Acquiring an existing company in Indonesia means a foreign investor buys shares or assets in a business that is already incorporated and operating, instead of building a new PT PMA from scratch. It is often faster than starting fresh, since the target already holds a business license, an operating history, and sometimes staff and contracts in place. It also comes with a different risk profile: you inherit whatever the target’s balance sheet and compliance record actually contain, not what the seller says they contain.
If you have found a local company you like the look of, the honest answer to “what do I need to know before I sign anything” is that the deal structure, the approvals, and the due diligence all have to happen in a specific order, and skipping a step tends to surface as a problem months after closing rather than before.
Key Takeaways
- Share acquisition and asset acquisition are structured, taxed, and approved differently. Most foreign buyers use a share purchase because it keeps the target’s existing licenses and contracts intact.
- The moment a foreign party buys even one share in a local PT, that company must be reclassified as a PT PMA and reported through OSS, a status change governed by BKPM Regulation No. 4 of 2021.
- Banks, insurers, financing companies, and other OJK-supervised businesses require Financial Services Authority approval and a fit and proper test on the incoming controlling shareholder before a change of control can close.
- The three deal risks that surface most often are undisclosed labor and tax liabilities, unverified KBLI or OSS licensing, and unresolved encumbrances on land titles at the National Land Agency.
A share acquisition is a purchase of the target company’s shares from its existing shareholders, which transfers control of the legal entity itself while the company continues to exist, along with all its licenses, contracts, employees, and liabilities. An asset acquisition is a purchase of specific assets, such as equipment, land, brand rights, or a customer book, without taking over the legal shell that held them. Indonesia’s Company Law No. 40 of 2007 defines an acquisition (pengambilalihan) as a legal act by a person or entity that results in a transfer of control, and in practice, a share purchase or a new share issuance are the two mechanisms buyers use to acquire that control.
Most foreign buyers default to a share acquisition, and there is a practical reason for that beyond convenience. The target’s NIB, KBLI registration, tax ID, and operating history all stay attached to the same legal entity, which means the buyer does not need to re-apply for licenses that took the seller months to obtain. The tradeoff is that the buyer also inherits the company’s history in full, including debts, disputes, and obligations that were never disclosed during negotiations.
| Factor | Share Acquisition | Asset Acquisition |
|---|---|---|
| Legal entity | Survives unchanged, ownership shifts | Stays with seller, buyer forms or uses its own entity |
| Licenses and NIB | Carried over automatically | Must be re-applied for under the buyer’s entity |
| Liability exposure | Buyer inherits existing debts and disputes | Buyer can select which liabilities to assume |
| Speed to close | Generally faster once approvals clear | Slower, since each asset and permit transfers individually |
Also Read: What a PT PMA is and what it lets a foreign shareholder do
What Government Approvals Are Required to Acquire an Indonesian Company as a Foreigner?
Buying shares in a local PT as a foreigner triggers a mandatory status change, not an optional filing. Under Article 57 of BKPM Regulation No. 4 of 2021, the moment a foreign individual or entity acquires shares in a company that was previously PMDN (domestic investment), the company must be reclassified as a PT PMA and that change must be recorded through the OSS system. This is treated as a change of “actor data,” which is administrative language for a real legal consequence: the target now falls under the foreign investment framework, with its own capital thresholds and reporting obligations.
Beyond the status conversion, the deal itself needs internal corporate approval before it can be filed anywhere. Company Law No. 40 of 2007 requires shareholder approval through a General Meeting of Shareholders, following prior approval from the Board of Commissioners, and the transaction generally needs at least three-quarters of voting shares represented and three-quarters approval to pass. Once approved, the amended Articles of Association go through a notary, then to the Ministry of Law and Human Rights for legal ratification, before the updated shareholder and capital data is reflected in OSS.
If the target’s sector carries a foreign ownership cap under the Positive Investment List, the buyer cannot simply acquire 100 percent regardless of what the seller offers. The cap applies at the specific five-digit KBLI code level, not the general industry description, so the same due diligence that confirms the deal is even legally possible also determines how much of the company a foreign buyer is allowed to hold. Handling the status conversion correctly the first time matters more than it sounds, since foreign investors who go into an acquisition needing a clean conversion from PMDN to PT PMA often underestimate how much the capital planning and sector eligibility steps interact with each other.
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Does Acquiring a Regulated Company Require OJK or Sector Regulator Approval?
