What is a Merger and an Acquisition?
What is a Merger?
A merger is a legal action taken by one or more Companies in order to merge with another existing Company, which causes the transfer of assets and liabilities of the merging Companies by operation of law, to the surviving Company and thereafter the legal entity status of the merging Company ceases by operation of law. (Article 1 Paragraph (9), Law No. 40 of 2007 on Limited Liability Company)
In a merger, Companies that merge will disappear and end their status as a legal entity. All assets and liabilities of the Company belong to the Company that receives the merger.
What is an Acquisition?
An acquisition is a legal action conducted by a legal entity or an individual to acquire the shares of the Company, resulting in the transfer of control of such Company. (Article 1 Paragraph (11), Law No. 40 of 2007 on Limited Liability Company)
In the acquisition, there is no dissolution of the legal entity status of the Company that was acquired by the acquiring Company. What happens is only a change of control, whereas the acquiring Company now has control over the acquired Company.