Merger Rules Revised, Danantara Granted a “Red Carpet” for State-Owned Enterprises Restructuring

Minister of Finance Regulation (PMK) Number 1 of 2026 (PMK 1/2026) introduces significant changes to the book-value merger regulations, more aligned with Danantara’s consolidation agenda. The reduction of the post-merger business continuity period from five to four years removes a key constraint that has limited subsequent corporate actions. As a result, the scope for consolidation, particularly within state-owned enterprises, becomes more open. 

This amendment addresses one of the most critical considerations in corporate actions: the post-merger lock-up period. Under the previous provisions, the five-year requirement often restricted companies’ flexibility to undertake follow-on measures. 

For companies with complex business structures—especially those undergoing phased restructuring—this period frequently slowed the consolidation process. Business decisions had to be aligned with tax provisions to avoid additional consequences. 

This is where PMK 1/ 2026 reshapes the landscape. Without altering the fundamental principles of the book-value facility, the regulation adjusts a timeline that has long been a constraint on restructuring. 

Restructuring Agenda 

Danantara, as the super holding of state-owned enterprises, carries a substantial mandate to consolidate the nation’s major state assets. One of its key initiatives is to encourage state-owned enterprises and their subsidiaries to carry out downsizing. 

In essence, the establishment of Danantara is not solely aimed at reorganizing state-owned enterprise structures. However, in practice, consolidation and efficiency enhancement have become integral components of large-scale state asset management. 

The current state-owned enterprise structure reflects a high degree of complexity. Many entities operate through multiple layers of subsidiaries and sub-subsidiaries with overlapping activities. This condition gives rise to potential inefficiencies, both in terms of operations and governance. 

Within this context, restructuring becomes a relevant instrument. Consolidation through mergers, amalgamations, or business line realignment is viewed as a means to simplify structures and improve management effectiveness. 

However, such initiatives do not operate in isolation. Each restructuring step carries tax implications that must be carefully considered. This is where PMK 1/2026 becomes significant, as it provides greater flexibility for companies to execute restructuring in a phased manner. 

New Timeframe 

The reduction from five to four years effectively accelerates the end of the monitoring period for tax facilities. Upon the lapse of this period, companies are no longer required to maintain the same line of business as at the time of the merger. 

This change directly impacts corporate planning horizons. In many cases, a merger is not the final step, but part of a broader consolidation sequence. 

With a shorter timeframe, the interval between restructuring phases can be reduced. Companies are no longer required to wait extended periods before proceeding with subsequent actions, whether in the form of further mergers, business separations, or asset transfers. 

Additionally, this change reduces the pressure to retain unprofitable business units solely to comply with regulatory time requirements. 

Flexibility in Corporate Actions 

From a business perspective, the shortened timeframe enhances flexibility in responding to dynamic market conditions. In a rapidly evolving environment, the ability to adjust business structures is critical to maintaining competitiveness. 

Restructuring is no longer viewed as a one-off event, but as a continuous process. Companies can conduct periodic evaluations and adjustments without being constrained by excessively long lock-up periods. 

In this regard, PMK 1/2026 reduces friction between business needs and tax regulations. Subsequent corporate actions can now be undertaken within a more commercially reasonable timeframe. 

Nevertheless, this increased flexibility still requires disciplined planning. Each restructuring step must be grounded in clear economic considerations, rather than being driven solely by tax motives. 

Sequential Restructuring 

Another equally important aspect is the strengthening of provisions governing subsequent restructuring, as reflected in Article 405 of the regulation. This provision provides assurance that subsequent corporate actions do not automatically invalidate previously granted book-value facilities. 

In practice, restructuring is often carried out in stages: companies merge entities and subsequently make adjustments in line with evolving business needs and group strategies. 

Previously, each subsequent step carried potential tax risks with respect to earlier transactions. These risks arose from the possibility of changes in business activities during the monitoring period. 

Now, with more explicit certainty, companies can design restructuring as a continuous process without undue concern over retrospective tax consequences. 

Reducing Uncertainty 

From a tax perspective, this amendment contributes to reducing uncertainty. The risk of revocation of tax facilities due to changes in business activities during the monitoring period becomes more limited, both because of the shorter timeframe and certainty on subsequent restructuring. 

Such certainty is critical in business decision-making, as tax considerations often serve as a key variable in restructuring strategies. 

With reduced uncertainty, companies have greater room to formulate strategic initiatives. This aligns with the consolidation agenda, particularly for state-owned enterprises that are being encouraged to become more efficient and integrated. 

However, this does not mean that tax risks are entirely eliminated. The book-value facility still requires the presence of valid business purposes, and tax authorities retain the authority to examine the substance of transactions. 

Ultimately, PMK 1/2026 reflects a policy direction that is more adaptive to the needs of business restructuring. In the context of state-owned enterprises, this amendment can be seen as part of broader regulatory support for consolidation efforts. 

Greater flexibility is now available. The challenge lies in how this flexibility is utilized prudently, while maintaining a balance between business needs and tax compliance. (ASP) 

Disclaimer! This article is a personal opinion and does not reflect the policies of the institution where the author works.