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Unpublished Paper
CHALLENGES AND OPPORTUNITIES FOR THE INDONESIAN SECURITIES TAKEOVER REGULATIONS: GENERAL FRAMEWORK AND ANALYSIS FROM DUTCH LAW AND THEORETICAL PERSPECTIVES
ExpressO (2012)
  • Yozua Makes
Abstract
This article examines question of the extent to which the rules in Indonesia concerning takeover of a public listed company: (1) facilitate 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) accommodate principles and protection provided in the securities laws of more developed jurisdictions. These issues are addressed by analyzing the current Indonesian legal framework from the perspective of fairness and efficiency in the securities regulations and corporate governance principles. 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 the Dutch law. First of all, the common practice of takeover of a public company in Indonesia is mostly conducted through acquisition of that company, which then leads to a mandatory offer. However, in the Netherlands, the initial step is more often that the prospective controller issues a public offer first, which then leads to the acquisition. Therefore, rules on mandatory tender offer have been more often applied in Indonesia, while in the Netherlands, the general rule on public offer holds higher importance. Furthermore, differences in market structure, business cultures, and practices might explain why several concepts and rules of offer under Dutch law are not relevant to the practice in Indonesia, as in the case of a hostile (unfriendly) offer, which has yet to occur in Indonesia, while in the Netherlands, this type of offer has gradually gained more practice. After describing these differences, it was found that there are several lessons that Indonesia can learn from the Dutch legal system on corporate governance and securities regulations. Firstly, there is a need to adopt a more substantive approach to information disclosure, rather than a mere formal screening. Secondly, there is a need to incorporate more protection for stakeholders, but with due observance of the Indonesian business and legal culture. Finally, there is also the need to strengthen both administrative and judicial authority to supervise capital market activities to ensure a fair, orderly, and efficient capital market.
Keywords
  • Indonesian Securities Law,
  • Takeover Regulations,
  • Comparison with Dutch Law
Disciplines
Publication Date
February 17, 2012
Citation Information
Yozua Makes. "CHALLENGES AND OPPORTUNITIES FOR THE INDONESIAN SECURITIES TAKEOVER REGULATIONS: GENERAL FRAMEWORK AND ANALYSIS FROM DUTCH LAW AND THEORETICAL PERSPECTIVES" ExpressO (2012)
Available at: http://works.bepress.com/yozua_makes/1/