Perjanjian Akuisisi

Pada dasarnya, perjanjian ini memberikan jaminan hukum dan melindungi kedua belah pihak (seller dan buyer), serta menguraikan langkah-langkah sebelum dan sesudah deal closing.

Material provisions in the acquisition agreement

• Representation and Warranties
• Covenants
• Conditions to Closing
• Post-Closing Covenants and Closing Documents

REPRESENTATION AND WARRANTIES

• Representations

Representations are statements of fact made by one party to another party during the negotiation and execution of a contract. The party making the representation should be aware and have knowledge of the truthfulness of the statement they are making.

Representation adalah statement of fact. Si penjual menyatakan bahwa saya adalah pemilik tanahnya. Ini adalah pertanyataan dari sisi penjual agar si pembeli mau masuk ke transaksi tersebut. 

• Warranties

Warranties, on the other hand, are specific promises or assurances made by one party to the other party regarding the condition, quality, performance, or other characteristics of the subject matter of the contract. They provide additional protection to the buyer by guaranteeing certain conditions or qualities of the acquired assets that cannot be verified when they are stated. Warranties also include certain matters related to the subject matter that cannot be verified by the seller or buyer (or related to any act that may be done by any third party that may affect the subject matter).

Warranties ini utk cover hal2 yang tidak sepenuhnya bisa diversify oleh buyer. Tujuannya adalah agar membuat buyer nyaman memasuki transaksi dengan si seller. Misal si PT A punya IUP. Kita gimana tau PT A ini comply dengan semua peraturan perundang2an, tidak ada dispute, dsbgny? Semua ini sulit diversify, dan buyer tetap akan LDD, kita tetep minta jaminan dari sisi seller. 

Kedua hal ini punya konsekuensi yang similar. Jika hal2 yang dinyatakan atau dijanjikan tidak benar, tentunya ada konsekuensi.

Indonesian Civil Code

The Indonesian Civil Code (ICC) provides the following representation and warranties in Article 1491:

"Penjual wajib menjamin (i) penguasaan benda yang dijual secara aman dan tentram dan (ii) tidak ada cacat-cacat yang tersembunyi atas barang tersebut."

However, the parties can include more detailed representations and warranties in their agreement.

Consequence of Breach of Representation and Warranties

Apa sih dampak terjadi breach of reps/warranties?

Kita tentu bisa minta ganti rugi atas kerugian yang buyer alami. Nanti di CSPA akan diatur pasal tetntang idemnification, sehingga buyer bisa ajukan claim. 

Kalau belum sampai di titik closing, salah 1 check listnya adalah gak ada breach reps/warranties. Kalau masih ada breach, nantinya akan dijadikan CP lagi.

Ask for a specific performace. Misal udah close tapi ada permasalahan, pastinya harus agree dulu di CSPAnya, misal ada adjustment of price. Misal barangnya ada defectnya, ada cacatnya. Misal ada cacat atau defect, purchase pricenya turun sehingga seller mesti kembalikan certain amount of price. 

Timing of the Representations and Warranties Given

Period to submit a claim based on breach of representation or warranties

If there is a breach of representations or warranties, the timing of the claim can range from a few months to several years, depending on the nature of the transaction, industry practices, and the level of risk associated with the target company. It is important for the buyer to conduct thorough due diligence and negotiate a claim period that provides sufficient time to identify and address any breaches or inaccuracies.

Kapan sih reps and warranties ini diberikan? Diberikan pastinya saat signing. Ini adalah dasar si buyer mau enter transaksi ini. 

Kedua, reps dan warranties ini juga dinyatakan saat titik closing, dengan fakta yang terjadi saat closing tersebut. 

Reps and warranties ini bisa diklaim sampai kapan? Tentunya sampai closing. Tapi setelah closing bisa diklaim sampai kapan? Sesuai dengan agreement para pihak. Tentunya tidak akan sepanjang yang ada di KUHPerdata. Tapi again, ini risk assessment dari sisi komersial.

