If the asset constitutes a shareholding in an Indonesian company, the vendor's ability to complete the transaction may be subject to transfer restrictions contained in the articles of association or any share-holders agreements to which the vendor is a party. Prospective pur-chasers should examine all such documents and be aware of statutory provisions requiring shareholders in the target company to approve the transaction. If a disposition of shares in an Indonesian company effects a change in control of the company, the directors of both the pur-chaser and the target company are required by law to prepare an acquisition plan setting out the reasons and explanations of the directors for the terms and procedure of the acquisition. The result of the acquisition must also be published in two daily newspapers. If the purchaser is a foreign company, this approval procedure needs to be followed only by the Indonesian target company.
Significant uncertainty exists regarding the application of the above procedure.
This may mean that an acquisition plan is not required for a friendly acquisition supported by all shareholders of the target. An acquisition of shares by or in an Indonesian listed company which results in a conflict of interest between the target com-pany and a controlling shareholder must be approved by a majority of shareholders who have no conflict of interest in such transaction. Securities regulations suggest that transactions which significantly disadvantage minority shareholders may fall within this category. The ability of a vendor facing bankruptcy to provide an effective transfer of assets may be put into question by the rights of creditors. The extent to which the vendor's creditors can use this provision to impugn a transaction is unclear.