Master Thesis_R.A.Sabrina Stamboel - University of Tilburg [PDF]

AN  ANALYSIS  OF  THE  CORPORATE  SPIN  OFFS  IN  INDONESIA:   POTENTIAL,  REGULATIONS  AND  ISSUES          

Master  Thesis      

International  Business  Law  2011/2012        

    Written  by:    

Ratna  Ayu  Sabrina  Stamboel     U1245758/ANR  195972    

 

   

            Thesis  Supervisors:   Prof.  Erik  P.  M.  Vermeulen   Ms.  Jing  Li  Mphil         Tilburg  University   Tilburg   2012  

 

ABSTRACT  

                     

 

  In  the  field  of  law,  Indonesia  is  consistently  developing,  as  shown  by  the  issuance  of   numerous   new   regulations,   including   the   Spin   Off   regulations.   Spin   Off   is   still   considered   a   “new   thing”   by   various   industries   in   Indonesia   and   many   are   still   not   familiar   with   such   a   term.   While   mergers,   acquisitions   and   consolidations   have   been   regulated   for   quite   a   number   of   years,   the   first   act   regulating   spin   offs   is   Law   No.   40   Year  of  2007  regarding  Limited  Liability  Companies.       Since  the  enactment  of  Law  No.40  Year  2007,  there  have  been  numerous  companies   conducting   spin   off   transactions.   The   Government   of   Indonesia   has   also   been   encouraging  many  industries  to  undertake  spin  offs,  especially  those  in  the  banking   industry   and   various   state-­‐owned   companies.   As   the   implementing   regulations   on   spin  off  have  yet  to  be  issued  until  today,  regulations  that  specifically  deal  with  spin   off  transactions  are  still  lacking.       This   paper   aims   to   show   how   Spin   Offs   work   by   theories,   implementation   and   regulations   under   the   laws   of   Indonesia,   as   well   as   the   main   issues   most   often   encountered  during  the  process  in  Indonesia  and  their  temporary  solutions.  

 

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PREFACE  

                     

 

  This  thesis  would  not  have  been  possible  without  the  support  of  several  thoughtful   and  generous  individuals.  Foremost  among  those  are  my  loving  parents,  sisters  and   family,  who  have  provided  all  their  love,  support  and  prayers  for  me.  Krishna  Yana   Stamboel,  Irma  Stamboel,  Sharinna  Tasha  Stamboel,  Amanda  Krishana  Stamboel  and   my  guardian  angel  Tartika  Darina,  I  am  very  grateful  to  have  you  all  in  my  life.  I  can   never   thank   you   enough   for   everything.   Pa   and   Ma,   this   is   for   you;   I   hope   I   can   always  make  you  proud.     I  would  like  to  express  my  deepest  and  sincere  gratitude  to  my  thesis  supervisor,  Ms.   Jing  Li  Mphil,  who  has  provided  tremendous  insight,  advice,  support  and  guidance;   to   Prof.   Erik   P.   M.   Vermeulen,   all   of   the   lecturers   and   staff   at   Tilburg   University   International   Business   Law   LLM   masters   program   (“IBL”)   for   their   kindness,   assistance,   time   and   help.   Without   all   of   you,   this   thesis   would   never   become   a   reality.     I  would  like  to  thank  my  firm,  Hanafiah  Ponggawa  &  Partners,  in  particular  to  Fabiola   Hutagalung   SH.,   for   being   my   mentor   who   I   can   always   trust   and   rely   on;   and   Bobby   Noer   Rahman   SH.,   LLM.   who   is   more   like   a   brother   than   just   a   colleague   for   me.   Thank  you  both  for  lots  of  great  inspirations,  ideas,  comments  and  endless  support.     I  am  grateful  to  Akina  Dinar  Sesari  and  Indria  Prasastia,  for  always  being  there  for  me   and   for   understanding   me   completely.   For   me,   you   two   are   more   like   sisters   than   best   friends.   I   cannot   imagine   my   life   in   Tilburg   without   you   two,   the   best   housemates  that  anyone  could  ask.     I   wish   to   express   my   warm   and   sincere   thanks   to   all   my   friends   from   Jakarta   and   Tilburg.  Although  I  cannot  mention  your  names  one  by  one,  you  know  who  you  all   are.  Your  friendship  and  support  have  given  me  the  confidence  to  achieve  this.  And   thank   you   to   all   my   IBL   classmates   for   creating   such   a   friendly   and   supportive   environment.     Last,   but   not   least,   to   Muhammad   Ikhsan.   Thank   you   for   always   giving   your   best   and   never   giving   up   on   me.   Without   your   love,   encouragement   and   understanding,   it   would  be  impossible  for  me  to  finish  all  of  these.  I  love  you,  Da.         Tilburg,  June  2012   R.  A.  Sabrina  Stamboel

 

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TABLE  OF  CONTENTS  

                     

 

  ABSTRACT………………………………………………………………………………………………………….  i   PREFACE……………………………………………………………………………………………………………  ii   TABLE  OF  CONTENTS…………………………………………………………………………………………  iii     CHAPTER  I:   INTRODUCTION…………………………………………………………………………..  1   The  Potential  of  Spin  Offs  in  Indonesia………………………………………………………………….  1     CHAPTER  II:     OVERVIEW  OF  SPIN  OFF  IN  INDONESIA.…………………………………......  7   A.   Spin  Off  as  one  type  of  Division……………………………………………………………………  7   B.             Shareholders  of  the  New  Company  Resulting  from  Spin  Off…………………………  14   C.   Relationship   between   the   transferring   company   and   the   transferee   company  in  Spin  Offs……………………………………………………………………………………  16   D.   Key  Motivations  of  Spin  Off………………………………………………………………………….  18     CHAPTER  III:     INDONESIAN  LEGAL  FRAMEWORK  IN  SPIN  OFF……………………………  25   A.          Company  Law………………………………………………………………………………………………..  25   1.        Basic  requirements………………………………………………………………………………..  25   2.        Procedures…………………………………………………………………………………………….  28   3.        Time  line……………………………………………………………………………………………….  32   B.        Islamic  Banking  Law  and  PBI  No.  11………………………………………………………………..  32   1.        Obligations  and  sanction……………………………………………………………………….  33   2.        Types  and  requirements……………………………………………………………………....  33   a.   Establishing  a  new  Islamic  Bank……………………….…………………….......  33   b.   Transferring  the  assets  and  liabilities  of  the  sharia  business  unit   to  an  existing  Islamic  Bank……………………………………………………………  35   3.        Procedures  and  time  lines……………………………………………………………………..  35   a.   Spin  Off  of  sharia  business  unit  by  establishing  an  Islamic  Bank…..  35   b.   Spin   Off   sharia   business   unit   by   transferring   the   rights   and   liabilities  to  an  existing  Islamic  Bank…………………………………............  39   C.        Other  related  regulations  for  public  companies…………………….……………..………..  41   1.          Material  transaction……………………………………………………………………………..  41   2.        Disclosure  of  information  that  must  be  immediately  announced  to  the   public…………………………………………………………………………….........................  43   3.        Obligation  to  report  information……………………………………………………........  44     CHAPTER  IV:     ANALYSIS  OF  THE  ISSUES  IN  SPIN  OFF  PROCESS  IN  INDONESIA…...  45   A.          Spin  Off  plan  and  the  announcement  of  an  abridged  Spin  Off  plan……………….  45   B.          The  transfer  of  employees…………………………………………………………………………….  47   C.          Mismatch  between  the  MOLHR  Regulation  and  PBI  No.  11……………………………  54     CHAPTER  V:     CONCLUSIONS…………………………………………………………………………….  56     REFERENCES………………………………………………………………………………………………………  58      

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CHAPTER  I  

                     

 

INTRODUCTION     The  Potential  of  Spin  Offs  in  Indonesia     The  fast  development  of  Indonesia’s  economy  has  brought  forth  the  need  for  a  set   of   laws   that   can   become   the   foundation   for,   and   are   able   to   guarantee   the   implementation   of   a   conducive   business   climate.   As   a   result,   Indonesia   has   constantly   been   issuing   new   regulations   to   follow   such   economic   development.   One   of   the   important   new   provisions   introduced   by   Law   No.   40   Year   of   2007   regarding   the   Limited   Liability   Companies   (“Company   Law”),   which   was   issued   on   16   August   2007,   is   the   inclusion   of   the   new   regulation   on   Division   of   company’s   assets   and   liabilities.       In   the   Company   Law,   Division   is   defined   as   a   legal   action   taken   by   a   company   to   separate   its   businesses   resulting   in   all   of   the   assets   and   liabilities   of   the   company   being   transferred   by   operation   of   law   to   two   or   more   companies   or   a   part   of   the   assets   and   liabilities   of   the   company   being   transferred   by   operation   of   law   to   one   or   more  companies  (“Division”).1  Further,  Divisions  can  be  carried  out  by  means  of  (i)   an   absolute   Division   or   (ii)   a   partial   Division,   which   is   commonly   known   as   spin   off   (“Spin  Off”)  2.       In   contrast   to   the   other   corporate   restructuring   transactions,   namely   merger,   acquisition   and   consolidation,   Division   is   a   brand   new   transaction   in   Indonesia   because   the   Company   Law   is   the   first   law   that   regulates   and   gives   the   legal   basis   for   Division.  Although  the  business  term  “spin  off”  has  already  been  used  for  a  long  time   to   describe   some   of   the   divestment   transactions   in   Indonesia3,   the   actual   Spin   Off   transactions  can  only  be  done  after  the  issuance  of  Company  Law.                                                                                                                      

1

 Indonesia  (a),  Law  No.  40  of  2007  regarding  Limited  Liability  Companies,  Art  1  (12).  

 

2

 Ibid.,  Art  135  (1)  jo.  elucidation  Art  135  (1)  b.    

   

 

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The  first  case  of  Spin  Off  after  the  enactment  of  Company  Law  was  undertaken  by  PT   Bank  Rakyat  Indonesia  (Persero),  Tbk.  (“BRI”)  in  January  2009.4  BRI  spun  off  its  sharia   business  unit  into  PT  Bank  BRISyariah  (“BRISyariah”),  which  was  originally  named  as   PT  Bank  Jasa  Artha  (“BJA”)  before  being  acquired  by  BRI  in  2007  and  converted  as  a   sharia/Islamic   commercial   bank   (“Islamic   Bank”)   in   2008.5   The   whole   BRI’s   spin   off   transaction,   including   the   acquisition   of   BJA,   took   approximately   two   years   to   be   completed.  However,  BRI’s  spin  off  had  indicated  a  positive  response  by  the  business   world  to  the  then  considered  “new”  regulation  in  Indonesia.       Further,   the   Government   of   Indonesia   (“Government”)   has   also   been   encouraging   industries  to  perform  spin  off  transactions,  especially  for  the  state-­‐owned  companies   and  the  banking  industry:     1.

State-­‐owned  companies   Based  on  the  Master  Plan  by  Indonesia’s  Minister  of  State-­‐Owned  Enterprises   (“Master   Plan”),   the   Government   plans   to   restructure   some   of   the   state-­‐ owned  companies  to  enhance  efficiency  at  all  levels  and  promote  better  good   corporate  governance.  The  restructuring  plans  also  aim  to  improve  companies’   performances  and  values,  so  they  will  be  able  to  provide  more  benefits  in  the   form  of  dividends  and  taxes  to  the  state  of  Indonesia  (“State”),  deliver  better   products   and   services   at   competitive   prices   to   consumers   and   facilitate   the   implementation  of  privatization.6    

                                                                                                                                                                                                                                                                                                                             

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nd

 Abdul  Moin,  Merger,  Akuisisi  &  Divestasi  (Mergers,  Acquisitions  and  Divestments),  2  ed.,  (Yogyakarta:   Ekonisia,  2004),  p.  330.     4  About  BRISyariah.  Retrieved  May  9,  2012,  from  http://www.brisyariah.co.id/?q=sejarah     5  Ibid.     6  Kementerian  Badan  Usaha  Milik  Negara,  Master  Plan  Badan  Usaha  Milik  Negara  Tahun  2002-­‐2006,  2006-­‐ 2010,  dan  2010  –  2014  (Indonesia’s  Minister  of  State-­‐Owned  Enterprises,  Master  Plan  of  State-­‐Owned  Enterprises   Year  of  2002-­‐20006,  2006-­‐2010  and  2010-­‐2014).  

 

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                        One  of  the  programs  for  such  restructuring  plans  is  to  form  a  holding  company   for  state-­‐owned  enterprises  engaging  in  the  same  sector.7  Further,  one  of  the   alternatives  to  form  such  holding  is  by  Spin  Off.  The  first  case  of  Spin  Off  after   the  issuance  of  the  Master  Plan  was  conducted  by  PT  Pupuk  Sriwijaya  (Persero)   (“PT  Pusri”),  which  engaged  in  the  fertilizer  business,  in  January  2011.8  PT  Pusri   spun   off   most   of   its   assets   and   liabilities   related   to   the   production   and   distribution  of  fertilizer  into  a  newly  established  subsidiary  company,  PT  Pupuk   Sriwidjaja   Palembang   (“PT   Pusri   Palembang”),   in   order   to   transform   PT   Pusri   from  an  operating  holding  company  into  a  holding  company.9       2.

Banking  industry   Following  the  issuance  of  Company  Law,  Indonesia  issued  spin  off  regulations   for  the  banking  sector  that  are  covered  by  Law  No.  21  Year  of  2008  regarding   Sharia  Banking  (“Islamic  Banking  Law”),  which  was  issued  on  16  July  2008,  and   Bank  Indonesia  Regulation  No.  11/10/PBI/2009  regarding  Sharia  Business  Unit   (“PBI   No.11”),   which   was   enacted   on   19   March   2009,   as   one   of   the   implementing   regulations.   Islamic   Banking   Law   and   PBI   No.11   require   all   conventional   commercial   banks   (“Conventional   Bank”)   that   have   sharia   business  units  to  spin  off  their  sharia  units  to  become  Islamic  Bank,  whenever   (i)  such  sharia  business  units  have  reached  50%  (fifty  percent)  of  the  total  asset   value  of  the  Conventional  Banks  that  own  them;  or  (ii)  at  the  latest  15  (fifteen)   years  after  the  enactment  of  the  Islamic  Banking  Law.10  PT  Bank  Pembangunan   Daerah   Jawa   Barat   dan   Banten,   Tbk.   (“Bank   Jabar”)   was   the   first   case   in   the  

                                                                                                                 

7

 Ibid.  

 

8

 Restrukturisasi  Pusri  Holding  mulai  2011.  Retrieved,  May  9,  2012,  from   http://www.pusri.co.id/50publikasi01.php?tipeid=DD&pubid=pub201011939     9  Pengumuman  atas  Ringkasan  Rancangan  Pemisahan  Sebagian  Aktiva  dan  Pasiva  PT  Pupuk  Sriwidjaya   (Persero)  kepada  PT  Pupuk  Sriwidjaja  Palembang  (“The  Announcement  of  the  Abridged  Spin  Off  Plan  by  PT  Pusri   and  PT  Pusri  Palembang”),  published  on  15  November  2010  in  two  newspapers:  Koran  Tempo  and  Sinar   Harapan.     10  Indonesia  (b),  Law  No.  21  of  2008  regarding  Islamic  Banking,  Art  68  (1)  jo.  Indonesia  (c),  Bank  Indonesia   Regulation  No.  11/10/PBI/2009  regarding  Sharia  Business  Unit,  Art  40  (1).  

 

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                        spin  off  of  a  sharia  business  unit  by  establishing  an  Islamic  Bank  based  on  PBI   No.  11,  conducted  in  January  2010.11       3.