Acquiring a bank, insurer, financing company, or publicly listed company in Indonesia adds a regulatory layer that ordinary PT acquisitions do not have. The Financial Services Authority, OJK, requires prior approval before a change of control in these sectors, and the incoming controlling shareholder must pass a fit and proper test assessing integrity, financial capacity, and competence under OJK’s Primary Party regulations. For publicly listed companies specifically, OJK Regulation No. 9/POJK.04/2018 defines control as holding more than 50 percent of voting shares, or otherwise being able to determine the company’s management or policy, and a buyer that crosses that threshold is generally obligated to launch a mandatory tender offer for the remaining public shares within 30 days of the required announcement.
Other sectors carry their own gatekeepers. A payment-system business answers to Bank Indonesia rather than OJK. A mining company holding an IUP or IUPK answers to the Ministry of Energy and Mineral Resources, and once it reaches production stage, faces a separate divestment obligation requiring 51 percent domestic ownership over time. None of this shows up by searching the general industry label of the target. It shows up when the specific business license and KBLI code are checked against the sector’s actual regulator, which is exactly the kind of gap a rushed acquisition tends to miss.
What Due Diligence Risks Should You Check Before Signing an Acquisition Agreement?
Due diligence before acquiring an Indonesian company splits into three separate questions, and a clean result on one says nothing about the other two. The first is whether the sector and the exact KBLI code are open to foreign ownership at all. The second is whether the specific target company is who it claims to be, verified across AHU Online for legal registration, OSS for licensing, and DJP Coretax for tax compliance, since a company can look legitimate on one system while carrying problems on another. The third is whether the filings behind the deal, including beneficial ownership reports and LKPM history, are current and complete.
The liability that catches buyers off guard most often is labor exposure. Under Government Regulation No. 35 of 2021, permanent employees are entitled to severance, service, and compensation pay calculated by tenure and salary, and if a change of ownership leads to termination, or employees decline to continue under the new owner, those obligations become the buyer’s to fund. They rarely appear in full on a target’s balance sheet without a proper actuarial review, and the same applies to unpaid BPJS contributions, which are worth confirming directly with the manpower office rather than taking the seller’s word for it.
Notes from InvestinAsia Consultants
A pattern we see often: a buyer treats a clean AHU Online search as proof the company is safe to acquire, then discovers during closing that the same company’s OSS license was never verified past “not yet checked” for its risk tier, or that its KBLI code predates the KBLI 2025 reclassification. Run all three systems, AHU, OSS, and DJP, before a signature goes on anything, and treat a share purchase agreement’s representations and warranties as a starting point for verification, not a substitute for it.
Land is its own due diligence track when the target owns property. A property and real estate due diligence review confirms the registered holder, the exact land title, remaining tenure, and whether the certificate is clear of a mortgage (Hak Tanggungan) at the National Land Agency, separately from the corporate checks above. Before any of this, the practical first move for most buyers is simply confirming the target’s legal footing, which is what a step-by-step process to verify a target company’s legal status is built to do.
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What Happens to the Target Company’s HGB Land Rights When You Acquire It?
Indonesian agrarian law reserves full freehold title, Hak Milik, exclusively for Indonesian citizens, so a company that owns land holds it under Hak Guna Bangunan (HGB, the right to build) or Hak Guna Usaha, both registered at the National Land Agency. In a share acquisition, the land title itself does not need to change. The registered holder is still the PT, and what changes is who owns the shares of that PT, so the land certificate carries forward without a new transfer deed. What matters is that the certificate inherits the company’s full history, including any lien or unresolved boundary dispute that existed before the buyer arrived, which is why checking the certificate at BPN is a distinct step from checking the company’s corporate registry.
An asset acquisition works differently. If the buyer wants the land itself rather than the company that holds it, the transaction requires a sale and purchase deed executed before a licensed land deed official (PPAT), followed by registration at BPN, and if the land was previously held under Hak Milik by an individual seller, it must first convert to HGB before a company can legally hold it. This is a separate administrative track from the corporate acquisition and needs its own timeline. For a fuller picture of how a foreign-owned company holds property in the first place, see how a PT PMA holds HGB titles under Indonesian law.
Also Read: What to verify about a local partner before formalizing a partnership
Are There Divestment or Lock-Up Requirements After Acquiring an Indonesian Company?
