforward. Employment law, in particular, deserves careful attention. Changing the structure or management of an acquired company can trigger obligations under Indonesia’s Manpower Law, including severance entitlements.
Why Legal Guidance Matters from Day One
A company acquisition in Indonesia involves a confluence of corporate law, investment regulation, competition law, sector-specific rules, and employment obligations, all of which must be navigated in parallel. Engaging a knowledgeable legal partner from the very beginning of the process helps identify structural risks before they become deal-breakers, and ensures that the transaction is structured in a way that achieves the buyer’s commercial goals while remaining fully compliant with Indonesian law.
At WNP Asia, our corporate legal team has extensive experience advising clients across the full spectrum of M&A transactions in Indonesia from initial due diligence through to post-closing compliance. Whether you are a foreign investor exploring your first Indonesian acquisition or a domestic company navigating a complex corporate restructuring, we are here to provide clear, practical, and commercially minded legal guidance.
Ready to explore a company acquisition in Indonesia? Contact the WNP Asia team to discuss how we can support your transaction.