MAIN POINTS OF THE REPRESENTATIONS AND WARRANTIES

• Organization and Authority
• Masalah tentang si sellernya. Misal, si seller tuh "I reps/warrants bahwa saya punya legal entitiy dbsgnya"
• Ownership and Title
• "Saya menyatakan dan menjamin bahwa saya adalah pemilik perusahaan"
• Capitalization
• "Semua saham2 yang dikeluarkan sudah disetor penuh modal2nya"
• Financial Statements
• Lebih ke arah warranty, udah menunjukkan kondisi company yg sebenarnya
• Legal Compliance
• Company tidak sedang in breach of applicable law and regulation
• Contracts and Liabilities
• Seller sudah menyampakan secara material contracts, liability, dsbgnya.
• Karena kita mau dapat jaminan bahwa company fine2 saja.
• Litigation
• Lebih ke arah warranty bahwa tidak ada issu hukum dan gak ada upaya utk likuidasi company. 
• Tax Matters
• Mirip dengan compliance bahwa si perusahan sudah melakukan seluruh kewajiban tax baik yang sifatnya filing, reporting, dan payment ke tax office

Ini poin2 yang biasa ada di reps/war di CSPA

COVENANT

The “Covenant” section in an agreement (especially in an M&A agreement) stipulates certain covenant/undertakings that the party undertakes (usually the seller) during a certain period of time (typically from the date of the agreement until the completion/closing date). It often outlines terms and conditions where a party will perform or refrain from certain actions. Covenants are legally binding and enforceable.

The purpose of the covenant is to ensure that the party performs or refrains from certain actions to prevent material adverse effects to the transaction or, if otherwise, may affect the other party’s decision on the transaction or the value of the transaction object (i.e., shares, land, assets, etc.).

Biasanya, covenant akan selalu ada di dokumen transaksi. Saat buyer enter the transaction, misal dia udah sepakat beli saham PT X, pasti mereka mau menjaga bahwa dari jangka waktu signing sampai closing, dari sisi buyer belum ada closing sehingga dia blm bisa control compannya. Tapi buyer udah punya interest agar jagain company ini agar jalan dulu sampai di titik nanti. Nanti akan diatur ada janji2nya seller yang akan berjanji hal2 yang kaitannya sama operation dari companynya.

Positif: Hal2 yang diwajibkan kepada seller untuk dilaksanakan

Negatif: Seller gak boleh melakukan itu.

MAIN POINTS OF THE COVENANT

• Organization and Authority
• Tentunya mengatur tentang keberadaan si sellernya. 
• Business and Operation
• Seller berjanji company itu akan selalu beroperasi
• Perusahaan gak akan melakukan hal-hal yang bertentangan dengan hukum
• Tidak akan tiba2 mengubah bisnis perusahannnya
• Buyer tidak mau tiba2 seller enter a loan agreement 
• Maintain Ownership
• Company ini tidak akan dijaminkan ke pihak ketiga
• Exclusivity
• Selama agreement ini, seller tidak akan enter dengan yang lain. 
• No Corporate Action
• Tidak boleh ada corporate action selama durasi transaksi ini
• Litigation
• Mewajibkan utk ngelapor ke buyer
• Kadang ada certain action yang butuh consent buyer
• Regulatory Compliances
• Comply dengan peraturan perundang2an yang ada

Ya namanya buyer pengen beli asset ini, lalu seller melakukan sesuatu terhadap asset yang mau dibeli oleh buyer, buyer punya hak untuk mengajukan claim itu.

CONDITION TO CLOSING

• The general function of closing conditions is to specify clearly the circumstances under which a party may back out of a transaction. Conditions can also be written to ensure that the buyer/ acquirer cannot refuse to close after the conditions have been fulfilled.
• The seller would generally prefer a few closing conditions. On the other hand, the buyer would prefer more detailed closing conditions.

Closing condition adalah dasar akhirnya kenapa transaksi itu bisa jalan atau tidak. Kadang itu mungkin dari due diligence exercisenya, saya cuman mau close the transaction kalau syarat2 ini terpenuhi. Utk ini juga biasanya, yang heavy di sisi seller. Karena buyer ada sesuatu untuk protect dirinya, sehingga seller yang heavy.