Two separate rules get confused with each other here, and they apply differently depending on the deal. The first is a capital lock-up: under BKPM Regulation No. 5 of 2025, paid-up capital deposited into a PT PMA’s bank account, including capital injected as part of an acquisition, cannot be withdrawn from that account for 12 months from the deposit date, except for verified operational costs, asset purchases, or building construction declared through OSS.
The second is the general divestment requirement, a legacy rule that once forced foreign shareholders of a PT PMA to sell down to a minimum of 51 percent domestic ownership after 15 years of commercial operation. Under BKPM Regulation No. 5 of 2019, this obligation can be waived through a shareholders’ resolution deed stating that no Indonesian party intends to claim the shares, and most PT PMA companies incorporated in the last several years carry this waiver as standard practice. Sector-specific divestment rules are a different matter and cannot be waived the same way. Mining companies holding a production-stage IUP or IUPK, for example, remain subject to a mandatory 51 percent divestment to Indonesian participants over a fixed number of years, regardless of what the shareholders’ deed says. Checking whether the target sits in one of these carve-out sectors is a due diligence step in its own right, not an afterthought to raise after signing.
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Frequently Asked Questions
Neither is universally better. A share acquisition keeps the target’s existing licenses and contracts intact and is generally faster, but the buyer inherits all existing liabilities. An asset acquisition lets the buyer choose which assets and obligations to take on, but requires re-applying for licenses and permits under the buyer’s own entity, which takes longer and costs more.
Yes. Under BKPM Regulation No. 4 of 2021, the moment a foreign individual or entity acquires even one share in a previously domestic (PMDN) company, that company must be reclassified as a PT PMA and the change reported through OSS. This is not optional and applies regardless of how small the foreign shareholding is.
Do I need OJK approval to acquire an Indonesian company?
Only if the target is a bank, insurer, financing company, publicly listed company, or another OJK-supervised entity. Ordinary trading, services, or manufacturing companies do not require OJK approval, though they still need BKPM/OSS status conversion and Ministry of Law and Human Rights ratification of the amended Articles of Association.
What is the biggest due diligence risk when acquiring a company in Indonesia?
Undisclosed liabilities that do not show up in a single search. Labor severance obligations, unpaid BPJS contributions, and licensing gaps between what a company’s KBLI code says on paper and what it actually operates as are the risks that most often surface only after a deal has closed, since no single government database captures all three at once.
Do land titles need to be re-registered when I acquire a company that owns HGB land?
Not in a share acquisition. The land certificate stays registered to the company, and only the company’s shareholders change, so the HGB title carries forward without a new transfer deed. The certificate should still be checked at the National Land Agency for existing encumbrances before the deal closes.
Is there still a mandatory divestment requirement for foreign-owned companies in Indonesia?
The general 15-year divestment rule can be waived through a shareholders’ resolution deed under BKPM Regulation No. 5 of 2019, and most PT PMA companies carry this waiver. Sector-specific divestment rules, most notably in mining, remain mandatory regardless of the waiver and cannot be avoided the same way.
References
1. Government of Indonesia. (2007). Law No. 40 of 2007 on Limited Liability Companies. Retrieved from
https://peraturan.go.id/id/uu-no-40-tahun-2007
2. Government of Indonesia. (2007). Law No. 25 of 2007 on Capital Investment. Retrieved from
https://peraturan.go.id/id/uu-no-25-tahun-2007
3. Government of Indonesia. (2021). Government Regulation No. 35 of 2021 on Fixed-Term Employment, Outsourcing, Working Hours, and Termination of Employment. Retrieved from
https://peraturan.go.id/id/pp-no-35-tahun-2021
4. Ministry of Investment/BKPM, OSS. (2024). Panduan Perubahan Alih Status Penanaman Modal Dalam Negeri (PMDN) menjadi Penanaman Modal Asing (PMA). Retrieved from
https://oss.go.id/id/panduan/66ecda24e09d998f717cb9f5
5. Ministry of Investment/BKPM. (2021). Presidential Regulation No. 10 of 2021 on Investment Business Fields (Positive Investment List). Retrieved from
https://jdih.bkpm.go.id/en/document/peraturan-presiden-nomor-10-tahun-2021-tentang-bidang-usaha-penanaman-modal19289
6. Financial Services Authority (OJK). (2018). Regulation No. 9/POJK.04/2018 on Acquisition of Publicly Listed Companies. Retrieved from
https://www.ojk.go.id/id/regulasi/Documents/Pages/Pengambilalihan-Perusahaan-Terbuka/pojk%209-2018.pdf