Other  institutions   Apart   from   the   state-­‐owned   companies   and   banks,   the   Government   has   also   encouraged  other  institutions,  especially  financial  institutions,  to  conduct  Spin   Off.   The   Capital   Market   and   Financial   Institution   Supervisory   Agency   (“Bapepam-­‐LK12”)   is   openly   supporting   the   Spin   Off   of   (i)   sharia   insurance   business   units   of   conventional   insurance   companies13   and   (ii)   investment   management  units  of  securities  companies14.       In   line   with   the   reasoning   for   the   Spin   Off   of   sharia   business   units   in   the   banking   industry,   the   Spin   Off   of   sharia   insurance   business   units   to   become   sharia   insurance   companies   (Islamic   Insurance   Companies)   is   also   believed   to   help   accelerate   the   development   of   the   Islamic   insurance   industry   in   Indonesia.   Such   Spin   Off   encouragement   is   planned   to   be   included   in   the   upcoming  insurance  law.15     The  Spin  Off  of  investment  management  units  of  the  securities  companies  to   become   independent   companies   is   based   on   the   Bapepam-­‐LK   Regulation   No.   V.D.11  dated  31  December  2009  regarding  Guidelines  for  the  Implementation   of   Investment   Manager   Functions   (“Regulation   No.V.D.11”),   which   basically   requires   compliance   of   the   independence   of   the   investment   manager’s  

                                                                                                                 

11

 Soft  Opening  Bank  Jabar  Banten  Syariah  Hasil  Spin  Off  Unit.  Retrieved  March  3,  2012,  from   http://www.bandungwebs.com/2010/05/bandung-­‐akhirnya-­‐bank-­‐jabar-­‐banten.html     12  Bapepam-­‐LK  stands  for  Badan  Pengawas  Pasar  Modal  dan  Lembaga  Keuangan.     13  Agus  &  Antara,  Bapepam-­‐LK  Desak  Pemisahan  MI.  Retrieved  March  5,  2012,  from  http://www.suarakarya-­‐ online.com/news.html?id=270530     14  Indra  Haryono,  Bapepam-­‐LK  Izinkan  Spin  Off  Aset  Manajemen.  Retrieved  March  5,  2012,  from   http://www.indonesiafinancetoday.com/read/7453/Bapepam-­‐LK-­‐Izinkan-­‐Spin-­‐Off-­‐Aset-­‐Manajemen     15  Spin  Off  Dorong  Perusahaan  Asuransi  Syariah  Kompetitif.  Retrieved  March  5,  2012,  from   http://www.republika.co.id/berita/syariah/bisnis/12/02/01/lypncq-­‐spin-­‐off-­‐dorong-­‐perusahaan-­‐asuransi-­‐ syariah-­‐kompetitif  

 

4  

                        functions.16   Within   Regulation   No.V.D.11,   there   is   no   obligation   to   conduct   Spin   Off,   but   Bapepam-­‐LK   urged   the   investment   management   units   of   securities  companies  to  spin  off  in  order  to  avoid  potential  conflict  of  interest   between  the  investment  managers  and  securities  companies.17  The  Bapepam-­‐ LK   states   that   the   separation   between   securities   companies   and   investment   management  units  will  be  included  in  the  draft  of  the  upcoming  capital  market   law18   and   Bapepam-­‐LK   is   currently   drafting   the   Bapepam-­‐LK   regulation   regarding   separation   (Spin   Off)   of   the   securities   companies   and   their   investment  management  units19.     Following  the  issuance  of  Company  Law,  Spin  Off  has  immediately  become  a  popular   transaction   since   many   companies   and   shareholders   (including   the   State)   have   become  more  aware  of  the  ease  and  benefits  of  Spin  Off.  Therefore,  quite  a  number   of   companies   had   done   Spin   Offs   over   these   past   few   years,   both   voluntarily   and   involuntarily.   The   above   explanations   showed   that   there   are   many   companies   in   Indonesia   which   have   more   than   two   different   lines   of   business,   each   of   which   is   commercially  operated.  Therefore  the  potential  for  Spin  Off  in  Indonesia  is  huge.       However,   the   provisions   regarding   Spin   Off   in   the   Company   Law   are   not   yet   sufficient.  According  to  Article  136  of  the  Company  Law,  further  provisions  regarding   Division   (including   Spin   Off)   are   to   be   regulated   by   Government   Regulation   after   the   enactment   of   Company   Law,   but   such   Government   Regulation   or   other   specific   regulations  related  to  the  implementation  of  Division  (including  Spin  Off)  of  limited   liability  companies  in  sectors  other  than  the  banking  sector  have  yet  to  be  issued.                                                                                                                      

16

 Fransiska  Firlana,  Bapepam  Dorong  Spin  Off  Unit  Usaha  Syariah.  Retrieved  March  5,  2021,  from   http://keuangan.kontan.co.id/news/bapepam-­‐dorong-­‐spin-­‐off-­‐unit-­‐usaha-­‐asuransi-­‐syariah-­‐1/2010/08/14     17  Astri  Karina  Bangun,  Peraturan  Spin  Off  Bapepam  –  Masih  ada  11  perusahaan  yang  belum  penuhi  aturan   manajer  investasi.  Retrieved  March  5,  2012,  from  http://investasi.kontan.co.id/news/masih-­‐ada-­‐11-­‐perusahaan-­‐ yang-­‐belum-­‐penuhi-­‐aturan-­‐manajer-­‐investasi-­‐1     18  Pemisahan  Manajer  Investasi  Diatur  Undang-­‐undang.  Retrieved  March  5,  2012,  from   http://www.indonesiafinancetoday.com/read/2752/Pemisahan-­‐Manajer-­‐Investasi-­‐Diatur-­‐Undang-­‐Undang     19  Agus  &  Antara,  loc.  cit.  

 

5  

                        Spin   Off   as   an   alternative   for   corporate   restructuring   in   Indonesia   is   still   a   current   issue   due   to   the   fact   that   the   potential   of   doing   Spin   Off   in   Indonesia   is   huge   and   growing  in  number  and  complexity  despite  it  being  considered  as  a  ‘new’  transaction   in  Indonesia.  At  the  same  time,  only  a  limited  number  of  in-­‐depth  research  on  this   topic   have   been   conducted,   leaving   a   vast   number   of   practical   legal   issues   that   have   yet   to   be   exhaustively   studied.   Hence,   the   study   of   Spin   Off   in   Indonesia   is   prospective,  because  as  Spin  Offs  are  expected  to  further  develop  and  become  more   complex,  detailed  analysis  of  the  prevailing  regulations  and  issues  is  needed.     The   research   methodology   is   based   on   the   goal   of   the   study,   which   is   to   analyze   the   existing   regulations   of   Spin   Off   and   to   identify   the   problems   that   arise   in   Spin   Off   process  due  to  the  limitation  of  such  regulations,  and  it  mainly  includes  the  use  of   qualitative   data.   The   main   research   technique   used   is   documentary   research   (including  legal  research  documents,  as  well  as  real  life  Spin  Off  cases  in  Indonesia),   combined   with   discussing   relevant   aspects   of   the   topic   with   professionals   in   the   field.  While  semi-­‐structured  discussions  with  Spin  Off  professionals  have  been  used   mainly   to   validate   the   reliability   of   the   collected   data,   documentary   research   has   been  the  primary  source  of  collecting  information.       The   remainder   of   this   paper   is   organized   as   follows.   Chapter   II   discusses   the   theoretical   background   of   Spin   Off   and   briefly   reviews   such   relevant   theories   with   Spin  Off  cases  in  Indonesia.  Chapter  III  describes  the  mechanism  of  Spin  Off  based  on   the   prevailing   regulations   in   Indonesia.   Chapter   IV   analyzes   the   issues   that   arise   in   the  process  of  Spin  Off  in  Indonesia.  The  paper  concludes  with  Chapter  V.      

 

6  

CHAPTER  II  

                     

 

OVERVIEW  OF  SPIN  OFF  IN  INDONESIA     A.  

Spin  Off  as  one  type  of  Division  

  As   outlined   in   the   Introduction,   Spin   Off   is   a   part   or   variation   of   Division.   Since   Company   Law   is   the   first   law   that   regulates   Division   and   there   are   no   other   rules   that   govern   Spin   Off   separately,   thus   the   legal   basis   of   Division   and   Spin   Off   is   identical.  The  materials  for  drafting  the  Division  provisions  in  the  Company  Law,   among   others,   are   using   Title   7   Book   2   BW   Netherlands   (New),   which   comes   into   effect  since  1  March  1998  as  the  implementing  regulation  of  the  Sixth  Directive   of   EC   Law   regarding   the   Division   of   Public   Limited   Liability   Companies   (82/891/EEC)  (“Sixth  Directive”).20     However,   there   are   some   differences   between   the   Division   based   on   the   Company   Law   and   division   based   on   the   Sixth   Directive,   among   others,   the   types   of  division.  According  to  the  Sixth  Directive,  there  are  four  (4)  types  of  division:  (i)   division   by   acquisition21,   (ii)   division   by   the   formation   of   new   companies22,   (iii)   division   by   combined   method,   which   is   basically   a   combination   of   division   by   acquisition   and   division   by   the   formation   of   new   companies23;   and   (iv)   division   under   the   supervision   of   a   judicial   authority24.   Whereas,   based   on   Article   135   Paragraph  (1)  of  the  Company  Law,  there  are  only  two  types  of  Division:                                                                                                                        

20

 Fred  B.G  Tumbuan,  Konsep  Pemisahan  Menurut  UUPT  (The  Concept  of  Division  According  to  the   Company  Law)  -­‐  Pointers  of  Discussion,  presented  at  the  event  of  Company  Law  Socialization,  Jakarta,  22   August  2007.     21  EEC,  Sixth  Council  Directives  82/891/EEC  of  17  December  1982  based  on  Article  54  (3)  (g)  Treaty,   concerning  the  division  of  public  limited  liability  companies,  Art  2  (1).     22  Ibid.,  Art  21  (1).     23  Ibid.,  Art  1  (3).     24  Ibid.,  Art  23.  

 

7  

                     

  1.

 

Absolute  Division   Absolute   division   is   a   legal   action   taken   by   a   company   to   separate   its   business   resulting   all   of   the   assets   and   liabilities   of   the   company   being   transferred  by  operation  of  law  to  two  or  more  other  transferee  companies   and   the   company   that   conduct   such   separation   expires   by   operation   of   law   (“Absolute  Division”)25.     The  term  “expires  by  law”  intends  to  make  explicit  that  the  company  which   conducts  Absolute  Division  will  no  longer  have  legal  status  as  a  legal  entity   under  the  law,  without  any  prior  liquidation.26    

2.

Spin  Off  (Partial  Division)     Many  definitions  of  spin  offs   Literally,  a  spin  off  means  “something  that  comes  about  unexpectedly,  as  a   result   of   activities   that   were   designed   to   achieve   something   else”   (Parhankangas   1999).27   Many   dictionaries,   articles   and   literatures   provide   definitions   of   corporate   spin   off   which   shall   be   reviewed   in   this   section,   among  others:    

  a.

“.   .   .   an   individual   or   an   organizational   unit   leaving   an   existing   firm   to   start   as   a   new   firm   on   the   basis   of   his/their   specific   knowledge   and   competence”  (Elfring  and  Foss  2000).28      

                                                                                                                 

25

 Indonesia  (a),  op.cit.,  Art  1  (12)  jo.  Art  135  (2).  

 

26

 Hadi  Setia  Tunggal,  Undang-­‐Undang  Perseroan  Terbatas  Indonesia  Dalam  Tanya  Jawab  (The  Company   Law’s  Frequently  Asked  Questions),  (Jakarta:  Harvindo,  2008),  p.  40.     27  A.  Parhankangas,  Disintegration  of  technological  competencies,  an  empirical  study  of  divestment   through  spin-­‐off  arrangements,  ACTA  Politechnica  Scandinavica,  Mathemathics,  Computing  and   Management  in  Engineering  Series  no.  99,  (Espoo:  Finish  Academy  of  Technology,  1999),  p.  21.     28  T.  Elfring  and  N.J.  Foss,  Competence  Building:  Understanding  the  Role  of  International  Venturing  and   Spin-­‐offs,  Advance  in  Applied  Business  Strategy,  vol.  6A,  (2000),  pp.  97-­‐119.  

 

8  

                        From   the   above   definition,   other   author   develops   such   definition   to   become:  ”A  spin  off  is  an  individual  or  a  group  of  individuals  leaving  a   ‘parent’   firm   to   start   up   a   new,   independent   business.   The   start   up   occurs  on  basis  of  specific  knowledge  and  competence  built  up  within   the  parent  firm.  The  parent  firm  supports  the  spin  off  by  allowing  the   transfer   of   knowledge,   competence   and/or   direct   means.”29   Elfring   and   Foss   further   classified   spin   offs   according   to   the   character   of   separation  (‘virtuous’  or  ‘vicious’)  and  the  unit  of  analysis  (individual   or  organizational  units).  The  vicious  spin  off  is  the  one  whose  motive   to   start   a   new   firm   is   negative:   the   organizational   unit   or   the   individual   leaves   the   company   because   they   are   frustrated   in   the   relationship  with  the  employer  or  because  they  expect  to  be  able  to   gain  higher  rewards  as  an  entrepreneur.  The  spun  off  company  in  this   case  often  competes  with  the  previous  firm.30  On  the  other  hand,  the   virtuous  spin  off  is  based  on  positive  motivation:  the  activities  of  the   spun   off   company   are   complementary   or   part   of   the   value   chain   of   the  parent  company.  Alternatively,  the  parent  company  may  be  able   to  concentrate  on  its  core  business  and  the  new  company’s  business   opportunities   may   have   higher   value   as   a   separate   company.   In   this   case,   the   new   company   does   not   compete   with   the   parent   company.31     b.

 “.  .  .  the  division  of  an  existing  company  into  two,  usually  a  bigger  one   (the  parent  company)  and  a  smaller  one  (the  spin  off)”  (Moncada  et   al.  (1999).32  

                                                                                                                 

29

 Yonne  Bernardt,  Richard  Kerste  and  Joris  Meijaard,  Spin-­‐off  start-­‐ups  in  the  Netherlands:  At  First   Glance,  EIM  Business  &  Policy  Research,  (Zoetermeer:  May  2002),  p.  13.  Retrieved  June  20,  2012  from   http://www.entrepreneurship-­‐sme.eu/pdf-­‐ez/B200106.pdf     30  Ibid.,  p.  10.     31  Ibid.     32  P.  Moncada  Paternò-­‐Castello,  A.  Tübke,  J.  Howells  and  M.  Carbone,  The  impact  of  corporate  spin-­‐offs   on  the  competitiveness  and  employment  in  the  European  Union,  a  first  study,  European  Commission,  IPTS,   (1999).  

 

9  

                     

 

 

Moncada  et  al.  also  make  a  further  division  into  two  types  of  spin  off   process:   (i)

Restructuring-­‐driven   spin   offs:   “.   .   .   because   the   business   no   longer   fits   the   parent’s   strategy,   because   functions   of   the   business   are   externalized   and/or   because   the   parent   company   tries  to  avoid  costly  layoffs  and  social  plans”.  

(ii)

Entrepreneurial   spin   offs:   “.   .   .   based   on   critical   know-­‐how   acquired  during  his  previous  professional  experience  in  order  to   exploit   an   unused   potential”.   This   type   can   be   further   divided   into   two   types:   spin   offs   that   collaborate   with   their   parent   company  and  spin  offs  that  compete  with  their  parent  company   (which   has   an   analogy   with   the   above   mentioned   virtuous   or   vicious  spin  offs).33  

  c.

Shrader   and   Simon   (1997)   divided   spin   offs   into:   (i)   independent   venture,   which   is   a   new   independent   company,   established   by   individual  entrepreneurs;  and  (ii)  corporate  ventures,  which  initiatives   are   controlled   and   sponsored   by   the   parent   company.   Both   of   them   started   by   individuals,   using   specific   knowledge   from   their   former   jobs.34  In  accordance  with  Shrader  and  Simon,  Green  et  al.  (1999)  also   define  corporate  venturing  as  a  creation  of  new  business  by  members   of  a  firm  that  already  exists.35    

d.

 Other   author   describes   ‘entrepreneurial’   spin   offs   as   “.   .   .   entrepreneurs  that  leave  a  company  to  start  a  firm  of  their  own.  This  

                                                                                                                 

33

 Bernardt,  op.cit.,  p.  11.  

 

34

 Rodney  C  Shrader  and  Mark  Simon,  Corporate  versus  independent  new  ventures:  resource,  strategy,   and  performance  differences,  Journal  of  Business  Venturing  (1997),  12,  pp.  47-­‐66.     35  Patricia  G.  Greene,  G.  Candida  Brush  and  Myra  M.  Hart,  The  Corporate  Venture  Champion:  A  Resource-­‐ based  Approach  to  Role  and  Process,  Entrepreneurship  Theory  and  Practice  (1999),  vol.  23,  no.  3,  pp.  103-­‐ 121.  

 

10  

                        transfer  to  a  new  company  must  include  the  transfer  of  some  rights,   e.g.   assets   or   knowledge,   from   the   existing   legal   body   to   the   new   firm   body”  (Lindholm  Dahlstrand  1997).36     e.

