On 25 September 2018 the Minister of Energy and Mineral Resources (“MEMR”) enacted a new regulation namely MEMR Regulation Number 43 of 2018 on the Amendment of MEMR Regulation Number 09 of 2017 on the Procedures of Shares Divestment and Mechanism of Divested Shares Price Determination in Mineral and Coal Mining Business Activities (“Regulation”).
IUP Operation Production and IUPK Operation Production holders in the form of Foreign Investment/Penanaman Modal Asing (PMA) after 5 (five) years since operation production is commenced is required to gradually divest the shares to Indonesian participants with the following percentages: (1) 20% (twenty percent) in the sixth year; (2) 30% (thirty percent) in the seventh year; (3) 37% (thirty seven percent) in the eighth year; (4) 44% (fourty four percent) in the ninth year; and (5) 51% (fiftty one percent) out of the total shares in the tenth year. Indonesian participants as mentioned above consist of: (1) government; (2) provincial government or regency/district government; (3) state-owned enterprises and regional state-owned enterprises; or (4) national private enterprises.
Shares divestment can be conducted by issuing new shares and/or transfer or sale of the existing shares, either directly or indirectly. IUP Operation Production and IUPK Operation Production holders are obliged to offer the mandatory-divested shares within 90 (ninety) days since the operation production reaches 5 (five) years to Indonesian participants with the terms as set out in the Regulation.
Government through MEMR jointly with provincial/regency/district government and state-owned enterprises and/or regional state-owned enterprises may coordinate to purchase the divested shares by: (1) determining divested shares composition and divestment scheme; and/or (2) establishing and/or appointing certain entities/special purpose vehicles to purchase the divested shares.
IUP Operation Production and IUPK Operation Production holders shall grant the Indonesian participants to perform their right to conduct due dilligence and to appraise the divested shares price with a fair market value without taking into account mineral and coal reserve. IUP Operation Production and IUPK Operation Production holders are forbidden from pledging the shares that must be divested.
The payment and transfer of the divested shares must be conducted within 12 (twelve) months after the date of statement of interest by Indonesian participants, and shall be stated in the deed of sales and purchase/akta jual beli of divested shares signed by both parties. (ppm)
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Praniti Putri Mirza
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