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The Minister of Energy and Mineral Resources recently issued Regulation No. 10 of 2017 on the Principles Governing Power Purchase Agreements ("MEMR 10") as part of its efforts to overcome persistent delays in the closing of Power Purchase Agreements ("PPA") between Independent Power Producers ("IPP"), the sellers of electricity, and state power utility Perusahaan Listrik Negara ("PLN"), as the buyer. From the Government's perspective, MEMR 10 is intended to provide greater certainty and thus help reduce the time needed for negotiating PPAs. The ultimate question, however, is whether MEMR 10 will actually expedite the signing of the PPAs or is it skewed to the benefit of PLN, thus potentially lessening the appetite of IPPs and their lenders to invest in projects promoted by PLN?
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The Government has instituted a new mechanism for sharing out production from oil and gas fields as between the State and its contractors ("Contractor") under Production Sharing Contracts ("PSC"). The new "Gross Split" mechanism is set out in Minister of Energy & Mineral Resources Regulation No. 8 of 2017, which came into force on 16 January 2017, while the first PSC to employ the new arrangement was signed on 18 January 2017, covering the Offshore North West Java working area operated by state energy firm Pertamina, which had recently expired.
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The Government has issued Government Regulation No. 1 of 2017 regarding the Fourth Amendment to Government Regulation No. 23 of 2010 regarding the implementation of Mineral and Coal Mining Business Activities (11 January 2017) ("GR 1/2017"). GR 1/2017 aims to strengthen the development of domestic mineral processing and refinery business. However, the changes introduced by GR 1/2017 may not be attractive to foreign entities looking into investing in Indonesia’s downstream mining sector.
Previously, the percentage of shares to be divested and the timetable for divestment depended on whether a company was engaged in underground mining or smelting operations. Under the new Regulation, the share divestment requirement applies uniformly, regardless of whether a mining company carries out underground mining or smelting operations. Moreover, all Mining Business License (Izin Usaha Pertambangan or "IUP") and Special Mining Business License (Izin Usaha Pertambanga Khusus or "IUPK") holders must begin divesting their shares after 5 years of production, so that by the 10th year, Indonesian party(-ies) own at least 51% of the shares.
On 23 December 2016, the Financial Services Authority (Otoritas Jasa Keuangan / "OJK") issued OJK Regulation No. 74/POJK.04/2016 on the Merger or Consolidation of Public Companies ("New Rule"). The New Rule, which revokes Bapepam Rule No. IX.G. on the Merger or Consolidation of Public Companies or Issuers, is aimed at simplifying the rules governing mergers or consolidations, and improving the quality of information disclosure. It expands the information that must be contained in the disclosure so as to include:
- disclosure of the new controlling shareholders resulting from the merger or consolidation; and
- additional information on changes in core business.
If the merger or consolidation results in a change in the Public Company's core business, the Merger or Consolidation Plan should provide relevant information on such change, including: (i) a summary of the feasibility study; (ii) the reasons and considerations underlying the change in core business and a description thereof; and (iii) a description of the effects of the change in core business on the Public Company's financial condition. These requirements are in line with the prevailing capital markets regulation on changes in core business.
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The Supreme Court recently issued a regulation setting out the procedures for handling criminal offenses committed by corporations. The new rules, which entered into force on 29 December 2016, provide a partial remedy to one of the most obvious deficiencies in Indonesian law, namely, the lack of a solid legal framework for addressing corporate crime.
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The House of Representatives ("DPR") enacted the Trademarks Bill into law on 27 October 2016. The new legislation ("2016 Trademarks Law") had long been anticipated as it relates to the requirement under the ASEAN Economic Community ("AEC") accords for all ASEAN member countries to implement the 1989 Protocol to the Madrid Agreement Concerning the International Registration of Marks.
The new legislation is aimed at encouraging local businesses to broaden their markets, both locally and overseas, supported by the availability of immediate and effective legal protection. It provides a trademark owner with the option of filing a trademark through a foreign country's trademark office ("International Bureau"), in accordance with the Madrid Protocol. It further modifies the trademark process and introduces the possibility of engaging independent experts to conduct the trademark examination process, a concept that was first introduced in the new Patents Law, which was enacted on 27 July 2016.
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Please note that whilst the information in this Update is correct to the best of our knowledge and belief at the time of writing, it is only
intended to provide a general guide to the subject matter and should not be treated as a substitute for specific professional advice.
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Assegaf Hamzah & Partners
Jakarta Office
Level 36 & 37, Capital Place
Jalan Jenderal Gatot Subroto Kav 18
Jakarta 12710, Indonesia
Surabaya Office
Pakuwon Center, Superblok Tunjungan City
Lantai 11, Unit 08
Jalan Embong Malang No. 1, 3, 5,
Surabaya 60261, Indonesia
http://id.rajahtannasia.com
Contacts: Ahmad Fikri AssegafSenior Partner/Co-FounderD +62 21 2555 7800 F +62 21 2555 7899 ahmad.assegaf@ahp.co.idBono Daru AdjiManaging PartnerD +62 21 2555 7800 F +62 21 2555 7899 bono.adji@ahp.co.idChandra M HamzahPartnerD +62 21 2555 7800 F +62 21 2555 7899 chandra.hamzah@ahp.co.idEri HertiawanPartnerD +62 21 2555 7800 F +62 21 2555 7899 eri.hertiawan@ahp.co.idIbrahim Sjarief AssegafPartnerD +62 21 2555 7800 F +62 21 2555 7899 ibrahim.assegaf@ahp.co.id
Rajah & Tann Singapore LLPContacts: Hamidul HaqPartnerD +65 62320398hamidul.haq@rajahtann.comPaul NgPartnerD +65 62320429paul.ng@rajahtann.com| Rajah & Tann Asia is a network of legal practices based in Asia. |
Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client. |
This update is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this update. |
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