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9 May, 2017
On 14 March 2017, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued OJK Rule No. 7/POJK.04/2017 on registration statement documents in public offerings of equity securities, debt securities or sukuk (“OJK Rule No. 7”). OJK rule No. 7 replaces Bapepam-LK Rule No. IX.C.1. We have summarised the key changes introduced by OJK Rule No. 7 below.
No preliminary listing agreement required for OJK submission
Previously, registration statements could be submitted to the OJK only after the Indonesian Stock Exchange (the “IDX”) provided a preliminary approval for listing via a preliminary listing agreement with the issuer. Under OJK Rule No. 7, the preliminary listing agreement with the IDX is no longer required to be included in the registration statement documents and submission to the IDX and the OJK can now be made simultaneously. This provision will become effective six months after OJK Rule No. 7 came into effect (i.e., from September 2017).
Issuers are still required to obtain the preliminary listing approval from the IDX. However, OJK Rule No. 7 provides that issuers can do this alongside the OJK submission process, which in turn is expected to reduce the overall timeline in Indonesian public offerings by approximately two weeks.
Simultaneous process for offering more than one type of securities
OJK Rule No. 7 clarifies that companies proposing to publicly offer more than one type of security are allowed to submit one prospectus covering all types of securities proposed to be offered by the issuers. In case of any difference in the information disclosure requirements under the relevant OJK rules for different types of securities, the single prospectus should satisfy the most extensive applicable disclosure standard. The OJK also has issued two additional rules which provide detailed guidelines on the form and content of the prospectus and the abridged prospectus in a public offering: (i) OJK rule No. 8/POJK.04/2017 relating to equity securities and (ii) OJK Rule No. 9/POJK.04/2017 relating to debt securities.
Simplified legal due diligence
Previously, the legal due diligence report required to be prepared by the issuers’ Indonesian counsel in a public offering covered all amendments to the issuer’s Articles of Association (the “AOA”) and share capital since the establishment of the issuer group (or the latest corporate action date for a listed company) up to the OJK submission date. OJK Rule No. 7 now eases this requirement. The due diligence review requirement for the issuer’s AOA is now limited to the first AOA of the issuer group and the most recent amendment to the AOA, while the due diligence review of the share capital has now been reduced to three years prior to OJK submission date for an equity securities offering and two years prior to OJK submission date for a debt securities offering. This new approach is expected to shorten the due diligence required as part of the public offering preparation phase, especially for companies with a complex share capital history.
Conclusion
OJK Rule No. 7 shows OJK’s continuing intention to simplify and speed up the public offering process in Indonesia and encourage companies to undertake public offerings of both equity and debt securities. The rule is also expected to have the effect of shortening the OJK’s approval process for Indonesian public offering. It is not yet clear if the IDX will also change its listing approval process in response to OJK Rule No. 7.
For further information, please contact:
David Dawborn, Partner, Herbert Smith Freehills
david.dawborn@hbtlaw.com
