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In a share deal or asset deal in Indonesia, one investor buys shares in a distribution company. Another buys the warehouse, vehicles, and inventory of a similar business. The prices are comparable, but the position after closing may be different. The first investor acquires shares in a company with an existing history of obligations and legal relationships. The second acquires the assets specified in the agreement, but may not be able to use the seller’s permits, contracts, or operating systems immediately.
The choice between a share deal and an asset deal is therefore not merely a matter of price. The more important questions are what the buyer actually acquires, what remains with the seller or target company, and what must still be done for the business to operate after the transaction.
Share Deal or Asset Deal: The Basic Distinction
In a share deal, the buyer acquires shares in the target company. The company continues to exist as the same legal person, while its ownership or control changes. Assets, contracts, permits, and obligations held by the company do not become the shareholder’s personal property. They remain with the company, subject to the effects of the transaction under the relevant documents and law.
In an asset deal, the buyer acquires the particular assets agreed in the transaction. The selling company continues to exist. Transferring assets does not, by itself, transfer the seller’s entire business, permits, employees, contracts, or obligations. Each component requires separate examination.
Before selecting a structure, an investor should define its operational needs: which assets and rights must it own or be entitled to use lawfully on the first day after closing?
What Needs to Be Examined?
| Issue | Share deal | Asset deal |
|---|---|---|
| Historical liabilities | Existing obligations remain with the target company and may affect the value and risk of the investment. | The buyer does not automatically assume all of the seller’s obligations, but must examine encumbrances, security interests, disputes, and obligations attached to the assets or transaction. |
| Permits and business activities | The target remains the permit holder, but a change in shareholders or control may trigger notification, approval, or adjustment requirements. | The seller’s permits do not automatically transfer with the assets. The buyer must examine the permits needed to carry on the activity. |
| Employees | The target remains the employer, while employment implications still need to be examined. | Employment relationships do not transfer merely because employees or operations are listed among the assets. Employment arrangements require separate assessment. |
| Contracts and third-party consents | Change-of-control clauses, transfer restrictions, and creditor or counterparty consents must be reviewed. | Assignment or substitution of a contracting party depends on the contract and any required consent. |
| Tax and transaction costs | The consequences depend, among other things, on the seller’s identity and domicile, the type of shares, and the payment structure. | The consequences depend on the type of asset, the parties’ tax status, and charges applicable to its transfer. |
| Land and buildings | Rights registered in the target’s name remain in its name. The type, encumbrances, and suitability of those rights still need to be examined. | Certain rights may be transferred if the requirements concerning the holder, asset, and procedure are met. Not every buyer may hold every type of land right. |
| Holder of rights to core assets | Land, buildings, or other assets held by a founder or third party are not acquired merely by buying the target’s shares. | The seller must have sufficient title and authority to transfer the assets it promises to sell. |
| Trademarks, technology, licences, and data | It must be established whether the target owns these rights, holds them under licence, or relies on a founder or another party. Licence terms, change of control, and data protection remain relevant. | The transfer of intellectual property, software, licences, or data, or the grant of rights to use them, must not be assumed to follow the transfer of physical assets. The legal basis and related obligations require review. |
This table is a map of issues, not a conclusion that any particular right or obligation necessarily transfers. The outcome depends on the documents, the activity, the parties, and sector-specific rules.
Additional Considerations for Foreign Investors
Foreign investors need to examine whether the target’s business activities are open to foreign investment and whether applicable requirements concerning the business field, location, and permits are satisfied. Presidential Regulation No. 10 of 2021, as amended by Presidential Regulation No. 49 of 2021, is one starting point, but sector-specific rules may also affect the outcome.
Where a foreign party acquires shares in a domestic-investment company, the change of status to a foreign-investment company and its implications for subsidiaries should be examined under Article 227 of Regulation of the Minister of Investment and Downstream Industry/Head of BKPM No. 5 of 2025. Investment value, capitalisation, business requirements, and risk level cannot be overlooked. Article 26 of the same regulation must also be assessed against the actual investment plan and corporate structure.
Buying shares does not change the identity of the holder of land rights already held by the target. The buyer should nevertheless check the type and term of each right, its designated use, and the holder’s eligibility. Financing land does not, in itself, give a foreign investor ownership rights over it. Arrangements involving a nominee require careful examination under Indonesia’s Basic Agrarian Law.
Before and After Closing
Review should begin before signing a binding letter of intent (LOI). The binding or non-binding status of each LOI provision should be clear. Due diligence can then examine title to core assets, historical liabilities, permits, contracts, employees, tax, and operational dependence on third parties.
Due diligence findings inform the choice of structure, the agreement, the allocation of risk, and the conditions precedent. Conditions to be fulfilled before closing should be distinguished from documents to be delivered at closing and obligations that can only be performed afterwards.
Depending on the transaction, post-closing obligations may include deeds and filings or approvals through AHU, updates to licensing data in OSS, beneficial-ownership reporting, and LKPM investment activity reports. Whether notification to KPPU is required must also be assessed by reference to group assets or sales, a change of control, affiliation, nexus with Indonesia, and the special rules for asset acquisitions. A required notification submitted late may attract an administrative fine. Not every transaction is notifiable.
Eight Questions Before Choosing a Structure
- What exactly will be purchased: shares, specified assets, or a combination?
- Who lawfully holds the rights to core assets, including land, trademarks, technology, and data?
- Does the target have enforceable rights to use assets owned by its founder or a third party?
- Which historical obligations remain with the target, and how will their risks be allocated?
- Whose consents are required, including those of shareholders, creditors, regulators, and contractual counterparties?
- Which permits, contracts, and operational rights remain effective after the transaction, and which require further action?
- Will foreign investment change the status or eligibility of the target’s or its subsidiaries’ activities?
- What must be completed before closing, and what must be reported or adjusted afterwards?
Conclusion
Neither structure is invariably safer or less costly. The transaction must be assessed against the target company, the assets it actually owns or controls, its business activities, and the investor’s objectives. Similar prices may produce different rights, risks, costs, and post-closing requirements.
To discuss the implications of a transaction structure under consideration, please contact Prasetyo Law Office. Assessment of a specific transaction requires review of the relevant facts and documents.
Prasetyo Law Office
Indonesia Stock Exchange Building, Tower 1 Level 3 Suite 304
Sudirman Central Business District, Jakarta 12190
Telephone: +6221 5890 5002 ext. 105
Email: info@prasetyolawoffice.com
Related Reading
- Share Purchase Agreement di Indonesia
- Regional Holding dan PT PMA
- Strategi Exit Investor Asing dari PT PMA
Primary Sources
- Law No. 40 of 2007 on Limited Liability Companies.
- Law No. 25 of 2007 on Investment.
- Law No. 5 of 1960 on Basic Agrarian Principles.
- Law No. 20 of 2016 on Trademarks and Geographical Indications.
- Law No. 27 of 2022 on Personal Data Protection.
- Presidential Regulation No. 10 of 2021 on Investment Business Fields, as amended by Presidential Regulation No. 49 of 2021.
- Regulation of the Minister of Investment and Downstream Industry/Head of BKPM No. 5 of 2025.
- KPPU Regulation No. 3 of 2023.
Disclaimer
This article is for general information only and is not legal advice or an opinion on any particular transaction. Any proposed acquisition must be assessed on the facts, documents, parties, business activities, and law applicable at the time. Receipt or use of this article does not establish a lawyer-client relationship.
Reviewed on 13 October 2026.