“.   .   .occurs   when   a   company   distributes   all   of   the   common   shares   it   owns   in   a   controlled   subsidiary   to   its   existing   shareholders,   thereby   creating  a  separate  public  company.”37    

f.

“.   .   .a   pro-­‐rata   distribution   of   the   stock   of   a   subsidiary   to   existing   shareholders.   The   subsidiary   may   be   an   existing   division   or   a   newly   created   subsidiary   of   the   parent.   At   the   time   of   the   spin-­‐off,   the   subsidiary  becomes  a  freestanding  company.  No  funds  are  raised  in  a   spin-­‐off,  and  neither  firm  revalues  its  assets.”38  

  g.

“   …the   property   company   is   split   up   and   the   resulting   “parts”   are   transferred  either  in  its  entirety  to  two  or  more  acquiring  companies,   or   the   dividend   company   continues   in   “reduced   circumstances”   retaining  its  remaining  property.”39    

h.

Further,   the   Black’s   Law   Dictionary’s   definition   of   spin   off   is   a   corporate   divestiture   in   which   a   division   of   a   corporation   becomes   an   independent  company  and  stock  of  the  new  company  is  distributed  to   the  corporation’s  shareholders.40  

                                                                                                                 

36

 Åsa  Lindholm  Dahlstrand,  Growth  and  inventiveness  in  technology-­‐based  Spin-­‐off  Firms,  Research   Policy  (1997),  26,  pp.  331-­‐344.     37  James  A.  Miles  and  James  D.  Rosenfeld,  The  effect  of  Voluntary  Spin-­‐off  Announcements  on   Shareholder  Wealth,  The  Journal  of  Finance  (December  1983),  vol.  38,  no.  5.  Retrieved  June  24,  2012,  from   http://bbs.cenet.org.cn/uploadimages/200462219135045452.pdf     38  Amy  K.  Dittmar,  Capital  Structure  in  Corporate  Spin-­‐offs,  The  Journal  of  Business  (January  2004);  77,  1,   The  University  of  Chicago  Press.  Retrieved  May  9,  2012,  from  http://www.journals.uchicago.edu/cgi-­‐ bin/resolve?JB770102     39 nd  Erik  Werlauff,  EU–Company  Law:  Common  Business  Law  of  28  States,  2  ed.,  translated  by  Hanre   Gron,  (Denmark:  DJØF  Publishing,  2003),  p.  587.      

 

11  

                     

 

 

Based   on   the   above   definitions,   spin   off   can   be   described   as   a   corporate   action,  which  is  taken  by  a  company  to  separate  its  division/business  unit  or   subsidiary  by  forming  a  new  company  or  into  an  existing  company  or  even   the  departure  of  an  individual  from  an  existing  company  by  establishing  a   new  company.  However,  since  there  are  many  definitions  in  use,  this  paper   shall   specifically   address   the   Spin   Off   in   which   the   meaning   is   in   line   with   the  definition  contemplated  in  the  Company  Law,  which  gives  the  following   definition  of  Spin  Off  as:     Spin   Off   is   a   legal   action   taken   by   a   company   to   separate   its   business   resulting   in   part   of   the   assets   and   liabilities   of   the   company   being   transferred   by   operation   of   law   to   1   (one)   or   more   other   transferee   companies   but   the   company   conducting   such   separation   remains   in   existence.41     According   to   the   Company   Law,   the   assets   and   liabilities   that   are   being   separated   is   a   part   of   the   company   itself,   such   as   the   separation   of   a   division/business  unit  of  the  company,  and  it  will  be  separated  by  operation   of  law  with  only  one  deed,  which  is  the  deed  of  Spin  Off.  Therefore,  neither   the   separation   of   a   subsidiary   from   its   parent   company  nor   the   departure   of   an   individual   from   an   existing   company   is   included   in   this   specific   definition  of  Spin  Off.     Consistent   with   the   definition   of   Spin   Off   according   to   Company   Law,   PBI   No.11  defines  Spin  Off  as  a  business  separation  of  one  Conventional  Bank   into   two   or   more   business   entities   in   accordance   with   the   stipulations   of   prevailing  legislations.42                                                                                                                                                                                                                                                                                                                      

40

 Black’s  Law  Dictionary,  8th  ed.,  edited  by  Bryan  A.  Garner,  (St.  Paul,  Minnesota:  West  Publishing  CO,   2004),  p.  1437.     41  Indonesia  (a),  op.cit.,  Art  1  (12)  jo.  Art  135  (3)  jo.  elucidation  Art  135  (1)  b.     42  Indonesia  (c),  op.cit.,  Art  1  (14).  

 

12  

Spin  off  and  merger    

                     

 

Spin   Off   is   the   opposite   of   merger.43   The   term   Spin   Off   is   also   known   as   demerger,  which  is  the  converse  of  a  merger.44  The  Company  Law  defines   merger   as   a   legal   action   taken   by   one   or   more   companies   to   merge   with   another   existing   company   resulting   the   assets   and   liabilities   of   the   companies   being   transferred   by   operation   of   law   to   the   surviving   company   and   thereafter   the   merging   companies   status   as   legal   entities   ceases   by   operation  of  law  (“Merger”).45  Basically,  in  Merger,  there  are  two  or  more   companies   being   merged   into   one   of   the   merging   companies,   conversely   in   Spin   Off   there   is   one   company   which   will   be   divided   into   two   or   more   companies.  Further,  the  transfer  of  assets  and  liabilities  in  both  Merger  and   Spin  Off  occurs  by  operation  of  law.  Therefore,  the  mechanism  of  Spin  Off  is   very   similar   to   the   mechanism   of   Merger,   which   makes   the   provisions   of   Merger   are   the   best   reference   in   filling   out   the   provisions   of   Spin   Off   in   Indonesia  that  have  not  yet  been  set  (if  it  is  deemed  necessary).      Other   important   things   that   need   to   be   noted   regarding   Division   in   Indonesia,   among   others,   that   the   cross-­‐border   Division,   for   example   between   an   Indonesian   company   and   a   Singaporean   company,   cannot   be   done.46   Since   the   laws   that   regulated   both   countries   are   different   and   especially   for   immovable   properties,   lex   rei   sitae   will   be   applied.47   Lex   rei   sitae   (lex   situs)   means   that   the   law   that   should   be   imposed   on   a   property   is   the   law   where   the   property   is  

                                                                                                                 

43

 Masih  Banyak  Yang  Perlu  Disempurnakan  RUUPT.  Retrieved  March  5,  2012,  from   http://hukumonline.com/detail.asp?id=15752&cl=Berita     44  SHP,  Demerger  /  Spin-­‐Off  –  Mandatory  Corporate  Action,  (21  July  2009).  Retrieved  May  9,  2012,  from   http://shareholdersportal.co.uk/investments/demerger-­‐spin-­‐off-­‐%e2%80%93-­‐mandatory-­‐corporate-­‐ action#ixzz1uDYfBFxY     45  Indonesia  (a),  op.cit.,  Art  1  (9).     46  Tumbuan,  op.  cit.     47  Ibid.    

 

13  

                        situated.48   This   shows   that   the   transfer   of   assets   and   liabilities   by   operation   of   law  might  be  invalid  or  cannot  be  applied  in  the  said  country.49     Moreover,   a   company   within   the   status   of   “under   liquidation”   after   dissolution   cannot   be   a   party   in   Division   process.50   This   condition   also   applied   with   a   company  that  has  been  declared  bankrupt  or  insolvent.51       B.  

Shareholders  of  the  New  Company  Resulting  from  Spin  Off  

  In   Indonesia,   a   company   must   be   established   by   at   least   two   shareholders.52   In   the  event  that  the  company  has  obtained  the  status  of  legal  entity  the  number  of   shareholders   become   less   than   two   persons,   then   within   six   months   from   that   the  time  the  situation  arises,  the  shareholder  concerned  must  assign  part  of  the   shares   to   some   other   person   or   the   company   must   issue   new   shares   to   some   other  person.53     With   regard   to   the   shareholders   of   the   new   company   resulting   from   Spin   Off   transaction   (the   transferee   company),   neither   the   Company   Law   nor   Islamic   Banking   Law   has   explicitly   stated   who   are   the   shareholders   of   the   new   company,   whether  the  initial  shareholders  of  the  divided  company  or  the  divided  company   itself.     Towards  this,  Fred  B.G.  Tumbuan,  one  of  the  legal  experts  in  Indonesia  involved   in   drafting   the   Division   provisions   in   the   Company   Law,   suggests   that   the   basic                                                                                                                    

48

 Bayu  Seto,  Dasar-­‐dasar  Hukum  Perdata  International  -­‐  Buku  Pertama  (The  Basics  of  International   Private  Law  -­‐  The  First  Book),  (Bandung:  PT  Citra  Aditya  Bakti,  1994).     49  Tumbuan,  op.cit.     50  Ibid.     51  Ibid.     52  Indonesia  (a),  op.cit.  Art  7  (1).     53  Ibid.,  Art  7  (5).    

 

14  

                        principle  in  Division  is  the  shareholders  of  the  companies  that  conduct  Spin  Off   by   operation   of   law   shall   become   the   shareholders   of   the   transferee   companies.54  Such  basic  principle  is  in  line  with  the  definition  of  Spin  Off  based   on  Black’s  Law  Dictionary,  which  is  “.  .  .  a  corporate  divestiture  in  which  a  division   of   a   corporation   becomes   an   independent   company   and   stock   of   the   new   company  is  distributed  to  the  corporation’s  shareholders  .  .  .”55.     Although   in   practice,   it   is   not   necessarily   so.   In   many   cases,   for   example   the   establishment  of  PT  Bank  BNI  Syariah  (“BNI  Syariah”),  PT  Pusri  Palembang  and  PT   Bank   BJB   Syariah   (“BJB   Syariah”),   which   are   companies   that   resulted   from   Spin   Off   transactions,   one   of   their   shareholders   was   not   the   shareholder   of   the   divided   companies,   but   the   divided   companies   themselves.   Such   condition   can   occur  because  in  Indonesia  there  is  no  automatic  distribution  of  shares  as  a  result   of  Spin  off.  Shareholders  of  the  new  company  are  not  determined  based  on  the   transferred   of   assets   and   liabilities,   but   based   on   who   injected   capital   in   the   company   which   can   be   calculated   as   shares.   In   the   event   that   the   assets   and   liabilities   being   transferred   to   the   transferee   company   are   in   balance,   they   cannot  be  considered  as  a  capital  injection  that  can  be  calculated  as  shares  in  the   transferee  company.  The  only  way  that  the  assets  can  be  calculated  as  shares  in   the   transferee   company   is,   if   there   is   a   difference   between   the   assets   and   liabilities  that  are  being  transferred,  and  the  difference  must  show  that  the  value   of   assets   is   greater   than   the   value   of   the   liabilities.   Such   difference   shall   be   considered  as  a  capital  injection  that  can  be  calculated  as  shares.56                                                                                                                          

54

 Tumbuan,  op.cit.  

 

55

 

 Black’s  Law  Dictionary,  op.cit.,  p.  1437.  

56

 Interview  with  Fabiola  Hutagalung,  Partner  at  Hanafiah  Ponggawa  &  Parners  law  firm,  Jakarta,   Indonesia  0n  16  May  2012,  at  17.00  time  in  Tilburg  -­‐  Netherlands.  Mrs.  Hutagalung  also  happens  to  be  one   of  the  lawyers  who  involved  in  the  Spin  Off  of  BRI,  PT  Pusri,  PT  Bank  Negara  Indonesia  (Persero),  Tbk.  and   BJB.  

 

15  

                        Relationship   between   the   transferring   company   and   the   transferee  

C.  

company  in  Spin  Offs     Almost   every   single   company   resulting   from   Spin   Off   received   different   kind   of   support  from  their  parent  companies  (transferring  companies)  at  least  until  they   can   be   truly   independent.   Resources   are   not   only   shared   unintentionally.57   In   some  case  the  transferring  company,  as  the  parent  company,  deliberately  helps   creating  a  new  company  (by  Spin  Off)  as  part  of  the  business  strategy,  which  they   believe  can  offer  several  benefits  to  the  existing  company.58  The  type  of  support   received   by   the   transferee   company   from   the   transferring   company,   among   others,   are   sales   or   job   orders,   knowledge,   financial   support   and   other   support   that  contain  a  range  of  different  support  types,  depending  on  each  case.     Many  companies  also  offered  their  former  employees  the  possibility  to  work  part   time  or  with  flexible  hours  during  the  transition  period.59  Physical  resources,  such   as   the   (temporary   or   permanently)   use   of   machines,   computers,   and   other   equipment   are   also   sometimes   transferred.60   Further,   one   of   the   most   important   aspects   is   the   reputation   of   the   parent   company,   especially   for   a   start   up   company.   The   use   of   network,   access   to   customers,   suppliers   and   access   to   finance  are  relevant  positive  effects  for  a  new  company  resulting  from  Spin  Off.61     In  Indonesia,  an  agreement  between  the  transferring  company  (the  parent  firm)   and  the  transferee  company  (the  subsidiary)  regarding  the  commitment  from  the   parent  company  to  the  subsidiary  usually  become  one  of  the  attachments  of  the   deed  of  Spin  Off.  Such  agreement  shall  state  that  the  transferring  company  shall                                                                                                                    

57

 Sierdjan  Koster,  Spin-­‐off  firms  and  individual  start-­‐ups.  Are  they  really  different?,  paper  prepared  for   th 44  ERSA  conference,  (Porto:  25-­‐29  August  2004),  p.  4.  Retrieved  June  20,  2012,  from:  http://www-­‐sre.wu-­‐ wien.ac.at/ersa/ersaconfs/ersa04/PDF/287.pdf     58  Ibid.     59  Bernardt,  op.cit.,  p.  24.     60  Ibid.     61  Ibid.,  p.  30.  

 

16  

                        commit  to  the  transferee  company  to  give  its  supports  in  relation  to,  for  example,   financial   support   (capital   injection),   human   resources,   physical   resources   (equipments  or  even  buildings  for  office),  information  technology  (IT),  intellectual   property  rights  and  others  deemed  necessary  until  a  specified  time  or  as  long  as   needed.     Success  factors  of  Spin  off  Start  Ups   The   advantage   of   the   above   mentioned   relationship   with   the   transferring   companies   is   the   most   significant   difference   between   an   ordinary   new   established   companies   and   new   companies   resulting   from   Spin   Off.   A   survey,   which  was  conducted  in  the  Netherlands,  showed  that  companies  resulting  from   Spin  Offs  might  perform  better  than  regular  companies.62       The   support   of   the   parent   companies   most   likely   becomes   a   very   important   contribution  of  the  spun  off  companies’  success.  The  spun  off  companies  can  be   seen   as   new   companies   managing   existing   resources   or   assets   originating   from   their  parent  companies,  while  the  resources  of  the  ordinary  companies  originate   from  elsewhere.63       Apart   from   the   financial   support,   including   the   physical   resources,   which   is   obviously   very   helpful   for   start   ups,   the   knowledge   and   experience   that   those   companies   gained   within   the   parent   companies   enable   them   to   expand   their   activities   rather   quickly   and   to   make   progress   in   the   development   of   their   activities.64   When   an   employee   utilizes   sector-­‐specific   knowledge   in   a   new   company,  resources  of  the  former  company  are  unintentionally  shared  with  the   newly   developed   company.   In   some   knowledge   intensive   industries   it   is   not   uncommon  for  employees  to  sign  a  contract  in  which  they  state  that  knowledge                                                                                                                    

62

 Ibid.,  p.  36.  

 

63

 Koster,  op.cit.,  p.  3.  

 

64

 Bernardt,  op.cit.,  p.  36.  

 

17  

                        will  not  be  used  outside  of  the  company.65  Therefore,  this  is  a  huge  advantage  for   spin   off   startups   since   the   parent   companies   are   allowing   them   to   use   such   knowledge.   On  the  contrary,  many  new  established  companies  lose  considerable   time  commercializing  their  ideas.       Further,   the   reputation   of   the   parent   company   is   also   an   advantage.   As   financiers,  potential  clients  and  partners  with  whom  they  cooperate  shall  have  a   positive  consideration  and  take  the  spun  off  companies  more  seriously  once  they   know  their  background  and  the  trusted  reputation  of  the  parent  companies  that   support  them.66  In  addition,  orders  from  the  parent  companies  or  other  kinds  of   indirect   financial   support   also   contribute   to   the   first   success   of   spun   off   companies.   For   example,   the   spun   off   companies   may   get   through   the   difficult   start-­‐up  phase  because  the  parent  company  is  a  reliable  client.67       D.  

