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The Ministry of Energy and Mineral Resources' Directorate General of Minerals and Coal ("Directorate General") issued Circular No 04 E/DJB/2013 on July 4 for the purpose of "optimizing non-tax state revenues." In contrast to the previous rules, when royalties had to be paid within one month subsequent to shipment, the new Circular requires miners to pay royalties upfront before shipping their output. Thus, it is now incumbent upon mining companies to make sure they have sufficient funds in hand to pay their royalties upfront -- prior to shipment and possibly prior to payment from their buyers. On the upside, however, advance payment of the royalties will ensure that good title to the minerals is vested in the mining companies, which can then be transferred to the buyers.
The Circular makes no changes to the rules governing the calculation of dead rents.
Indonesian competition law applies a mandatory post-merger notification system to M&A transactions. On 5 April 2013, the Indonesia Competition Commission ("KPPU") introduced Directive No. 2/2013, which amends the requirements for such notifications as set out in KPPU Directive No. 13/2010. Previously, only limited information had to be provided in the notification, such as information on the legal aspects, assets and turnover, and affiliated companies. Directive No. 2/2013 introduces two additional requirements, namely, the submission of (1) a business plan for the next three years, including information on the industry outlook; and (2) information on the market structure of the industry, including the market share of the merging entities and their competitors. These changes present new challenges to prospective mergers and acquisitions as it will have to be ensured that the due diligence process takes into account the new requirements.
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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