Regulation of business

Registration and filing requirements
Although the government does not promote licensing agreements in any particular sector, many companies use licensing agreements in conjunction with direct investment. Parties to a licensing and processes as long as they do not affect Indonesia’s economic and technological contract do not need government approval. Patentees have the right to license their products development. The Directorate-General of Intellectual Property Rights must register a licensing agreement, for which it charges a fee.

Mergers and acquisitions
The Company Law regulates mergers, consolidations, acquisitions and splits of companies. Mergers generally are permitted with the consent of 75% of the shareholders. Some protection for minority shareholders is provided, particularly with respet to the share sale price, which must be “fair.” Unless retained by the surving company, a merged entity must adopt a new name and management; otherwise, the surviving company’s name and management should be used.

Mergers of limited liability companies are possible where one or more companies is merged into a single surviving company (with the simultaneous dissolution of the other company or companies). In a consolidation, two or more companies merge into a new entity and each of the original companies is dissolved; in an acquisition, an individual or legal body takes over all or most of the shares of a company, resulting in a transfer of control.

Monopolies and restraint of trade
The Anti-Monopoly and Unfair Competition Law prohibits a company from holding more than a 50% share of the domestic market or two or three companies from holding 75% of the market between them. Market share is determined by sales value rather than volume. The law prohibits vertical restrictions on competition and any deals or contracts allowing for monopolies, oligopolies, price fixing, cartels, trusts and geographical designations of markets between suppliers. Small enterprises and cooperatives are exempt, as are the production and marketing of goods and services deemed “vital” to public welfare, and state companies. Companies violating the law are subject to maximum fines of IDR 100 billion and six-month prison terms for their executives.

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