Training FUTURUM : Restructuring Transactions under Common Control Date : See at the website “futurum corfinan” (2-day training) Venue : Hotel at Jakarta Pusat Notes : Presentation slides will be distributed in softcopy Minimum participants = 10 persons After the training, participants are allowed to discuss about the training materials via email in the website Contact email : futurumcorfinan@gmail.com Visit Website and Training Testimonials : google “futurum corfinan”

1. Restructuring
Transactions under
Common Control

2. The Most Common Types of Restructurings Involving
Entities Under Common Control
Creation of a New Company and transfer of business to the new company (also referred
to as spin-offs) in anticipation of a listing of securities or sale of business or debt raising
or taking benefit of a tax advantageous territory etc.
Group reorganisation involving moving of assets or entities within the group mainly
driven by tax or financial considerations or for simplification of group structure. Similar
to spin-offs, these could take several forms as these reorganisations are driven by
varied necessities. Mergers and amalgamations of group entities are the most common
forms of reorganisations.

3. Corporate Restructuring
Expansion
• Amalgamation
• Absorption
• Tender Offer
• Asset Acquisition
• Joint Venture
Contraction
• Asset Sale
• Demerger :
• Spin off
• Equity carve out
• Split off
• Split up
• Divestitures
Corporate Control
• Going Private
• Equity Buyback
• Leveraged Buyouts

4. Spin Off and Simultaneous Merger
In order to restructure the hierarchy among entities under common control,
below transactions occur.
Source: presentation slide by UCC research team of KASB

5. Group Reorganizations
Group reorganizations involve the restructuring of the relationships between
companies in a group (or under common control) and can take many forms, for
example:
 Setting up a new holding company
 Changing the direct ownership of subsidiaries within the group (possibly
involving the creation of a new intermediate holding company)
 Transferring businesses from one company to another

6. Group Reorganization : How to Account For?

7. Did I buy a group of assets or a business?
Why should I care?
Determining whether an acquired group of assets is a business has proven to
be one of the more challenging aspects of applying the current M&A
accounting guidance
Asset Acquisition
Business
Combination
DO WE BUY BUSINESS OR ASSETS?
HAVE ACCOUNTING AND TAX DIFFERENCES

8. UNDER COMMON “CONTROL”
What is CONTROL?
CONTROL CONCEPT BECOMES MORE COMPLEX
Example :
Company X holds 38% of the common shares of Company A.
Company X does not hold any other instrument of Company A that might be
converted to common shares in the future.
Does Company X control Company A?
Company X
38%
Company A

9. Application – Company X
It is possible! Depends on specific facts. More information required.
Examples:
 What is the size of Company X’s shareholdings relative to size and dispersion of other shareholdings?
 The more voting rights Company X holds compared to anyone else, and the greater number of other vote-
holders that would need to act together to outvote Company the more likely Company X has practical ability to
direct Company A’s relevant activities
 Do other vote holders or other parties hold potential voting rights?
 Are there any other relevant contractual arrangements?
 What is the voting pattern at past shareholder meetings?
 Does a special relationship (e.g., reliance on intellectual property) exist between Company X
and Company A?
 What level of exposure does Company X have to variability in returns?

10. The Control Model : An Overview
An investor controls an investee when
it is exposed, or has rights, to variable
returns from its involvement with the
investee and has the ability to affect
those returns through its power over
the investee.
Exposure
to
variable
returns
Power
Link
power-
returns
control

11. Assessing Control of An Investee
Rights Ability
to
use power
over the
investee to
affect its
own returns
Exposure
(or rights)
to variable
returns of
the investeeRelevant
activitie
s

12. Q: Advice for Assessing The Existence of
Control
Hint: Call an IFRS expert!

13. New Companies in Common Control
Transactions and Transfer within Group
 Formation of a new company to facilitate disposal of business
 Business brought together into a new company before an IPO
 Setting up a new top holding company in exchange for equity
 Setting up a new top holding company : transactions including cash consideration
 Inserting a new intermediate parent within an existing group
 Transferring businesses outside an existing group using a new company
 Transferring associates/joint ventures within an existing group

14. Accounting for Business Combinations involving
entities or businesses under common control
 Pooling of interests method or Predecessor accounting
 Acquisition method
 The fresh-start method
 Capital reorganization accounting
 PSAK 38 (revisi 2012)

15. Training Desktop
 Date : See at the website “futurum corfinan” (2-day training)
 Venue : Hotel at Jakarta Pusat
 Notes :
• Presentation slides will be distributed in softcopy
• Minimum participants = 10 persons
• After the training, participants are allowed to discuss about the training materials via
email in the website
 Contact email : futurumcorfinan@gmail.com
 Visit Website and Training Testimonials : google “futurum corfinan”