Yes, via private negotiations, but court-supervised PKPU ensures all parties' protection.
In today’s fast-evolving business landscape, corporate restructuring is no longer a luxury—it’s a necessity. Whether a company is navigating financial hardship, aiming for growth, or adjusting to regulatory shifts, understanding corporate restructuring in Indonesia is crucial for long-term viability.
Corporate restructuring refers to the process of significantly modifying a company’s operational, legal, ownership, or financial structure to improve profitability, streamline operations, or respond to economic and legal challenges. It is a strategic tool used to stabilize businesses, align them with market conditions, and increase shareholder value.
Restructuring in Indonesia is governed by a complex legal framework, including:
M&A is a common path for restructuring, allowing companies to consolidate market position or enter new markets. Legal due diligence, shareholder approval, and OJK/BKPM clearance are critical steps in this process.
Spin-offs involve separating business units into new entities. They allow firms to streamline focus and unlock value, but must comply with corporate restructuring procedures and tax planning.
Under Indonesia’s PKPU (Penundaan Kewajiban Pembayaran Utang) mechanism, companies can suspend debt repayment while negotiating with creditors. This formal court-supervised process is a powerful tool during financial crises.
Companies may restructure their balance sheets by reducing capital (to absorb losses) or injecting new capital (to finance growth). These actions require GMS (General Meeting of Shareholders) approval and legal filings.
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During COVID-19 and post-pandemic recovery, many Indonesian companies restructured to survive declining revenue and cash flow constraints.
Changes in foreign ownership rules, tax law reforms, or OJK regulations may compel businesses to realign their structures to maintain compliance.
Understanding the company’s legal and financial standing is critical. This includes identifying hidden liabilities, tax exposures, and compliance risks.
Shareholder and creditor consent is often legally required. Proper disclosure and approval through GMS are essential.
For PT PMA or listed entities, the restructuring plan must be submitted to BKPM or OJK, followed by notarial deeds and Ministry of Law and Human Rights registration.
Transfers of assets during restructuring may trigger VAT or income tax. Strategic planning is essential to minimize tax leakage.
For intra-group restructuring, transfer pricing must reflect the arm’s length principle, or risk adjustment by the Directorate General of Taxes.
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Improper procedures may lead to annulment by the court or disputes among stakeholders. This underscores the need for legal precision.
Layoffs or organizational changes must comply with Law No. 6 of 2023 on Job Creation (Omnibus Law), ensuring fair severance and labor union involvement.
At Kusuma & Partners, we’ve guided numerous Indonesian and foreign clients through complex restructuring—from mergers and capital reductions to PKPU filings. One of the most critical lessons we’ve learned is that timing and preparation are everything. Businesses that restructure proactively—before financial or legal issues escalate—achieve far better outcomes than those that wait until crisis hits. Clear communication with stakeholders and early regulatory engagement are also key to avoiding costly delays or disputes.
We often remind clients that restructuring is not merely a legal procedure, but a strategic pivot that demands alignment between legal, financial, and operational functions. Whether through debt reorganization, shareholding adjustments, or business model changes, a well-planned restructuring—done with precision and compliance—can secure a company’s future. With our hands-on experience, Kusuma & Partners delivers practical, business-focused legal solutions that protect value and support long-term success.
Corporate restructuring in Indonesia is more than a legal formality—it’s a vital business strategy. Companies that restructure smartly and legally position themselves for resilience and growth. Yet, the journey is complex, demanding sound legal advice, financial prudence, and human sensitivity.
Need to restructure your business in Indonesia? Let Kusuma & Partners Law Firm help you navigate the process with legal precision and business foresight. Contact us today for a consultation.
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“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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