Key  motivations  of  Spin  Offs  

  Generally,  Spin  Offs  come  in  two  forms68:   1.

Voluntary   Voluntary   Spin   Offs   typically   yield   and   thus   not   essential   to   the   parents   companies.69   Companies   may   have   a   number   of   reasons   for   spinning   off   their  business  units  such  as  to  improve  the  value  of  such  business  units  or   to   take   advantage   of   the   tax   benefits   as   discussed   below.70   While   many   Spin   Offs   are   motivated   by   the   desire   to   dispose   unprofitable  

                                                                                                                 

65

 Koster,  op.cit.,  p.  3.  

 

66

 

 Ibid.  

67

 Ibid.  

 

68

 Spin-­‐Off  Benefits,  Spin  Off  Advisors  L.L.C:  Independent  Research  on  Corporate  Spin-­‐Offs.  Retrieved   May  10,  2012,  from  http://www.ibtimes.com/clients/2010/spin-­‐off/pdffiles/Spin-­‐Off_Benefits_4_10.pdf     69  Ibid.     70  Ibid.  

 

18  

                        divisions/business  unit,  there  are  also  many  very  good  business  reasons  to   spin  off  profitable  divisions/business  unit.             2.

Involuntary/mandatory   On   the   other   hand,   involuntary   Spin   Offs,   which   may   also   result   from   a   variety  of  causes,  generally  result  from  obligations  under  any  law  or  other   relevant   regulations   or   also   by   court   decisions   or   complaints   filed   by   the   State  regulatory  agency71  that  basically  require  companies  to  Spin  Off  and   leave   the   companies   with   no   other   choice   than   to   spin   off   their   business   units.    

  Spin   Off   is   also   a   sensible   option   if   negative   synergies   or   diseconomies   of   scale   exist   that   can   be   eliminated   by   separating   the   company   into   two   or   more   independent   companies.72   According   to   Kudla   and   McInish   (1984),   companies   have  a  variety  of  motivations  for  Spin  Off,  including  management  reasons,  capital   market   factors,   risks,   tax   benefits,   marketing   factors,   and   regulatory/legal   reasons73.   Possible   explanations   for   conducting   Spin   Offs   are   plentiful   and   can   be   broadly  categorized  into  the  following:     1.

Organizational  improvements   Spin   Off   is   most   often   conducted   in   circumstances   where   a   company   is   engaged   in   a   number   of   businesses,   one   of   which   is   considered   non-­‐core   in   relation  to  the  company’s  primary  business  areas.74    

                                                                                                                 

71

 Ronald  J.  Kudla  and  Thomas  H.  Mcinish,  Corporate  Spin-­‐Offs,  (London:  Quorum  Books,  1984),  p.  7.  

 

72

 Thomas  Kirchmaier,  The  Performance  Effects  of  European  Demergers,  Centre  for  Economic   Performance  (London:  London  School  of  Economics  and  Political  Science,  May  2003).  Retrieved  May  10,   2012,  from  http://eprints.lse.ac.uk/20047/     73  Kudla,  op.cit.     74  Phillip  Webb,  Spin-­‐off:  How  to  find  hidden  treasures  in  the  desert  of  market  crisis,  IR  Magazine   (January/February  2009).  Retrieved  May  28,  2012,  from   http://www.debevoise.com/files/Publication/a0ca3db2-­‐ce22-­‐4bea-­‐abd8-­‐ 9ad6cf74207c/Presentation/PublicationAttachment/bdbdbe46-­‐ea14-­‐466b-­‐b655-­‐ 9f4500c665e0/IRmagazinereprint.pdf  

 

19  

                        From   an   organizational   perspective,   value   can   be   created   through   the   elimination  of  misfits  in  the  strategic  focus  or  organizational  properties  of   the   organization.   In   addition,   the   reduction   of   the   size   of   an   organization   leads   to   an   over-­‐proportional   reduction   in   ‘information   loss’   hierarchy.75   Spin   Offs   can   also   alleviate   management   problems   for   the   companies   conducting  Spin  Offs  and  the  spun  off  companies  because  both  companies   often  have  different  and/or  unrelated  lines  of  business  or  different  business   environments   and   market   sectors.76   Unrelated   business   lines   means   that   they  also  have  different  business  risks,  which  affect  operating  earnings  thus   Companies  sometimes  Spin  Off  their  units  to  protect  both  companies  and   units  from  one  another’s  risks.77     Moreover,   the   original   companies   often   cannot   provide   the   kind   of   management,   financial,   and   resources   support   that   the   units   need   for   continuous  growth.78  Consequently,  Spin  Offs  allow  the  spun  off  companies   to   negotiate   management,   finance   and   resource   issues   with   their   own   board   of   directors   (“BoD”),   to   make   decisions   for   themselves79   and   concentrate  on  their  specific  market  segment  thus  enabling  the  market  to   better   appreciated   the   spun   off   companies.   Further,   companies   conducting   the  Spin  Offs  can  better  concentrate  on  their  most  important  operations  or   core   businesses   unencumbered   by   the   spun   off   companies.80   Therefore,   Spin   Offs   that   increase   corporate   focus   should   create   value   and   improve   efficiency.81                                                                                                                    

75

 

 Kirchmajer,  op.cit.  

76

 Spin-­‐Off  Benefits,  loc.cit.  

 

77

 Ibid.  

 

78

 Ibid.  

 

79

 Ibid.  

 

80

 Ibid.  

 

81

 Dmitri  Boreiko  and  Maurizio  Murgia,  Which  spin-­‐offs  generate  value  and  performance  improvements?,   Free  University  of  Bolzano-­‐Bozen:  School  of  Economics  and  Management,  (Italy:  September  2008).  Retrieved   June  20,  2012,  from  http://69.175.2.130/~finman/Turin/Papers/EUSpinoffPaper_V_09_2008.pdf  

 

20  

                     

 

 

For  example,  based  on  BJB’s  Announcement  of  Abridged  Spin  Off  Plan,  the   purposes  from  spinning  off  its  sharia  business  unit  by  establishing  PT  Bank   Jabar   Banten   Syariah   (“BJBS”)   are,   among   others,   (i)   to   increase   productivity  and  efficiency;  (ii)  to  improve  the  capital  structure;  and  (iii)  to   enhance   the   business   prospect   of   BJB’s   sharia   business   unit.82     The   above   three  purposes  can  be  better  achieved  if  BJB’s  sharia  business  unit  stands   on   its   own   as   an   independent   company   with   its   own   organizational   structure.       2.

Capital  market  improvements   More   focused   units   might   improve   access   to   the   capital   market   or   attract   a   new  set  of  investors,  thereby  eliminating  barriers  to  growth  from  a  capital   market  perspective.83  Further,  the  spun  off  company  has  the  advantage  of   an   independent   stock   price   which   should   reflect   the   capital   market’s   assessment   of   management’s   performance.84   Therefore,   the   spun   off   companies   could   be   worth   more   in   the   open   market   if   they   traded   on   their   own.  This  is  a  way  to  bring  out  hidden  asset  value.85     In   line   with   the   above,   PT   Bank   Negara   Indonesia   (Persero),   Tbk.   (“BNI”)   declared   in   its   Announcement   of   Abridged   Spin   Off   Plan   that   one   of   the   positive   benefits   expected   from   the   spun   off   of   BNI’s   sharia   business   unit   is   that   BNI   Syariah,   as   an   independent   company,   shall   be   able   to   enter   the   Islamic   capital   market   and   international   financing.86   Such   condition   will  

                                                                                                                 

82

 Pengumuman  atas  Ringkasan  Rancangan  Pemisahan  Dan  Rencana  Pengalihan  Hak  Dan  Kewajiban   Unit  Usaha  Syariah  PT  Bank  Pembangunan  Daerah  Jawa  Barat  dan  Banten  Tbk.  Dengan  Cara  Mendirikan  PT   Bank  Jabar  Banten  Syariah  (“The  Announcement  of  the  Abridged  Spin  Off  Plan  by  BJB”),  published  on  1   December  2009  in  Business  Indonesia  newspaper.     83  Kirchmajer,  op.cit.     84  Spin-­‐Off  Benefits,  loc.cit.     85  John  A.,  Why  Do  Companies  Spin  Off?.  Retrieved  May  23,  2012,  from   http://www.cdnbusinessdirectory.com/financial-­‐planning/39439-­‐why-­‐do-­‐companies-­‐spin-­‐off      

 

21  

                        never  happen  if  BNI  Syariah  remained  as  part  of  BNI  as  its  sharia  business   unit.     3.

Corporate  governance  improvements   Value  creation  through  improvements  in  the  role  and  function  of  the  head   office,   improvement   in   the   structuring   of   managerial   incentives   and   more   effective   market   based   governance   mechanisms   due   to   increased   transparency.87  

  One   of   the   examples   in   line   with   the   above   is   the   spun   off   PT   Pusri.   As   mentioned  in  the  Introduction,  PT  Pusri  spun  off  all  its  assets  and  liabilities   that   related   to   its   operations   and   distributions   of   fertilizer   into   PT   Pusri   Palembang.  The  transaction  was  conducted  in  order  to  transform  PT  Pusri   from  an  operating  holding  company  to  a  holding  company.88  Such  condition   is  intended  to  apply  better  principles  of  good  corporate  governance  on  the   fertilizer  industry  (for  the  state-­‐owned  companies)  in  relation  to  PT  Pusri’s   position   as   the   holding   of   all   state-­‐owned   fertilizer   companies,   especially   in   terms  of:       a.

To   avoid   any   conflict   of   interest   between   the   holding   and   its   subsidiaries.    

b.

To   create   a   more   effective   control   mechanism   by   the   holding   company   towards   its   subsidiaries   thus   the   accountability   of   the   subsidiaries’  performances  will  be  better  established.  

                                                                                                                                                                                                                                                                                                                   

86

 Pengumuman  atas  Ringkasan  Rancangan  Pemisahan  Unit  Usaha  Syariah  PT  Bank  Negara  Indonesia   (Persero)  Dengan  Cara  Pendirian  Bank  Umum  Syariah  (“The  Announcement  of  the  Abridged  Spin  Off  Plan  by   BNI”),  published  on  12  August  2009  in  three  newspapers:    Business  Indonesia,  Media  Indonesia  and  the   Jakarta  Globe.     87  Kirchmajer,  op.cit.     88  The  Announcement  of  the  Abridged  Spin  Off  Plan  by  PT  Pusri  and  PT  Pusri  Palembang,  op.cit.  

 

22  

c.

                        To   avoid   any   conflict   of   interest   and   job   function   between   the   BoD   and   board   of   commissioners   of   the   holding   company   and   its   subsidiaries.  

  d.

Harmonization   and   synchronization   of   the   corporate   policy   inter-­‐ subsidiaries.  

  e.

The   centralization   of   the   strategic   organizational   functions   and   policies   to   the   holding   company   to   increase   the   overall   value   of   the   fertilizer  state-­‐owned  companies.89  

  4.

Tax  advantages   Spinning   off   the   companies’   assets   and   liabilities   can   be   a   better   way   to   create  shareholder  value  while  taking  advantage  of  tax  laws.  In  Indonesia,   Regulation   of   the   Minister   of   Finance   No.   43/PMK.03/2008   regarding   the   Use  of  Book  Value  upon  the  Transfer  of  Assets  in  Mergers,  Consolidations   or   Divisions   allows   the   company   which   is   going   to   conduct   a   spin   off   to   use   the   book   value   for   the   calculation   of   the   tax   on   the   transfer   of   its   assets,   provided  that:     a.

The   approval   of   the   Directorate   General   of   Tax   for   the   proposed   transfer  in  the  Spin  Off  has  been  obtained90;    

b.

Such  company  is  (i)  a  private  company  who  is  about  to  make  an  initial   public  offering  within  1  year  after  the  approval  from  the  Directorate   General   of   Tax   is   obtained,   or   (ii)   a   public   company   as   long   as   the   company   which   receives   the   assets   in   the   Spin   Off   will   make   an   IPO   within  1  year  after  the  approval  from  the  Directorate  General  of  Tax  is   obtained.91  

                                                                                                                 

89

 Ibid.  

 

90

 Indonesia  (d),  Regulation  of  the  Minister  of  Finance  No.  43/PMK.03/2008  regarding  the  Use  of  Book   Value  upon  the  Transfer  of  Assets  in  Mergers,  Art  2.    

 

23  

                     

 

 

Further,   Spin   Off   can   also   be   used   as   an   alternative   restructuring   strategy   for   companies.   In   many   events,   restructuring   companies   through   selling   (assets  and/or  shares)  could  generate  a  big  capital  gain  tax.  Conducting  Spin   Off  can  reduce  such  condition.     5.

Regulatory  reason   Finally,   laws   and   regulations   may   cause   companies   to   Spin   Off   units   by   voluntarily  or  involuntarily.92  As  previously  mentioned,  laws  and  regulations   sometimes   lead   to   involuntary   spin   offs   when   such   regulations   oblige   companies   to   conduct   Spin   Off.   For   example,   PBI   No.11   requires   all   the   Conventional  Banks  that  have  sharia  business  units  to  spin  off  their  sharia   business  units  to  become  Islamic  Banks,  whenever  (i)  such  sharia  business   units   have   reached   50%   (fifty   percent)   of   total   asset   value   of   the   conventional   commercial   banks   that   own   them;   or   (ii)   at   the   latest   15   (fifteen)   years   since   the   enactment   of   the   Islamic   Banking   Law.93   Those   banks   that   have   met   the   first   and   the   second   requirements   have   to   do   spin   off  by  mandatory  and  all  the  banks  in  Indonesia  that  have  sharia  business   units   in   the   year   2023   have   to   Spin   Off   such   units   by   mandatory   as   well.

                                                                                                                                                                                                                                                                                                                 

91

 Ibid.,  Art  1  (5)  jo.  Art  6  (1).  

 

92

 Spin-­‐Off  Benefits,  loc.cit.  

 

93

 Islamic  Banking  Law  was  enacted  on  16  July  2008.  

 

24  

CHAPTER  III  

                     

 

INDONESIAN  LEGAL  FRAMEWORK  IN  SPIN  OFF     A.  

Company  Law  

  As   the   first   law   regulating   Spin   Off   in   Indonesia,   Company   Law   contains   the   basic   requirements  and  general  procedures  for  conducting  Spin  Off.     1.

Basic  requirements   The  basic  requirements  for  Division  (including  Spin  Off)  are  stipulated  under   Article  126:     a.

The   legal   actions   of   Merger,   consolidation,   acquisition   and   Division   must   be   subject   to   the   interests   of   the   company,   minority   shareholders,   the   company’s   employees,   creditors,   other   business   partners   of   the   company,   the   public   and   sound   business   competition.94    

b.

Merger,   consolidation,   acquisition   and   Division   shall   not   reduce   the   rights   of   minority   shareholders   to   sell   their   shares   at   a   reasonable   price.95  

  As  stated  above,  there  are  some  interests  that  must  be  considered  by  the   BoD,   as   the   authorized   organ   of   the   company96,   in   performing   Spin   Off,   among  others:                                                                                                                        

94

 

 Indonesia  (a),  op.cit.,  Art  126  (1).  

95

 Ibid.,  Art  126  (2)  jo.  Art  62.  

 

96

 The  Board  of  directors  shall  be  fully  responsible  for  the  management  of  the  companies  and  represent   companies  in  and  out  of  the  courts.  See  Indonesia  (a),  op.cit.,  Art  97  (1)  jo.  Art  98  (1).  

 

25  

                     

  a.

 

The  company’s  interest   Company’s   interest   becomes   the   main   interest   to   be   considered   in   conducting   Spin   Off.   In   this   matter   the  BoD   is   to   be   reminded   by   such   provisions  that  the  execution  of  Spin  Off  shall  not  be  detrimental  to   the  company.  The  decision  of  conducting  Spin  Off  must  be  based  on   good   faith   and   responsibility   of   the   BoD   for   the   benefit   of   the   company   and   in   accordance   with   the   purpose   and   objectives   of   the   company.97    

b.

