Services » Corporate Restructuring

Corporate Restructuring

Written by Samuel S. K. A. on 05/03/2025
The author’s views are entirely their own and may not always reflect the views of Putranto Alliance.

Audio Summary

Below is an AI generated discussion of the topic summary. For any clarity or accuracy please contact us here.

00:00 / 00:00

Introduction

Corporate restructuring is a key strategy for businesses aiming to improve efficiency, financial stability, and competitiveness. Restructuring allows companies to optimize their operations and realign with their strategic objectives, during economic shifts, regulatory changes, or internal inefficiencies.

The tailored professional services assist through the corporate restructuring process, ensuring compliance with legal requirements. Partnering with us enables businesses to improve governance, operational effectiveness, and financial health.

Definition

Corporate restructuring refers to the reorganization of a company’s structure, operations, or financial framework to improve efficiency and long-term sustainability. This may involve changes in several aspects of the company. mergers, acquisitions, divestitures, debt restructuring, or labor realignment.

The Importance

Based on Law Number 40 Year 2007 concerning Limited Liability Companies (Undang-undang Perseroan Terbatas), corporate restructuring can apply to the following cases:

Change (Amendments) to the Articles of Association (Anggaran Dasar):Adjusting company objectives, ownership structures, or operational guidelines to align with business needs and regulatory requirements.
Change in the company capital and shares:
Increasing the invested capital structure, issuing new shares, reducing capital, or restructuring shareholder compositions to enhance financial flexibility.
Change in the Board of Director (BoD) and Board of Commissioner (BoC):
Appointing new leadership, extending board tenures, or restructuring governance to improve decision-making and corporate oversight.
Other legal actions related to corporate restructuring in the business entity, including:
1. Merger:
  Combining two or more companies to achieve operational synergies and market expansion.
2. Consolidation:
  Uniting businesses into a single legal entity to streamline operations and enhance financial performance.
3. Acquisition:
  Gaining control over another company through share purchases or asset transfers to strengthen market position.
4. Separation (Spin Off):
  Splitting business units into independent entities to improve focus, efficiency, and shareholder value.

Key Consideration

Companies undergoing restructuring must address these critical aspects:

Stakeholder Communication:
1. Notify shareholders, creditors, and employees about restructuring plans.
2. Address concerns through transparent and effective communication.
Financial Impact Assessment:
1. Analyze potential risks and rewards before implementing restructuring.
2. Evaluate cost-benefit factors and future financial projections.
Business Continuity Planning:
1. Implement contingency strategies to mitigate disruptions during restructuring.
2. Ensure operational stability while executing organizational changes.

The Best Time to Engage with Professional Service

A company should consider restructuring in the following situations:

Post-Financial Year Review:
Addressing performance gaps and inefficiencies.
Before Business Expansion:
Optimizing internal operations for growth.
When Facing Operational Challenges:
Resolving inefficiencies and restructuring management.

Benefits of Using Professional Service

Engaging professional advisors ensures a smooth restructuring process. The advantages include:

Strategic Guidance:
Providing restructuring plans tailored to business needs.
Risk Mitigation:
Identifying and minimizing legal and financial risks.
Regulatory Compliance:
Adhering to good corporate governance (GCG) and prevailing financial laws.
Legal Documentation Support:
Assisting with shareholder agreements, contracts, and filings.

Key Steps in Corporate Restructuring

Corporate restructuring requires careful planning and execution, following these key steps:

Approval in the General Meeting of Shareholders / GMS (Rapat Umum Pemegang Saham / RUPS):
Corporate restructuring decisions must be approved by shareholders during RUPS, which may be conducted during the Annual GMS (RUPS Tahunan) or an Extraordinary GMS (RUPS Luar Biasa), depending on the urgency and nature of the restructuring.
Notification to Stakeholders:
All relevant stakeholders, including creditors and employees, must be informed about the restructuring plan. Stakeholders have the right to raise objections within a specified timeframe (typically between 14 to 60 days), depending on the type of restructuring being undertaken.
Regulatory Approvals:
Certain restructuring activities, such as mergers, stock buybacks, or changes in business operations, require approval from Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan / OJK) and other relevant government institutions. The required approvals vary based on the industry and nature of the company’s business activities.
Legal Documentation and Amendments:
Any structural changes must be legally documented and reflected in the Articles of Association (Anggaran Dasar). These amendments must be officially reported to the Ministry of Law and Human Rights (Kementerian Hukum dan HAM) for validation.
Ongoing Compliance and Monitoring:
Certain industries or business activities may require additional supervision and regulatory reporting from the relevant authorities.
For example, hospitals must comply with regulations set by the Ministry of Health, construction companies are overseen by the Ministry of Public Works and Housing, and financial institutions are regulated by OJK (Financial Services Authority).

How We Can Help

Our company specializes in providing tailored corporate restructuring solutions, ensuring smooth execution while adhering to legal requirements, including:

Board of Directors and Board of Commissioners Restructuring:
• Changes in board composition.
• Extension of board members' tenure.
Capital and Shares Restructuring:
• Capital increases.
• Capital reductions and adjustments.
• Debt-to-equity conversion.
Asset Contribution (Inbreng):
• Transferring land or other assets into company ownership to strengthen business equity.
Operational Restructuring:
• Mergers, consolidation, acquisitions, and separation of business entity.
• Operational efficiency through financial statement optimization, tax structuring, and other strategic improvements.

FAQs

What expenses should be considered during the restructuring process?

Several costs must be accounted for in corporate restructuring, including:

Legal and administrative fees:
Costs for notarial deeds, amendments to the Articles of Association, and approvals from the Ministry of Law.
Regulatory expenses:
Restructuring involving mergers, acquisitions, or changes in business activities may require additional costs for obtaining new business permits or regulatory approvals.
Employee-related costs:
Restructuring involving workforce reorganization must consider severance payments or employee compensation in compliance with labor laws.

How long does a corporate restructuring process take?

The timeframe depends on several factors, including the complexity of the restructuring, regulatory approvals, and the company’s objectives.

Some processes, such as board restructuring, can be completed within a few weeks. Major changes such as mergers or acquisitions may take several months or years due to regulatory and compliance requirements.

Can corporate restructuring be done voluntarily?

Yes, restructuring can be voluntary for growth optimization or mandatory due to financial distress.

What are the risks of corporate restructuring?

Potential risks include financial losses, employee layoffs, and legal disputes if not properly managed.

Share to your network

Contact Us

How may we address you?

May we have your email address?

What service category can we help you with?

How can we help?

Submission of this form indicates consent to data management in accordance with the privacy policy.

A response to the inquiry will be sent to your email within 2 working days.