| Engagement snapshot | |
|---|---|
| Client archetype | Asia-based strategic acquirer buying a controlling stake in a privately held, mid-market industrial manufacturer |
| Service lines | Financial, tax and compliance due diligence · SPA protection support |
| Jurisdiction | Indonesia (target and governing law); acquirer home-country approvals out of scope |
| Engagement model | One-off, pre-signing, with Day-1 handover |
| Duration band | 1–3 months |
| Frameworks | UU 40/2007 · UU 5/1999 Art. 29 · PP 57/2010 · UU KUP Art. 13(1) · PSAK 237 · PSAK 103 · ISRS 4400 (Revised) |
| Team shape | Partner-led; manager; finance, tax and compliance specialists |
What was the challenge?
The target's statutory accounts could not, on their own, support a purchase price or an SPA risk allocation. A share purchase transfers every historical liability of the target, recorded or not. The acquirer's board needed four answers: what the business earns, what it owes, what the tax office can still assess, and what must be filed after closing.
| Challenge | Operational reality | Business risk |
|---|---|---|
| Earnings quality | Management accounts, statutory accounts and tax returns showed different profit; related-party trades ran on non-market terms | Paying a multiple of unadjusted EBITDA |
| Debt-like items | Provisions, accrued employee obligations and unpaid taxes sat outside reported borrowings | Paying for liabilities missing from headline net debt |
| Open tax years | Withholding (PPh 21, 23, 26), final tax (PPh 4(2)), PPN and related-party pricing stay assessable for five years | Inheriting every open-year assessment risk |
| Licences and workforce | KBLI codes, NIB, LKPM reporting and BPJS contributions had to match actual operations | Restricted plant activity or sanctions after closing |
| Post-closing filings | Competition, registry and announcement duties run from the effective date | A missed filing as the acquirer's first breach |
How did JCSS Indonesia approach it?
We built the workplan backwards from the SPA, so every diligence question ended in a price, indemnity or closing action.
Terms and request list. We agreed procedures and report format with the acquirer under ISRS 4400 (Revised), which yields factual findings, not assurance, and issued a tiered data-room request list.
Quality of earnings and net debt. We bridged reported to normalised earnings, scheduled debt-like items and normalised working capital from monthly balances. Provisions were tested against PSAK 237 (IAS 37), related parties against PSAK 224 (IAS 24) and post-year-end events against PSAK 210 (IAS 10).
Tax exposure matrix. We reviewed PPh 21, 23, 26 and 4(2), PPN, related-party pricing (PMK 172/2023) and open years under Art. 13(1) UU KUP, reading audit history against PMK 15/2025.
Licence and workforce map. We matched KBLI codes (BPS Regulation 7/2025), NIB and permits to actual activity, checked LKPM and foreign-ownership status (PP 28/2025, Permen Investasi/BKPM 5/2025, Perpres 10/2021 as amended) and tested BPJS contributions (PP 86/2013).
Red-flag report and SPA map. Each finding carried a proposed treatment: price adjustment, specific indemnity, warranty, retention or condition precedent. The acquirer's counsel drafted the SPA wording.
Day-1 plan. We tested KPPU notification under Art. 29 UU 5/1999, PP 57/2010 and KPPU Regulation 3/2023, listed the UU 40/2007 steps (Arts. 128, 131, 133) and prepared opening data for PSAK 103 (IFRS 3) purchase accounting.
Why this approach: a report organised around the SPA puts each finding's price consequence on the table before signing; a descriptive report leaves that translation to the acquirer. We rejected audit-style verification of every balance: it adds time without changing the nature of the work, and assurance in Indonesia is reserved to public accountants (UU 5/2011).
What were the results?
JCSS Indonesia delivered a red-flag report that tied every material finding to a contractual response before SPA negotiation.
| Result | What was delivered | Why it matters |
|---|---|---|
| Price basis | Normalised-earnings bridge and net-debt schedule | The offer could rest on adjusted, not reported, figures |
| Tax exposure | Matrix by tax type and open year | Counsel could size indemnities and retentions to specific years |
| Compliance gaps | Licence-to-activity matrix, one remediation owner per gap | Each gap was assigned for pre-closing fix or pricing |
| Contract protection | Every red flag mapped to price, indemnity, warranty or condition | Negotiation centred on evidenced items |
| Post-closing duties | Day-1 calendar: KPPU test, registry notification, announcement | Every statutory deadline had an owner from the effective date |
Which frameworks and regulations applied?
- UU 40/2007, Arts. 125–128, 131, 133: acquisition, notarial deed, notification, announcement. Pasal 131
- UU 5/1999 Art. 29; PP 57/2010 Art. 5; KPPU Regulation 3/2023: post-closing notification. PP 57/2010 · KPPU Reg. 3/2023
- UU KUP Art. 13(1); PMK 15/2025; PMK 172/2023: limitation, tax audits, arm's length. PMK 15/2025 · PMK 172/2023
- PP 28/2025; Permen Investasi/BKPM 5/2025: risk-based licensing, LKPM. PP 28/2025
- PSAK 237, 224, 210, 103: IAI renumbering, effective 01 Jan 2024
- ISRS 4400 (Revised): agreed-upon procedures. IFAC
Key takeaways for acquirer CFOs
- Use the five-year assessment period in Art. 13(1) UU KUP as the baseline for diligence scope and indemnity design.
- Map every finding to a price, indemnity or closing action; an unmapped finding is information, not protection.
- Put the KPPU test and registry steps in the pre-signing workplan; the 30-working-day clock starts at the effective date.
Frequently asked questions
When must a share acquisition be notified to KPPU in Indonesia?
Within 30 working days after the acquisition becomes legally effective, where combined post-transaction assets exceed IDR 2.5 trillion or sales exceed IDR 5 trillion (banks: assets above IDR 20 trillion). The basis is Article 29 of UU 5/1999, Article 5 of PP 57/2010 and Articles 2(2) and 6 of KPPU Regulation 3/2023.
How far back can the Indonesian tax office assess a company being acquired?
Generally five years after the tax becomes due, or after the tax period, part of the tax year or tax year ends, under Article 13(1) of UU KUP. Article 13(5) allows later assessment after a final tax-offence conviction. The liabilities stay with the company, so a share buyer inherits these open years.
Is acquisition due diligence an audit or assurance engagement?
No. JCSS Indonesia performs due diligence as agreed-upon procedures. Under ISRS 4400 (Revised), the practitioner reports procedures and factual findings and expresses no opinion or assurance conclusion. Assurance services in Indonesia are reserved to public accountants under UU 5/2011, so the acquirer draws its own conclusions.
Which PSAK numbers apply to provisions and business combinations after the 2024 renumbering?
Since 01 Jan 2024, IAI numbers IFRS-aligned standards in the 100 and 200 series. Provisions and contingent liabilities are PSAK 237 (formerly PSAK 57, aligned with IAS 37). Business combinations are PSAK 103 (formerly PSAK 22, aligned with IFRS 3).
Which corporate steps follow a share purchase of an Indonesian limited-liability company?
Under UU 40/2007, a direct purchase from shareholders needs a notarial deed in Indonesian (Article 128(2)), and a copy accompanies the notification to the Minister (Article 131(2)). Article 133 requires a newspaper announcement within 30 days of the effective date. Counsel confirms the sequence for each transaction.