Minority  shareholders’  interest   The   term   “subject   to   the   interest   of   minority   shareholders”   is   intended  to  ensure  that  the  majority  shareholders  do  not  act  as  they   pleased   themselves   without   considering   the   interest   of   the   minority   shareholders,   but   rather   on   good   faith.   On   the   other   hand,   the   minority   shareholders   are   also   required   to   act   wisely   and   based   on   good   faith   since   the   minority   shareholders   are   not   always   the   party   with   the   weak   economic   condition.   Sometimes   for   various   reasons,   the  party  with  the  strong  economic  condition  agreed  to  hold  shares  in   small  quantities.98     The   problems   of   minority   shareholders   could   be   a   dilemma   if   the   majority   shareholders   or   the   minority   shareholders   show   dictatorial   attitudes,  especially  when  the  minority  shareholders  represent  more   than  ¼  (one  quarter)  of  the  total  shares  with  voting  rights  while  the   majority   shareholders   insisted   on   continuing   the   plan   for   Spin   Off   without  considering  the  minority  shareholders’  interests.  In  this  case,   the   minority   shareholders   with   their   ability   to   prevent   decision-­‐

                                                                                                                 

97

 Indonesia  (a),  op.cit.,  Art  97  (2)  jo.  Art  92  (1).  

 

98

 Kartini  Muljadi,  Merger,  Konsolidasi,  dan  Akuisisi  Dalam  UU  Perseroan  Terbatas  No.  1  tahun  1995,   Newsletter  (Juni  1995).  

 

26  

                        making   process   through   the   general   meeting   of   shareholders   (“GMS”)99  could  insist  on  refusing  the  plan  for  Spin  Off  regardless  of   the   majority   shareholders’   interests   and   reasons.   Therefore,   the   execution   of   Spin   Off   shall   not   reduce   the   rights   of   minority   shareholders   to   sell   their   shares   at   a   reasonable   price   in   the   case   when  the  minority  shareholders  do  not  agree  and  feel  disadvantaged   with  such  plan.     Shareholders’  rights  shall  be  settled  in  accordance  with  the  provisions   of   Article   126   jo.   Article   62   of   the   Company   Law,   which   stated   that   their   shares   could   be   purchased   according   to   the   company’s   reasonable  price.     c.

Creditors’  interest   The   creditors   of   the   companies   in   Spin   Off   are   entitled   to   obtain   complete   information   regarding   the   company   that   will   receive   the   transfer   of   assets   and   liabilities   resulting   from   such   Spin   Off.   This   is   reasonable  since  the  transferee  company  shall  bear  the  fulfillment  of   all  the  engagements  in  relation  to  the  transferred  assets  and  liabilities   from  the  transferring  company.  This  is  also  to  avoid  any  abuse  of  law   against   the   creditors   since   Spin   Off   could   be   used   as   a   loophole   to   avoid   paying   obligations   or   debts.100   Therefore,   it   is   appropriate   for   the   creditors   to   have   the   right   to   submit   objections   to   the   company   with  regard  to  the  plan  for  Spin  Off.101  In  the  event  that  a  creditor’s   objection  cannot  be  resolved  by  the  BoD  as  of  the  date  on  which  the  

                                                                                                                 

99

 The  GMS  resolutions  regarding  Spin  Off  shall  be  valid  if  adopted  on  the  basis  of  deliberation  to  reach  a   consensus.  In  the  event  that  resolutions  on  the  basis  of  deliberation  to  reach  a  consensus  cannot  be   achieved,  resolutions  shall  be  lawful  if  in  the  meeting  at  least  ¾  (three  quarters)  of  the  total  number  of   shares  with  voting  rights  are  present  or  represented  in  the  GMS  and  approved  by  at  least  ¾  (three  quarters)   of  the  number  of  vote  cast.  See  Indonesia  (a),  op.cit.,  Art  127.     100  Ketentuan  tentang  Pemisahan  (juga)  tak  Komplet  RUUPT.  Retrieved  May  28,  2012,  from   http://hukumonline.com/detail.asp?id=16951&cl=Berita     101  Tumbuan,  op.cit.  

 

27  

                        GMS   is   convened,   the   objection   must   be   presented   in   the   GMS   in   order  to  find  a  resolution.  Until  the  resolution  is  achieved,  the  act  of   Spin  Off  cannot  be  performed.102       d.

The  company’s  employees  interest   Considering   the   company’s   employees   interest   is   also   a   very   reasonable   requirement.   Because   labor   settlement   is   absolutely   necessary,   Spin   Off   should   not   cause   a   termination   of   employment.   If   there   are   objections   from   the   company’s   employees   regarding   the   plan   for   Spin   Off,   it   must   be   resolved   in   accordance   with   the   applicable   provisions   of   labor   law   and   internal   policies   of   the   company.        

e.

Public  interest   The   term   “public   interest”   has   a   broad   meaning.   It   depends   on   which   sector  the  Spin  Off  is  conducted.  For  example,  if  it  is  associated  with   the   banking   sector,   then   the   interest   of   the   banks’   customers   is   included  as  part  of  public  interest.      

f.

 The  sound  business  competition   The   consideration   of   sound   business   competition   is   intended   to   avoid   any   possibilities   of   a   monopoly   or   monopsony   occurring   in   various   forms   and   can   be   detrimental   to   the   public.103   Spin   Off   should   not   lead   to   a   condition   that   runs   counter   to   the   applicable   competition   law.    

  2.

Procedures   The   following   is   general   procedures   for   conducting   Spin   Off   based   on   the   Company  Law:  

                                                                                                                 

102

 Indonesia  (a),  op.cit.,  Art  127  (6)  and  (7).    

 

103

 Ibid.,  elucidation  Art  126  (1).  

 

28  

 

                     

No.   Steps  to  be  completed   Remarks   1.   GMS  which  approves  the  BoD’s  plan   The  Company  Law  does  not  require   to  conduct  plan  for  Spin  Off.   this   step.     However,   the   BoD   would   not   usually   proceed   to   take   action   with   regards   to   the   plan   for   Spin   Off   without   obtaining   prior   approval   from   the   shareholders   of   the  company.     2.   The   BoD   of   the   companies   in   Spin   Commonly,   both   companies,   the   Offs  shall  compile  a  plan  of  Spin  Off.   company   conducting   the   Spin   Off   and   the   transferee   company,   jointly   formulate   the   plan   of   Spin   Off.   In   the   event   that   the   transferee   company   has   not   yet   been   established,   the   plan   of   Spin   Off   shall   be   made   by   the   company   conducting   the   Spin   Off   and   containing   all   information   on   the   company   to   be   established   as   a   result  of  the  Spin  Off.       3.   The   plan   of   Spin   Off   shall,   after     obtaining  approval  from  the  board  of   commissioners   (“BoC”)   of   each   company,   be   submitted   to   the   extraordinary  GMS  (“EGMS”)  of  each   company   to   obtain   their   respective   shareholders’  approval.     4.   Apart   from   the   provisions   in   the   For  example,  in  the  banking  sector,   Company   Law,   certain   companies   in   the   company   must   obtain   prior   Spin   Offs   will   also   need   to   obtain   approval   from   Bank   Indonesia,   prior   approval   from   the   relevant   which   regulated   through   PBI   government   agencies   in   accordance   No.11.   For   public   companies,   they   with   the   provisions   of   legislative   need   to   conduct   reports   or   obtain   regulations   and   for   public   certain   approvals   from   the   companies,   the   provision   Bapepam-­‐LK   (if   deemed   contemplated   in   the   Company   Law   necessary).   shall   also   apply   in   so   far   as   the   legislative   regulations   in   the   field   of   capital   markets   do   not   provide   otherwise.     5.   The   BoD   of   the   companies   in   Spin   Those   announcements   are   Offs  must  publish  the  announcement   intended   to   give   the   parties   of   abridged   Spin   Off   plan   in   at   least   concerned   the   opportunity   to   find   one   (1)   newspaper   and   publish   it   in   out  about  the  plan  for  Spin  Off  and   writing   to   the   employees   of   the   submit   objections   if   they   feel   their  

 

  Legal  Basis   N/A  

Art  123  (1)    

Art  123  (2)  

Art  123  (4)   and  (5)  

Art  127  (2)   and  (3)  

29  

companies  in  Spin  Offs  not  later  than   30  (thirty)  days  before  the  invitation   of  EGMS.  Such  publication  must  also   contain   notice   that   the   interested   parties   may   obtain   the   plan   of   Spin   Off   at   the   company’s   office   as   from   the   date   of   its   publication   to   the   date   on   which   the   EGMS   is   to   be   convened.     6.   The  creditors  may  submit  objections   to   the   company   within   a   period   of   not   more   than   14   (fourteen)   days   after   the   announcement   of   the   abridged  Spin  Off  plan  in  accordance   with  such  plan.  

7.   The  BoD  shall  issue  EGMS  invitations   within   a   period   of   not   later   than   14   (fourteen)   days   before   the   date   on   which   the   EGMS   is   held,   exclusive   the   date   of   the   invitation   and   the   date  of  EGMS.  Such  Invitations  must   fulfill  the  requirements  under  Art  82   and  83  of  the  Company  Law.  

8.   Spin   Off   shall   only   be   done   if   the   EGMS   regarding   Spin   Off   approved   the   plan   of   Spin   Off,   which   has   already   been   approved   by   the   BoC.   The   EGMS   resolutions   regarding   Spin   Off   shall   be   valid   if   adopted   on   the   basis   of   deliberation   to   reach   a   consensus.   In   the   event   that   resolutions   on   the   basis   of   deliberation   to   reach   a   consensus   cannot   be   achieved,   resolutions   shall   be  lawful  if  in  the  meeting,  at  least  ¾   (three  quarters)  of  the  total  number   of   shares   with   voting   rights   are   present   or   represented   in   the   GMS   and   approved   by   at   least   ¾   (three   quarters)  of  the  number  of  vote  cast.  

 

                     

interests  will  be  harmed.  

 

If   within   the   set   period,   no   Art  127  (4),   creditors   have   submitted   any   (5),  (6)  and   objections,   the   creditors   will   be   (7)   deemed  to  have  approved  the  Spin   Off.    In  the  event  that  the  BoD  as  of   the   date   on   which   the   EGMS   is   to   be   convened   cannot   resolve   a   creditor’s   objection,   the   objection   must   be   presented   in   the   EGMS   in   order  to  find  a  resolution.  Until  the   resolution  is  achieved,  the  Spin  Off   cannot  be  performed.     The   invitations   may   be   issued   by   Art  82  jo.   registered   letter   and/or   by   an   Art  83   advertisement   in   newspapers.     For   public  companies,  invitations  to  an   EGMS   must   be   preceded   by   an   announcement   that   invitations   to   an   EGMS   will   be   issued   with   due   attention   to   the   provisions   of   legislative  regulations  in  the  field  of   capital  markets.     Both   of   the   transferring   company   Art  127  (1)   and   the   transferee   company   must   conduct  the  EGMS.  In  practice,  the   EGMS   resolutions   shall   approve   at   least:   (i) The   Spin   Off   (for   the   transferring   company   the   EGMS   shall   approve   the   legal   action   of   transferring   the   assets   and   liabilities   and   for   the   transferee   company   the   EGMS   shall   approve  the  legal  action  of   receiving   such   assets   and   liabilities);   (ii) The  plan  of  Spin  Off;  and   (iii) The   draft   of   the   deed   of  

30  

                     

Spin  Off.   9.   The   plan   of   Spin   Off   approved   by   the   EGMS  of  each  companies  involved  in   the   Spin   Off   shall   be   set   forth   in   a   deed   of   Spin   Off   made   before   a   notary  in  Indonesian  language.    

  In   practice,   the   deed   of   Spin   Off   has   several   of   attachments,   such   as:  the  EGMS  approval,  the  Spin  Off   plan   approved   by   the   BoC,   the   written   announcement   to   employees,   copy   of   any   relevant   licenses,   the   announcement   of   abridged   Spin   Off   plan,   statement   of  no  objections  from  the  creditors,   the   concept   of   the   deed   of   Spin   Off,   agreement   between   the   transferring   company   and   transferee  company,  and  the  list  of   assets  and  liabilities  being  spun  off.      

10.   The   copy   of   the   deed   of   Spin   Off,   accompanied  by  amendments  to  the   articles  of  association  (“AoA”)  of  the   respective   companies,   need   to   be   attached   to   (i)   the   application   submitted   to   obtain   approval   or   (ii)   the   delivery   notification   to   the   Minister   of   Law   and   Human   Rights   (“MOLHR”).     11.   In   the   event   that   the   deed   of   Spin     Off   is   not   accompanied   by   amendments   to   the   AoA,   a   copy   of   the   deed   must   be   delivered   to   the   MOLHR   for   recording   in   the   registry   of  companies.     12.   The   BoD   of   the   transferee   Company     must   publish   the   result   of   Spin   Off   in   one   (1)   newspaper   within   no   more   than   30   (thirty)   days   as   from   the   date  the  Spin  Off  comes  into  effect.      

  Art  128  (1)  

Art  129  (1)  

Art  129  (2)  

Art  133  (1)  

               

 

31  

3.

Time  line  

                     

 

In  brief,  the  schedule  of  a  Spin  Off  process  is  as  follows:  

    B.  

Islamic  Banking  Law  and  PBI  No.11  

  The   enactment   of   the   Islamic   Banking   Law   has   provided   a   more   adequate   legal   base   to   the   development   of   Islamic   banking   in   Indonesia   and   consequently   will   accelerate   the   growth   of   the   industry.104     One   of   the   provisions   in   the   Law   that   is   believed   will   encourage   the   growth   of   Islamic   banking,   is   the   obligation   to   perform   Spin   Off   of   the   sharia   business   units   from   the   Conventional   Banks.105   Further  provisions  regarding  Spin  Off  and  sanction  for  neglecting  such  obligations   are   regulated   in   PBI   No.11   as   one   of   the   implementing   regulations   of   Islamic   Banking  Law.                                                                                                                          

104

 Islamic  Banking  in  Indonesia  in  Brief.  Retrieved  May  29,  2012,  from   http://www.bi.go.id/web/en/Perbankan/Perbankan+Syariah/.     105  Indonesia  (b),  op.cit.,  Art  68.  

 

32  

1.

Obligations  and  sanction  

                     

 

As   mentioned   before,   the   Islamic   Banking   Law   and   PBI   No.11   oblige   the   conventional   commercial   banks   to   Spin   Off   their   sharia   business   units   whenever106:   a.

The   sharia   business   units’   assets   value   have   reached   50   %   (fifty   percent)   of   the   total   assets   value   of   their   parent   compnies   (Conventional  Banks);    

b.

At  least  15  (fifteen)  years  after  the  enactment  of  the  Islamic  Banking   Law.107  

  However,   Conventional   Banks   owning   sharia   business   units   are   able   to   Spin   Off  their  sharia  units  prior  to  meeting  the  above  conditions.108     Any  Conventional  Bank  that  has  met  the  requirements  above  and  does  not   conduct  a  Spin  Off  shall  be  imposed  with  the  revocation  of  their  respective   sharia  unit’s  business  license.109         2.

Types  and  requirements   The   Spin   Off   of   sharia   business   unit   from   Conventional   Bank   could   be   undertaken  by:     a.

Establishing  a  new  Islamic  Bank.   The   Conventional   Bank   establishes   an   Islamic   Bank   as   its   subsidiary   with  part  of  the  assets  of  the  spin  off  being  calculated  as  the  paid  up   capital   (if   possible).   The   minimum   paid   up   capital   is  

                                                                                                                 

106

 Ibid.,  Art  68  (1)  jo.  Indonesia  (c),  op.cit.,  Art  40  (1).  

 

107

 

 Islamic  Banking  Law  was  issued  on  16  July  2008.  

108

 Indonesia  (c),  op.cit.  Art  40  (2).  

 

109

 Ibid.,  Art  43  (1).  

 

 

33  

                        Rp500,000,000,000.-­‐   (five   hundred   billion   Rupiah)   and   should   be   increased  in  stages  to  no  less  than  Rp1,000,000,000,000.-­‐  (one  trillion   Rupiah)   by   at   the   latest   10   (ten)   years   after   the   Islamic   Bank’s   business  license  is  issued.110  In  the  event  that  the  amount  of  paid  up   capital   does   not   meet   the   requirement   for   the   Spin   Off,   additional   paid   up   capital   should   be   made   by   the   Conventional   Bank   in   the   form   of  cash  and/or  land  and  building  that  will  be  used  for  the  Islamic  Bank   resulting  from  the  Spin  Off.  111     This   type   of   Spin   Off   can   be   done   by   one   (1)   or   more   conventional   commercial  banks.112  If  the  said  Spin  Off  performs  by  more  than  one   (1)   Conventional   Banks,   the   Islamic   Bank   resulting   from   Spin   Off   should   meet   at   least   the   ratio   of   minimum   capital   adequacy   requirement  of  8%  (eight  percent).113     The  licensing  for  the  establishment  of  Islamic  bank  as  a  result  of  Spin   Off  granted  by  Bank  Indonesia  shall  be  made  in  two  (2)  stages:     (i)

Principle   approval,   which   is   approval   for   undertaking   preparation  for  the  establishment  of  the  Islamic  Bank  resulting   from  Spin  Off;  and    

(ii)

Business   license,   which   is   a   license   provided   after   such   Islamic   Bank  is  ready  to  undertake  operational  activities.114  

                                                                                                                       

110

 Ibid.,  Art  45  (2)  and  (4).  