• Kalau CP gak terpenuhi dan buyer choose not to close, agreement ya diterminate. Bisa diatur juga kalau sampai gak closing dan karena kesalahan salah satu pihak bisa diatur.
• Misal ada pembayaran di muka, di beberapa transaksi deposit akan hangus. Misal karena kesalahan buyer, dan transaksi gak close, bisa diatur agar deposit hangus.
• Seandainya ada deposit yang udah dibayar buyer, tapi transaksi gagal gara2 seller, ya deposit harus dibalikin lagi
• Bisa juga diatur bahwa siapa yang berhak menentukan transaksi itu bisa closing atau tidak. Jika karena kesalaohan seller, maka yang terminate buyer, vice versa. 

TYPICAL CLOSING CONDITIONS THAT ARE OFTEN NEGOTIATED

Representations and warranties certified true on the closing date

This is a requirement that the representations and warranties of a party are true as if made on the closing date and (generally) that a certificate to that effect will be delivered on closing.

Reps and warrants kadang diminta diulang dengan fakta saat closing date. Misal ternyata ketahuan ada warranty yang salah atau tak tepenuhi, bisa jadi gak akan closing

Certain authorizations, approvals, or waivers are obtained.

This is a requirement that all required consents and authorizations have been obtained. In this connection, consents and authorizations generally may come from:

• a. Government (for certain business sectors, transferring shares or changing ownership needs government approval).
• b. Lenders (specific events set out in the relevant credit agreement would need the lender’s approval or waiver, is a change of control, change of ownership percentage, acquiring a new business).
• c. Articles of association (e.g., acquisition) → corporate approvals.

Biasanya utk migas tuh butuh persetujuan dari SKK migas, finansial dari OJK, dsbgnya.

The buyer/acquirer must be satisfied with the results of its due diligence.

The buyer may attempt to obtain a condition that the due diligence results must be satisfactory.

No material adverse changes, etc.

Typically agreed to address if the assumptions (economic or regulatory assumption) underlying the transaction have been materially changed.

Other

• Execution of another agreement (e.g., shareholders agreement).
• The reorganization must occur before completion (e.g. if the parties agreed that certain companies within the group companies or certain assets being acquired are excluded from the deal. As such, the need for a carve-out).
• Other conditions may be agreed upon between the parties (e.g., the success of relinquishing the relevant encumbrance).

POST-CLOSING COVENANTS AND CLOSING DOCUMENTS

The general purposes of post-closing covenants or subsequent conditions are:

• Integration of the business after the mergers or acquisitions takes place.
• Masih butuh bantuan dari seller utk integrate the business
• Regulatory matters post mergers or acquisition (e.g., report to the relevant ministry).
• Biasanya disisi si buyer. Mungkin perlu report ke OJK atau ke public
• Dari sisi pemberi izin biasanya minta reporting setelah transaksi
• Bisa juga put obligation ke seller
• Ensuring the seller to still financially capable of performing post-transaction matters (e.g., claim that the buyer may have against the seller due to breach of warranties).

Tadi kita ngomongin kondisi yang 'sebelum'. Sekarang kondisi yang setelah. Sudah closing tapi masih ada hal2 yang harus dilakukan.

TYPICAL POST-CLOSING COVENANTS AND CLOSING DOCUMENTS

Typical post-closing covenants include:

• Transitional services.
• Kan tidak mungkin karena ada pergantian pemilik, operasi berhenti
• Necessary reporting obligations (for certain business sectors, transferring shares or changing ownership requires report to the government).
• Maintaining books and records (for tax purposes or audit), particularly financial and tax data.
• Commission for the Supervision of Business Competition (Komisi Pengawas Persaingan Usaha) matter 

Non-fulfillment or non-performance would generally result in a breach of contract.

Post-closing, diprotectnya akan jadi breach of contract.