 

111

 Ibid.,  Art  45  (3).  

 

112

 Ibid.,  Art  41  (1)  a  and  (2).  

 

113

 Ibid.,  Art  41  (4).  

 

114

 Ibid.,  Art  46.  

 

34  

b.

                        Transferring   the   assets   and   liabilities   of   the   sharia   business   unit   to   an  existing  Islamic  Bank.   This   type   of   Spin   Off   can   only   be   done   to   an   Islamic   Bank   that   has   ownership   related   to   the   transferring   Conventional   Bank.115   Therefore,   the   common   practice   is   for   the   Conventional   Bank   to   acquire  an  existing  Islamic  Bank  and  subsequently  transfer  all  of  the   assets   and   liabilities   of   its   sharia   business   unit   to   the   respective   Islamic  Bank.       In  addition,  the  transferee  Islamic  Bank  should  also  meet  at  least  the   ratio   of   minimum   capital   adequacy   requirement   of   8%   (eight   percent).116  

  Further,   in   the   event   that   Spin   Off   of   sharia   business   units   to   an   Islamic   bank  (for  these  two  types  of  Spin  Off)  causes  the  transferee  Islamic  bank  to   own   net   Non   Performing   Loan   of   more   than   5%   (five   percent)   and/or   causes   the   Islamic   bank   to   exceed   the   Legal   Lending   Limit,   then   the   respective   Islamic   Bank   is   obliged   to   settle   the   matters   within   a   period   of   one  (1)  year.117       3.

Procedures  and  time  lines   Based  on  Article  42  of  PBI  No.11,  the  Spin  Off  of  a  sharia  business  unit  must   also   fulfill   other   provisions   of   the   applicable   legislations,   including   the   Company  Law.     a.

Spin  Off  of  sharia  business  unit  by  establishing  an  Islamic  Bank   The  following  is  the  steps  in  performing  Spin  Off  of  a  sharia  business   unit  by  establishing  an  Islamic  Bank  according  to  PBI  No.11:  

                                                                                                                 

115

 Ibid.,  Art  41  (1)  b  and  (3).  

 

116

 Ibid.,  Art  41  (4).  

 

117

 Ibid.,  Art  41  (5).  

 

35  

 

                     

 

No.   Steps  to  be  completed   1.  Submission   of   the   application   for   a   principle   approval   by   the   Conventional   Bank   that   owns   the   sharia   business   unit,   supplemented   with,   among   others,   a   draft   of   the   deed  of  establishment  of  the  Islamic   Bank  resulting  from  the  Spin  Off.    

Remarks   Legal  Basis   Such   application   shall   contain   at   Art  47  (1)     least:   (i) name   and   domicile   of   the   Islamic   Bank   resulting   from   the  Spin  Off;   (ii) business   activities   of   the   Islamic   Bank   in   accordance   with   the   prevailing   legislations;   (iii) paid   up   capital   of   no   less   than   Rp500,000,000,000   (five   hundred   billion   Rupiah);   (iv) provisions   concerning   the   BoC,   BoD   and   Sharia   Supervision  Board  (“SSB”)  of   the   Islamic   Bank   in   accordance   with   the   prevailing   legislations     (including  the  requirements,   number   of   persons,   tasks,   authorities,  responsibilities);   (v) provisions   concerning   the   appointments   of   members   of  BoD,  BoC  and  SSB  for  the   Islamic   Bank   in   accordance   with   the   prevailing   legislations,   which   required   prior   approval   from   Bank   Indonesia;   (vi)  provisions   concerning   the   GMS   for   the   Islamic   Bank,   which   determines   the   tasks   of   management,   remunerations   of   BoC,   BoD,   annual   accountability   report,   appointment   and   fee   for   public   accountant   firm,   the  use  of  profits;   (vii)  provisions   concerning   the   head   of   the   GMS,   which   is   either   the   President   Commissioner   or   President   Director.     2.  The   Conventional   Bank   should     Art  47  (2)   present   the   entire   plan   for   the   establishment  of  an  Islamic  Bank  as  a   result  of  the  Spin  Off.  

 

36  

  3.  The   Conventional   Bank   owning   the   sharia   business   unit   is   obliged   to   publish   an   announcement   of   the   plan   for   transferring   the   sharia   business   unit’s   assets   and   liabilities   in   a   newspaper   with   national   circulation   no   later   than   10   (ten)   days   after   the   date   of   the   principle   approval  is    granted.     4.  Submission   of   the   business   license   for   the   Islamic   Bank   resulting   from   Spin   Off   by   the   Conventional   Bank   no  later  than  6  (six)  months  after  the   principle   approval   is   granted,   supplemented  by,  among  others,  the   deed  of  establishment  of  the  Islamic   Bank.  

5.  The  Islamic  Bank  resulting  from  Spin   Off   is   obliged   to   conduct   business   activities   no   later   than   30   (thirty)   days   from   the   date   of   the   business   license  is  granted.    

                      In   practice,   such   announcement   can   be   combined   with   the   announcement   of   the   plan   of   Spin   Off   based   on   the   Company   Law   or   publish   separately   (depends   on   each  case).  

Art  48  (2)  

The  Spin  Off  of  the  sharia  business   unit   can   only   be   done   after   the   business   license   for   the   Islamic   Bank  is  granted.     If   within   six   (6)   months   after   the   issuance   of   the   principle   approval   the   Conventional   Bank   has   not   submitted   the   application   of   business   license,   the   principle   approval   shall   become   no   longer   valid.       If   after   30   (thirty)   days   as   of   the   date   of   the   business   license   granted,   the   Islamic   bank   has   not   conducted   any   business   activities,   the   business   license   shall   be   reviewed.     In   the   event   that   such   business   license   is   annulled,   all   the   sharia   business   unit’s   liabilities   shall   be   settled   by   the   Conventional   Bank   that   owns   it     no   later   than   one   (1)   year   after   the   annulment   of   the   business  license.        

Art  48  (1)   and  (3)  jo.   Art  49  

6.  The   execution   of   business   activities   of   the   Islamic   Bank   should   be   reported   to   Bank   Indonesia   no   later   than   10   (ten)   days   after   the   execution  date.       7.  The   Conventional   Bank   than   owns     the  sharia  business  unit  is  obliged  to   submit   application   for   revocation   of   the   said   sharia   business   unit’s   business   license   no   later   than   10  

 

 

Art  50  (1),   (2).  (4)  

Art  50  (3)  

Art  51  

37  

(ten)  days  after  the  Spin  Off.    

                     

 

  In   brief,   the   schedule   for   Spin   Off   of   a   sharia   business   unit   by   establishing  an  Islamic  Bank  is  as  follows:    

 

38  

b.

                        Spin   Off   of   sharia   business   unit   by   transferring   the   rights   and   liabilities  to  an  existing  Islamic  Bank   The   following   is   the   steps   in   performing   Spin   Off   of   sharia   business   unit  to  an  existing  Islamic  bank  based  on  PBI  No.11:  

  No.       Steps  to  be  completed   1.  Submission   of   the   application   for   Bank   Indonesia’s   approval   by   the   Conventional  Bank.    

Remarks   Approval   of   such   application   shall   be   granted   based   on,   among   others:   (i) fulfillment   of   the   legal   aspect   regarding   the   Spin   Off;   (ii) analysis   on   the   plan   of   the   transfer   of   sharia   business   unit’s  assets  and  liabilities;   (iii) analysis   on   the   pro-­‐forma   financial   report   of   the   transferee  Islamic  Bank.     In   practice,   such   announcement   can   be   combined   with   the   announcement   of   the   plan   of   Spin   Off   based   on   the   Company   Law   or   publish   separately   (depends   on   each  case).  

Legal  Basis   Art  51  (1)  

In   the   event   that   after   30   (thirty)   days   after   the   approval   is   granted,   the   Spin   Off   has   not   yet   been   executed,   the   approval   shall   be   reviewed.     In   the   event   that   such   approval   is   annulled,   all   the   sharia   business   unit’s   liabilities   shall   be   settled   by   the  Conventional  Bank  that  owns  it   no   later   than   one   (1)   years   after   the  annulment  of  the  approval.     4.  The   execution   of   Spin   Off   should   be     reported  no  later  than  10  (ten)  days   after  the  execution  date.     5.  The   transferee   Islamic   Bank   is     obliged   to   report   its   financial  

Art  53  (1),   (4)  and  (5)  

2.  The   Conventional   Bank   that   owns   the  sharia  business  unit  is  obliged  to   publish   an   announcement   of   the   plan   for   transferring   the   sharia   business   unit’s   assets   and   liabilities   in   a   newspaper   with   national   circulation   no   later   than   10   (ten)   days   from   the   date   the   principle   approval  is  granted.     3.  The   Conventional   Bank   that   owns   the  sharia  business  unit  is  obliged  to   Spin   Off   its   sharia   business   unit   no   later   than   30   (thirty)   days   from   the   date  the  approval  is  granted.    

 

Art  52  (2)  

Art  53  (2)  

Art  53  (3)  

39  

condition   after   the   Spin   Off   no   later   than   10   (ten)   days   after   the   execution  date.     6.  The   Conventional   Bank   than   owns     the  sharia  business  unit  is  obliged  to   submit   application   for   revocation   of   the   said   sharia   business   unit’s   business   license   no   later   than   10   (ten)  days  after  the  Spin  Off.    

                     

 

Art  54  

  In   brief,   the   schedule   of   the   Spin   Off   of   a   sharia   business   unit   to   an   existing   Islamic  bank  based  on  PBI  No.11  is  as  follows:    

 

40  

                      Other  related  regulations  for  public  companies  

C.  

 

  As  outlined  in  the  Introduction,  Bapepam-­‐LK  has  been  encouraging  the  Spin   Off   of   (i)   sharia   insurance   business   units   of   conventional   insurance   companies118   and   (ii)   investment   management   units   of   securities   companies119.     As   of   the   writing   and   completion   of   this   paper,   both   Bapepam-­‐LK   and   Indonesia   Stock   Exchange   (“IDX”)   have   not   yet   issued   regulations  regarding  Spin  Off.       However,  there  are  certain  Bapepam-­‐LK  and  IDX’s  regulations  that  need  to   be   taken   into   consideration   by   the   public   companies   in   order   to   conduct   Spin  Off:     1.

Material  transaction   Public   companies   planning   to   perform   Spin   Offs   should   first   analyze   whether  such  plans  are  deemed  as  material  transactions  or  not.  Based  on   Bapepam-­‐LK   Rule   No.   IX.E.2   dated   28   November   2011   regarding   Material   Transaction   and   Changes   in   Main   Business   Activity   (“Rule   No.IX.E.2”),   the   definition  of  Material  transaction  is  as  follows:     a.

Participation   in   a   business   entity,   project,   and/or   certain   business   activity;  

  b.

Purchasing,   selling,   transferring,   or   exchanging   assets   or   business   segment;  

  c.

Leasing  assets;  

d.

Borrowing  or  lending  funds;  

                                                                                                                     

118

 Agus  &  Antara,  loc.cit.  

 

119

 Indra  Haryono,  loc.cit.  

 

41  

e.

Encumbering  assets,  and/or:  

f.

Providing  corporate  guarantees,    

                     

 

  with   value   of   20   %   (twenty   percent)   or   more   of   the   public   company’s   equity,   whether   conducted   in   one   transaction   or   a   series   of   transactions   per  purpose  or  activity.120     Spin   Off,   based   on   the   Company   Law,   is   a   legal   action   to   transfer   part   of   company’s   assets   and   liabilities   to   one   or   more   companies,   which   can   be   included   into   the   category   of   transferring   assets   or   business   segment   according  to  the  Material  Transactions  definition  above.  A  public  company   which   performs   Spin   Off   with   a   transaction   value   from   20   %   (twenty   percent)   to   50   %   (fifty   percent)   of   the   said   public   company’s   equity   does   not   require   EGMS   approval   based   on   Rule   No.   IX.E.2,   if   the   public   company   publishes   an   announcement   regarding   the   Spin   Off   on   a   complying   newspaper  and  submits  the  required  supporting  documents  to  Bapepam-­‐LK   within   two   (2)   days   of   the   signing   of   the   deed   of   Spin   Off.121   Previously,   evidence  of  an  announcement  had  to  be  submitted  to  Bapepam-­‐LK  by  the   end  of  the  second  business  day  after  the  Spin  Off  occurred.     If   the   Spin   Off   value   is   more   than   50%   (fifty   percent)   of   the   public   company’s   equity,   the   public   company   also   requires   EGMS   approval   with   requirements  and  procedure  based  on  Rule  No.IX.E.2.122     However,   there   are   exemptions   from   the   requirements   under   Rule   IX.E.2   whereby  Spin  Offs  conducted,  among  others:                                                                                                                    

120

 Indonesia  (e),  Rule  No.  IX.E.2  regarding  Material  Transaction  and  Changes  in  Main  Business  Activity  as   the  attachment  of  the  Decree  of  the  Head  of  Bapepam-­‐LK  No.  KEP-­‐614/BL/2011  dated  28  November  2011,   No.  1.a.2).     121  Ibid.,  No.  2.a.     122  Ibid.,  No.  2.b.  

 

42  

a.

                        between   controlling   companies   (parent   and   subsidiary   companies)   with   99   %   (ninety   nine   percent)   of   the   shares   owned   by   the   public   company;      

b.

towards  the  public  company’s  main  business  activity;    

c.

by   banks   with   loans   from   Bank   Indonesia   or   other   government  

  entities   worth   up   to   100%   (one   hundred   percent)   of   their   total   issued   and   paid   up   capital   or   any   other   conditions   which   may       cause   a   bank   to  require  restructuring  by  the  authority;     d.

based  on  a  court  order;  or  

e.

to   fulfill   the   public   company’s   obligations   under   the   applicable   laws  

  and  regulations,     are   exempted   from   the   requirements   of   material   transactions   under   Rule   No.IX.E.2.123     2.

Disclosure   of   Information   that   must   be   immediately   announced   to   the   public   In  the  event  that  a  Spin  Off  is  not  a  material  transaction  or  exempted  from   Rule   IX.E.2,   the   public   company   must   still   comply   with   the   disclosure   obligation  imposed  under  Bapepam-­‐LK  Rule  No.  X.K.1.  regarding  Disclosure   of  Information  that  must  be  Immediately  Announced  to  the  Public.124        

                                                                                                                 

123

 

 Ibid.,  No.  3.a.  

124

 Ibid.,  No.  3.b.  jo.  Indonesia  (f),  Rule  No.  X.K.1.  regarding  Disclosure  of  Information  that  must  be   Immediately  Announce  to  Public  as  the  attachment  of  the  Decree  of  the  Head  of  Bapepam-­‐LK  No.  KEP-­‐ 86/PM/1996  dated  24  January  1996.    

 

43  

3.

Obligation  to  report  information  

                     

 

The   IDX   also   require   listed   companies   to   report   information,   in   this   case,   the   plan   for   Spin   Off   based   on   the   IDX   Rule   No.   I-­‐E   regarding   the   Obligation   to   Report   Information.   Such   report   shall   be   supplemented   with   the   announcement   of   an   abridged   Spin   Off   plan,   which   has   been   published   in   the  complying  newspaper  based  on  the  applicable  laws  and  regulations  by   the  listed  company.125  

                                                                                                                 

125

 Indonesia  (g),  The  Decree  of  the  Board  of  Directors  of  Jakarta  Stock  Exchange  (Now,  Indonesia  Stock   Exchange)  No.  Kep-­‐306/BEJ/07-­‐2004  dated  19  July  2004  regarding  Rule  No.  I-­‐E  regarding  the  Obligation  to   Report  Information.  

 

44  

CHAPTER  IV  

                     

 

ANALYSIS  OF  THE  ISSUES  IN  SPIN  OFF  PROCESS  IN  INDONESIA     As  mentioned  before,  the  provisions  regarding  Spin  Off  in  the  Company  Law  are   not   yet   sufficient.   Further,   the   Government   Regulation   or   other   specific   regulations   related   to   the   implementation   of   Division   (including   Spin   Off)   of   limited  liability  companies,  in  sectors  other  than  the  banking  sector,  have  not  yet   been  issued  as  of  the  writing  and  completion  of  this  paper.       Moreover,   as   Spin   Off   is   relatively   a   “new”   transaction   in   Indonesia,   many   government   institutions   are   not   yet   aware   of   the   concept   of   Spin   Off,   let   alone   issuing  supporting  regulations.  There  are  many  issues  and  problems  arising  from   such  condition.  This  paper  only  addresses  three  (3)  problems  that  are  most  often   encountered  during  the  Spin  Off  process.       A.  

Spin  Off  plan  and  the  announcement  of  an  abridged  Spin  Off  plan  

  According   to   the   Company   Law,   one   of   the   obligations   of   the   company   conducting   a   Spin   Off   is   to   publish   an   announcement   of   abridged   Spin   Off   plan   in   the   complying   newspaper.126   However,   in   contrast   to   Merger,   Acquisition   and   Consolidation,  the  Company  Law  does  not  regulate  the  provisions  regarding  the   minimum   content   of   the   Spin   Off   plan,   much   less   the   announcement   of   an   abridged  Spin  Off  plan.     Until   the   implementation   regulations   regarding   Spin   Off   mandated   by   the   Company   Law   have   been   issued,   there   is   no   standard   regarding   the   types   of   information   that   have   to   be   included   in   the   Spin   Off   plan   or   disclosed   in   the   abridged   Spin   Off   plan   published   in   newspapers.   This   condition   can   be   fatal   since   the  companies  can  basically  publish  anything  they  deem  important  or  need  to  be   published.  If  companies  plan  for  a  Spin  Off  not  in  good  faith,  they  can  deliberately                                                                                                                    

126

 Indonesia  (a),  op.cit.,  Art  127  (2).  

 

45  

                        omit   important   information   that   should   be   disclosed   and   known   by   the   parties   concerned.     To  circumvent  these  negative  possibilities,  in  practice,  disclosures  in  the  abridged   Spin   Off   plan   are   adopted   from   the   Merger   plan,   because   in   both   transactions,   the  assets  and  liabilities  of  a  company  will  be  transferred  by  the  operation  of  law.     Therefore,  by  using  Merger  plan  based  on  Article  123  (2)  of  the  Company  Law  as   a  reference,  the  following  is  the  common  content  of  a  Spin  Off  plan:     a.

The  name  and  domicile  of  each  company  in  the  Spin  Off  (both  transferring   and  the  transferee  companies);    

b.

The  reasons  and  explanations  of  the  BoD  of  the  companies  in  the  Spin  Off   and  the  Spin  Off  requirements;  

  c.

The  draft  for  any  amendment  of  the  AoAs  of  the  companies  (if  any);  

  d.

The   financial   statement   consisting   of   at   least   the   balance   sheet,   income   statement,  cash  flow  report  and  report  on  changes  in  equity  as  well  as  the     notes  on  the  financial  report,  covering  the  last  3  (three)  financial  years  from   each   companies   in   the   Spin   Off   with   the   latest   for   the   financial   year   just   ended;    

  e.

The   financial   statement   of   the   division/business   unit   to   be   spun   off   in   accordance  with  the  generally  accepted  accounting  principles  in  Indonesia   (if  possible);  

  f.

A   pro-­‐forma   financial   statement   of   the   transferee   company   after   the   Spin   Off,   in   accordance   with   the   generally   accepted   accounting   principles   in   Indonesia;    

 

46  

                     

  g.

 

The  plans  for  the  transferring  and  transferee  companies  after  the  Spin  Off;    

h.

Method  of  settlement  of  the  status,  rights  and  obligations  of  the  BoD  and   employees  of  the  Spin  Off  division/business  unit;    

i.

Method   of   settlement   of   the   rights   and   obligations   of   the   transferee   company  against  third  parties  after  the  Spin  Off;    

j.

Method  of  settlement  of  the  rights  of  shareholders  who  do  not  agree  to  the   Spin  Off  of  the  companies;    

k.

Names  of  the  members  of  the  BoD  and  BoC  and  the  wages,  honoraria  and   allowances   for   the   member   of   the   BoD   and   BoC   of   the   transferee   company   after  the  Spin  Off;    

l.

Estimated  period  for  the  implementation  of  the  Spin  Off;    

m.

Report  on  the  circumstances,  development  and  results  achieved  of  each  of   the  companies  in  the  Spin  Off;    

n.

Main   activities   of   each   company   in   the   Spin   Off   and   changes   which   occurred  in  the  current  financial  year;  and    

o.

Details   of   problems   arising   during   the   current   financial   year   which   affect   activities  of  the  companies  in  Spin  Off.  

  B.  

The  transfer  of  employees  

  Law  Number  13  Year  of  2003  regarding  Manpower  (“Manpower  Law”)  regulates   the  basic  provisions  concerning  manpower  in  Indonesia.  As  provisions  on  Spin  Off  

 

47  

                        were  regulated  for  the  first  time  in  2007,  there  are  not  yet  regulations  regarding   Spin   Off   in   the   Manpower   Law.   Although   the   Manpower   Law   regulates   the   termination   of   employees   as   a   result   of   Merger,   such   provisions   can   hardly   be   used  since  the  effect  on  employees  from  the  terminating  company  in  Merger  is   different  from  the  effect  on  employees  of  the  spun  off  division/business  unit.  In   Merger,   the   employees   basically   have   no   option   on   staying   in   the   terminating   company  since  the  company  shall  expire  by  law  after  the  Merger.  On  the  other   hand,   the   company   conducting   the   Spin   Off   shall   remain   to   exist   after   the   Spin   Off,  thus  the  employees  have  a  choice  to  remain  in  the  transferring  company  or   move  to  the  transferee  company.       This   condition   could   be   a   problem   since   the   Company   Law   only   regulates   the   transfer   by   operation   of   law   for   the   assets   and   liabilities   in   Spin   Off;   while   employees   of   the   related   division/business   unit   being   spun   off   cannot   be   transferred   automatically   following   the   movement   of   said   assets   and   liabilities.     The   termination   of   employees   may   also   cause   additional   problems   for   the   company.   For   example,   in   the   case   if   there   are   employees   with   bad   faith   who   deliberately  refuse  to  move  to  the  transferee  company  so  they  can  be  terminated   by  the  transferring  company  and  obtain  severance  pay,  will  cost  the  transferring   company  substantial  amount  of  funds  and  time  for  the  severance  payment  and   effort   to   find   new   employees   to   carry   on   its   business   activity.   Further,   if   the   employees   insist   on   staying   at   the   transferring   company,   they   may   have   no   work   or   become   idle   since   their   jobs   had   been   ‘eliminated’   with   the   transfer   of   the   business  unit.     The  dilemma  of  the  transfer  of  employees  must  be  handled  very  carefully  since   the   Company   Law   also   explicitly   require   that   Spin   Off   cannot   be   done   if   it   will   harm   the   interests   of   the   parties   concerned,   including   the   companies   themselves   and   their   employees.127   Consequently,   it   is   best   to   avoid   any   termination   of   employees.                                                                                                                    

127

 Ibid.,  126  (1)  

 

48  

                     

 

 

In  practice  there  are  three  alternatives  in  handling  the  employees  in  accordance   with  the  prevailing  laws  and  regulations:     a.

Alternative  1:  The  termination  of  employment  for  employees  of  the  spun   off  division/business  unit,  which  is  followed  by  the  signing  of  employment   agreements   by   the   former   employees   of   the   spun   off   division/business   unit  and  the  transferee  company.     Article  164  (3)  of  Manpower  Law  stipulated:     “The   employers   may   terminate   the   employment   of   its   employees   because   the  company  has  to  be  closed  down  and  the  closing  down  of  the  company  is   caused  neither  by  continual  losses  for  two  (2)  years  consecutively  nor  force   majeure   but   because   of   the   company’s   action   to   improve   efficiency.   The   employees  shall  be  entitled  to  severance  pay  twice  the  amount  of  severance   pay   stipulated   under   Article   156   (2),   reward   period   of   employment   pay   amounting  to  one  (1)  time  the  amount  stipulated  under  Article  156  (3)  and   compensation  pay  for  entitlements  according  to  Article  156  (4).”128     Further,   Article   156   of   the   Manpower   Law   provides   guidance   for   the   financial   benefits   for   the   employees   from   the   employers   in   the   event   of   termination  of  the  employment:              

                                                                                                                 

128

 Indonesia  (h),  Law  No.  13  Year  of  2003  regarding  Manpower,  Art  164  (3).  

 

49  

(i)

                     

Severance  Pay129   Years  of  employment  

Less  than  1  year   More  than  1  year  and  less  than  2  years   More  than  2  years  and  less  than  3  years   More  than  3  years  and  less  than  4  years   More  than  4  years  and  less  than  5  years   More  than  5  years  and  less  than  6  years   More  than  6  years  and  less  than  7  years   More  than  7  years  and  less  than  8  years   More  than  8  years  

 

Severance  payment     (minimum)   One  month  wage   Two  months  wages   Three  months  wages   Four  months  wages   Five  months  wages   Six  months  wages   Seven  months  wages   Eight  months  wages   Nine  months  wages  

  (ii)

Reward  period  of  employment130     Years  of  employment  

Three  years  until  six  years   Six  years  until  nine  years   Nine  years  until  twelve  years   Twelve  years  until  fifteen  years   Fifteen  years  eighteen  years   Eighteen  years  until  twenty  one  years   Twenty  one  years  until  twenty  four  years   Twenty  four  years  or  more  

Reward  period  of  employment    (minimum)   Two  months  wages   Three  months  wages   Four  months  wages   Five  months  wages   Six  months  wages   Seven  months  wages   Eight  months  wages   Ten  months  wages  

  (iii)

Compensation  Pay   a)

Paid  annual  leave  which  is  still  unused;  

b)

Transportation   cost   for   the   employee   and   his/her   family   to   the  place  where  he/she  was  recruited;  

c)

Housing   and   medical   allowance,   determined   at   15%   of   the   severance   pay   and/or   reward   period   of   employment   for   those  entitled  to  receive;  

d)

Other   benefits   that   are   stipulated   in   the   employment   agreement,   company   regulations,   or   the   collective   labor   agreement.  131  

                                                                                                                 

129

 Ibid.,  Art  156  (2).  

 

130

 Ibid.,  Art  156  (3).  

 

 

50  

 

                     

 

In  accordance  to  the  provisions  above,  Spin  Off  can  be  categorized  as  an  act   of   restructuring   to   improve   efficiency.   In   the   event   of   termination   of   employment  as  a  result  of  Spin  Off,  the  transferring  company  shall  pay  the   employees  all  payments  as  stipulated  in  Article  164  (3)  jo.  Article  156  of  the   Manpower  Law.     By  signing  the  new  employment  agreement  with  the  transferee  company,   the   former   employees   of   the   spun   off   division/business   unit   formally   become   the   employees   of   the   transferee   company   with   working   period   starting  from  zero.       b.

Alternative  2:  Assignment  or  movement  of  the  former  employees  of  the   spun  off  division/business  unit  to  the  transferee  company.     This   alternative   depends   on   the   policies   of   each   company.     The   most   common  arrangement  is  for  the  BoD  of  the  transferring  company  to  issue  a   decree  as  legal  basis  for  such  movement  from  the  transferring  company  to   the   transferee   company,   which   should   explicitly   mention   the   terms   of   conditions   in   relation   to   the   payment   of   wages,   position   and   the   working   period  of  the  particular  employee  being  moved.       In  the  event  of  an  assignment,  since  the  employees  who  shall  work  in  the   transferee   company   still   have   the   status   as   the   employees   of   the   transferring   company,   the   financial   benefits   of   the   said   employees   shall   remain  similar  to  that  given  by  the  transferring  company.     Such   assignment   or   movement   can   be   done   as   long   as   it   is   done   without   violating   or   reducing   the   rights   of   the   employees   who   are   to   be   assigned   in   the  transferee  company.  

                                                                                                                                                                                                                                                                                                                 

131

 Ibid.,  Art  156  (4).  

 

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c.

                        Alternative   3:   Signing   an   agreement   between   the   transferring   company,   the   transferee   company   and   the   former   employees   of   the   spun   off   division/business  unit  (tripartite  agreement).  

    With   this   alternative,   the   transferring   company,   the   transferee   company   and  the  former  employees  of  the  spun  off  division/business  unit  shall  sign   an  agreement  before  the  Spin  Off  occurs  which  in  principle  states:     (i)

All   the   parties   agree   that   the   employment   relationship   between   the   former   employees   of   the   spun   off   division/business   unit   shall   be   ended  by  the  time  of  such  division/business  unit  is  closed.    

(ii)

The   former   employees   of   the   spun   off   division/business   unit   are   officially   listed   as   the   employees   of   the   transferee   company   with   cumulative   working   period   (by   taking   into   account   the   period   of   employment   from   the   transferring   company)   at   the   time   when   the   Spin  Off  becomes  effective.  

  (iii)

The  former  employees  of  the  spun  off  division/business  unit  agree  to   waive   their   rights   of   severance   pay   since   such   rights   are   already   compensated   with   the   cumulative   working   period   from   the   spun   off   division/business  unit  into  the  transferee  company.  

  The   following   is   the   analysis   of   the   pros   and   cons   of   the   above   three   (3)   alternatives:                    

 

52  

                     

   

Pros  

Alternative  1     Termination   of   employment   which   is   followed   by   the   singing   of   the   new   employment   agreements     (i) The   employees   should   feel   safer   since   the   transferring   company   has   fulfilled   their   rights   before  they  move  to   the   transferee   company.   (ii) The   transferee   company   can   conduct   new   recruitment   of   employees,   thus   the   transferee   company   can   actually   hire   only   the   competent   employees.    

Alternative  2     Assignment/mutation  

Alternative  3     Signing   of   the   tripartite   agreement  

(i)

(i)

(ii)

(iii)

(iv)

(v)

(vi)

Cons   (i)

Severance   pay   shall   (i) cost   a   lot   of   money   for   the   transferring   company.   (ii) New   recruitment  

 

 

No   severance   pay   that   needs   to   be   paid   at   the   assignment   period   since   the   absence   of   termination   of   employment.   The  employees  and   management   of   the   transferee   company   are   able   to   explore   the   conditions   of   each   during   the   mutation.    The   employees   who   are   being   assigned   shall   not   have   to   worry   to   think   about   their   employment  status   and  facilities.    The   recruitment   for  new  employees   only   to   fulfill   few   positions.   To   ease   the   burden   of   the   transferee   company   for   finding   additional   employees.   It   is   one   of   the   forms  of  assistance   from   the   transferring   company.     The   former   employees   of   the   spun   off   division/business   unit   shall   still  

No   severance   pay   that   needs   to   be   paid   since   the   absence   of   termination   of   employment.   (ii) The   procedure   of   transition   is   easier   and  simpler.   (iii) Give   a   good   image   to   the   transferring   company  since  there   is   no   termination   of   employment   as   a   result  of  Spin  Off.   (iv)  The   working   period   of   the   former   employees   of   the   spun   off   is   being   accumulated   to   the   transferee   company.   Thus,   the   rights   of   the   employees   are   being  protected.    

(i)

If   there   are   some   employees   that   refuse   to   be   transferred   to   the   transferee   company,  

53  

from   zero   shall   spend  a  lot  of  time.   (iii) The   termination   of   employment   might   be   interpreted   negatively.   (ii)    

                     

 

registered   as   the   such   employees   transferring   need   to   be   located   company   instead   in  available  positions   of   the   transferee   in   the   transferring   company.   company.   The   (ii) The   recruitment   assignment/mutati process   for   new   on   is   only   a   employees   in   the   temporary   transferee   company   solution.   Thus   at   is  more  limited.   the   end   of   their   assignment,   the   assigned   employees   have   to   move   back   to   the   transferring   company.    

  Given  the  above  analysis,  in  the  case  that  explanation  of  the  Spin  Off  plan  in   the   transferring   company   is   well   conducted   and   all   the   former   employees   of   the   spun   off   division/business   unit   agree   to   be   transferred   to   the   transferee   company,   then   the   best   alternative   for   all   parties,   the   transferring   company,   the   transferee   company   and   the   employees,   is   the   third  alternative.     C.  

Mismatch  between  the  MOLHR  Regulation  and  PBI  No.11  

  In   the   event   that   a   sharia   business   unit   is   to   be   spun   off   by   establishing   a   new   Islamic   bank,   PBI   No.11   regulates   that   one   of   the   requirements   for   obtaining   Bank  Indonesia  business  license  is  the  Deed  of  Establishment  of  the  new  Islamic   bank  which  has  been  approved  by  the  MOLHR.  Only  after  obtaining  such  license   that  the  spin  off  can  be  conducted.132     However,   the   Regulation   of   MOLHR   No.   M-­‐01-­‐10   Year   2007   regarding   the   Procedure  of  Submission  Application  of  ratification  of  Legal  Entity  and  Approval   of  the  Amendments  Articles  of  Associations,  Notification  of  the  Amendments  of                                                                                                                    

132

 Indonesia  (c),  op.cit.,  Art  48  (3)  jo.  Art  49.  

 

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                        Articles   of   Association   and   Changes   of   the   Company’s   Data   (“MOLHR   Regulation”)   requires   evidence   of   payment   of   the   Company’s   subscribed   and   paid   up   capital   in   order   to   grant   the   MOLHR   approval   for   the   Company’s   Deed   of   Establishment.133   In   this   case,   however   the   evidence   of   payment   is   the   balance   sheet   of   the   sharia   business   unit   that   has   been   spun   off   into   the   new   Islamic   bank,  which  means  that  the  Islamic  bank  has  to  be  spun  off  before  MOLHR  grants   its  approval  to  the  Deed  of  Establishment  of  the  new  Islamic  bank.       As  compromise,  in  practice,  the  transferring  company  shall  need  to  sign  the  deed   of   Spin   Off   with   provision   that   the   effective   date   will   be   after   obtaining   Bank   Indonesia  business  license,  followed  by  the  signing  of  the  deed  of  establishment   of  the  new  Islamic  bank  as  a  result  of  Spin  Off  with  the  provision  that  states  the   part  of  the  capital  injections  is  from  the  spun  off  sharia  business  unit  (if  there  is  a   difference  between  the  assets  and  liabilities  that  are  being  transferred,  and  the   value   of   assets   is   greater   than   the   value   of   the   liabilities).   Further,   the   deed   of   establishment   of   the   Islamic   bank   submitted   to   the   MOLHR   to   obtain   MOLHR   approval,   supplement   by   the   deed   of   Spin   Off   as   one   of   the   evidence   of   payments.  After  the  issuance  of  the  MOLHR  approval,  the  deed  of  Spin  Off,  the   deed  of  establishment  and  the  MOLHR  approval  submitted  to  the  bank  Indonesia   as  the  supplements  of  business  license  application.  

                                                                                                                 

133

   Indonesia  (i),  Regulation  of  the  Minister  of  Law  and  Human  Rights  No.  M-­‐01-­‐10  Year  2007  regarding   the  Procedure  of  Submission  Application  of  ratification  of  Legal  Entity  and  Approval  of  the  Amendments   Articles  of  Associations,  Notification  of  the  Amendments  of  Articles  of  Association  and  Changes  of  the   Company’s  Data,  Art  33  (2).  

 

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CHAPTER  V  

                     

 

CONCLUSIONS     This   paper   has   outlined   the   potential   of   Spin   Off   in   Indonesia   with   theoretical   overview  of  the  Spin  Offs  in  Indonesia  and  its  applicable  laws  and  regulations,  as   well   as   the   mechanism   of   Spin   Offs   and   factual   Spin   Off   cases   in   Indonesia   as   examples.   The   paper   also   elaborates   the   main   issues   that   are   most   often   encountered  during  a  Spin  Off  process.  Considering  the  goal  of  the  study,  which  is   to  analyze  the  legal  tools  and  problems  that  arise  in  the  Spin  Off  process  due  to   limitation   of   relevant   regulations,   an   analysis   of   the   regulations   of   Spin   Off   and   problems   have   been   provided.   The   analysis   observes   the   current   statutory   framework  relevant  in  the  Spin  Off  act  in  Indonesia  and  its  shortcomings.     The   number   of   corporate   Spin   Offs   which   has   accelerated   following   the   establishment  of  Company  Law  serves  to  prove  that  the  potential  of  Spin  Off  in   Indonesia   is,   indeed,   huge.   We   have   chosen   the   specific   definition   of   Spin   Off,   among  other  definitions,  as  the  legal  action  taken  by  a  company  to  separate  its   business   that   results   in   part   of   the   assets   and   liabilities   of   the   company   being   transferred  by  operation  of  law  to  1  (one)  or  more  transferee  companies  with  the   company   conducting   such   separation   remains   in   existence.   The   definition   is   based   on   the   Company   Law,   which   is   the   first   regulation   dealing   with   Spin   Offs   in   Indonesia.       I  understand  that  the  action  of  Spin  off  brings  numerous  benefits  or  advantages,   especially  for  startup  companies,  considering  that  the  role  of  parent  companies   being  one  of  the  key  success  factors  for  their  ‘going  concern’.    Spin  Offs  come  in   two  forms,  either  by  a  voluntary  act  or  mandatory.  The  key  motivations  of  Spin   Offs  can  be  broadly  categorized  as,  to  achieve  improvements  organizationally  and   in  terms  of  capital  market  access,  to  promote  better  corporate  governance  and   benefit  from  the  resultant  tax  advantages.  

 

56  

                        Although   the   Company   Law   and   PBI   No.   11,   in   general,   have   provided   the   mechanism   and   requirements   for   Spin   Offs,   Government   Regulations   or   other   specific   regulations   related   to   the   implementation   of   Division   (including   Spin   Off)   of   limited   liability   companies   in   Indonesia   have   yet   to   be   issued.   These   legislative   gaps,  as  a  result,  pose  problems  in  the  process  of  Spin  Offs.  The  main  issues  are   the  unregulated  contents  of  the  abridged  Spin  Off  plan  to  be  announced  to  the   public,  the  unregulated  transfer  of  employees  as  a  result  of  the  Spin  Off  and  the   mismatch  between  current  regulations,  which  is  the  MOLHR  Regulations,  and  the   Spin  Off  regulations,  particularly  PBI  No.11.     The  abovementioned  flaws  or  issues  are  temporarily  resolved  by  Indonesia’s  legal   practitioners   and   governments’   institutions.     Some   of   these   temporary   resolutions   are   (i)   the   contents   of   the   announcement   of   the   abridged   Spin   Off   plan  are  to  be  adopted  from  the  Merger  plan;  (ii)  the  transfer  of  employees  can   be   resolved   through   three   alternatives,   including   the   termination   of   employment   for   employees   of   the   spun   off   business   unit,   followed   by   the   signing   of   new   agreements  with  the  company  resulting  from  Spin  Off,  temporary  assignment  by   the  transferring  company  to  the  transferee  company  and  a  tripartite  agreement;   and   (iii)   the   mismatch   between   the   MOLHR   regulation   and   PBI   No.   11   can   be   overcome   by   the   wording   in   the   deed   of   establishment   of   the   new   company   resulting  from  Spin  Off  and/or  the  deed  of  Spin  Off  itself.    The  Government  of  the   Republic   of   Indonesia   must   act   quickly   to   overcome   these   problems   by   issuing   Government   Regulation   as   the   implementation   regulation   of   Spin   Off,   giving   specific  directions  to  the  related  institutions  and  providing  new  regulations  that   serve  Spin  Off  transactions.     In  conclusion,  it  is  evident  that  Indonesia’s  business  environment  has  been  more   than  ready  to  undertake  Spin  Off  transactions.  Considering  that  support  from  the   State   is   currently   still   insufficient,   this   condition   must   be   offset   with   a   set   of   laws   and   regulations   conducive   for   the   undertaking   of   such   a   process,   as   well   as   to   achieve  legal  certainty  for  all  parties  involved  in  the  Spin  Off  transaction.  

 

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                        _____  .  Bank  Indonesia  Regulation  No.  11/10/PBI/2009  regarding  Sharia  Business   Unit.     _____   .   Rule   No.   X.K.1.   regarding   Disclosure   of   Information   that   must   be   Immediately  Announce  to  Public  as  the  attachment  of  the  Decree  of  the  Head  of   Bapepam-­‐LK  No.  KEP-­‐86/PM/1996  dated  24  January  1996.     _____   .   Rule   No.   IX.E.2   regarding   Material   Transaction   and   Changes   in   Main   Business  Activity  as  the  attachment  of  the  Decree  of  the  Head  of  Bapepam-­‐LK  No.   KEP-­‐614/BL/2011  dated  28  November  2011.     _____  .  The  Decree  of  the  Board  of  Directors  of  Jakarta  Stock  Exchange  No.  Kep-­‐ 306/BEJ/07-­‐2004   dated   19   July   2004   regarding   Rule   No.   I-­‐E   regarding   the   Obligation  to  Report  Information.     EEC.  Sixth  Council  Directives  82/891/EEC  of  17  December  1982  based  on  Article  54   (3)  (g)  Treaty,  concerning  the  division  of  public  limited  liability  companies.       C.   Internet  sources     A.,   John.   Why   Do   Companies   Spin   Off?.   Retrieved   May   23,   2012,   from   http://www.cdnbusinessdirectory.com/financial-­‐planning/39439-­‐why-­‐do-­‐ companies-­‐spin-­‐off     Agus  &  Antara.  Bapepam-­‐LK  Desak  Pemisahan  MI.  Retrieved  March  5,  2012,  from   http://www.suarakarya-­‐online.com/news.html?id=270530     Bangun,   Astri   Karina.   Peraturan   Spin   Off   Bapepam   –   Masih   ada   11   perusahaan   yang   belum   penuhi   aturan   manajer   investasi.   Retrieved   March   5,   2012,   from   http://investasi.kontan.co.id/news/masih-­‐ada-­‐11-­‐perusahaan-­‐yang-­‐ belum-­‐penuhi-­‐aturan-­‐manajer-­‐investasi-­‐1     Firlana,   Fransiska.   Bapepam   Dorong   Spin   Off   Unit   Usaha   Syariah.   Retrieved   March  5,  2021,  from  http://keuangan.kontan.co.id/news/bapepam-­‐dorong-­‐ spin-­‐off-­‐unit-­‐usaha-­‐asuransi-­‐syariah-­‐1/2010/08/14     Haryono,  Indra.  Bapepam-­‐LK  Izinkan  Spin  Off  Aset  Manajemen.  Retrieved  March   5,   2012,   from   http://www.indonesiafinancetoday.com/read/7453/Bapepam-­‐LK-­‐Izinkan-­‐ Spin-­‐Off-­‐Aset-­‐Manajemen     SHP,   Demerger   /   Spin-­‐Off   –   Mandatory   Corporate   Action,   21   July   2009.   Retrieved   May  9,  2012,  from  http://shareholdersportal.co.uk/investments/demerger-­‐ spin-­‐off-­‐%e2%80%93-­‐mandatory-­‐corporate-­‐action#ixzz1uDYfBFxY    

 

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                        Webb,  Phillip.  Spin-­‐off:  How  to  find  hidden  treasures  in  the  desert  of  market  crisis.     IR   Magazine,   January/February   2009.   Retrieved   May   28,   2012,   from   http://www.debevoise.com/files/Publication/a0ca3db2-­‐ce22-­‐4bea-­‐abd8-­‐ 9ad6cf74207c/Presentation/PublicationAttachment/bdbdbe46-­‐ea14-­‐466b-­‐ b655-­‐9f4500c665e0/IRmagazinereprint.pdf     About   BRISyariah.   Retrieved   May   9,   2012,   from   http://www.brisyariah.co.id/?q=sejarah     Islamic   Banking   in   Indonesia   in   Brief.   Retrieved   May   29,   2012,   from   http://www.bi.go.id/web/en/Perbankan/Perbankan+Syariah/     Ketentuan   tentang   Pemisahan   (juga)   tak   Komplet   RUUPT.   Retrieved   May   28,   2012,  from  http://hukumonline.com/detail.asp?id=16951&cl=Berita     Masih   Banyak   Yang   Perlu   Disempurnakan   RUUPT.   Retrieved   March   5,   2012,   from   http://hukumonline.com/detail.asp?id=15752&cl=Berita     Pemisahan   Manajer   Investasi   Diatur   Undang-­‐undang.   Retrieved   March   5,   2012,   from   http://www.indonesiafinancetoday.com/read/2752/Pemisahan-­‐ Manajer-­‐Investasi-­‐Diatur-­‐Undang-­‐Undang     Restrukturisasi   Pusri   Holding   mulai   2011.   Retrieved,   May   9,   2012,   from   http://www.pusri.co.id/50publikasi01.php?tipeid=DD&pubid=pub2010119 39     Soft  Opening  Bank  Jabar  Banten  Syariah  Hasil  Spin  Off  Unit.  Retrieved  March  3,   2012,   from   http://www.bandungwebs.com/2010/05/bandung-­‐akhirnya-­‐ bank-­‐jabar-­‐banten.html     Spin-­‐Off   Benefits.   Spin   Off   Advisors   L.L.C:   Independent   Research   on   Corporate   Spin-­‐Offs.   Retrieved   May   10,   2012,   from   http://www.ibtimes.com/clients/2010/spin-­‐off/pdffiles/Spin-­‐ Off_Benefits_4_10.pdf     Spin   Off   Dorong   Perusahaan   Asuransi   Syariah   Kompetitif.   Retrieved   March   5,   2012,   from   http://www.republika.co.id/berita/syariah/bisnis/12/02/01/lypncq-­‐spin-­‐ off-­‐dorong-­‐perusahaan-­‐asuransi-­‐syariah-­‐kompetitif       D.   Other  sources     A.   Garner,   Bryan.   Black’s   Law   Dictionary,   8th   ed.   St.   Paul,   Minnesota:   West   Publishing  CO,  2004.    

 

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                        Muljadi,  Kartini.  Merger,  Konsolidasi,  dan  Akuisisi  Dalam  UU  Perseroan  Terbatas   No.  1  tahun  1995.  Newsletter,  Juni  1995.     Tumbuan,   Fred   B.G.   Konsep   Pemisahan   Menurut   UUPT   (The   Concept   of   Division   According   to   the   Company   Law)   -­‐   Pointers   of   Discussion.   Presented   at   the   event  of  Company  Law  Socialization,  Jakarta,  22  August  2007.     Kementerian  Badan  Usaha  Milik  Negara,  Master  Plan  Badan  Usaha  Milik  Negara   Tahun   2002-­‐2006,   2006-­‐2010,   dan   2010   –   2014   (Indonesia’s   Minister   of   State-­‐Owned   Enterprises,   Master   Plan   of   State-­‐Owned   Enterprises   Year   of   2002-­‐20006,  2006-­‐2010  and  2010-­‐2014).     Pengumuman   atas   Ringkasan   Rancangan   Pemisahan   Dan   Rencana   Pengalihan   Hak   Dan   Kewajiban   Unit   Usaha   Syariah   PT   Bank   Pembangunan   Daerah   Jawa  Barat  dan  Banten  Tbk.  Dengan  Cara  Mendirikan  PT  Bank  Jabar  Banten   Syariah   (The   Announcement   of   the   Abridged   Spin   Off   Plan   by   BJB).   Published  on  1  December  2009  in  Business  Indonesia  newspaper.     Pengumuman  atas  Ringkasan  Rancangan  Pemisahan  Unit  Usaha  Syariah  PT  Bank   Negara   Indonesia   (Persero)   Dengan   Cara   Pendirian   Bank   Umum   Syariah   (The  Announcement  of  the  Abridged  Spin  Off  Plan  by  BNI).  Published  on  12   August   2009   in   three   newspapers:     Business   Indonesia,   Media   Indonesia   and  the  Jakarta  Globe.     Pengumuman  atas  Ringkasan  Rancangan  Pemisahan  Sebagian  Aktiva  dan  Pasiva   PT  Pupuk  Sriwidjaya  (Persero)  kepada  PT  Pupuk  Sriwidjaja  Palembang  (The   Announcement   of   the   Abridged   Spin   Off   Plan   by   PT   Pusri   and   PT   Pusri   Palembang).   Published   on   15   November   2010   in   two   newspapers:   Koran   Tempo  and  Sinar  Harapan.        

 

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