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3 April, 2017
In brief
On 14 March 2017, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued regulation no. 11/POJK.04/2017 on Reporting of Ownership, or Changes in the Ownership, of Shares in Issuers or Public Companies. This new regulation took effect immediately and revoked OJK regulation no. 60/POJK.04/2015 on Information Disclosure of Certain Shareholders.
With this new regulation the OJK aims to enhance the quality of information available to the public in respect of the shareholding in Indonesian public companies in accordance with international standards, with a view to enhancing transparency and protecting minority investors.
One notable amendment is that the new OJK regulation now imposes an obligation on an indirect owner (i.e. ultimate beneficial owner) of 5% or more of the paid-up capital in an Indonesian public company to report its ownership to the OJK. Under the previous OJK regulation, such reporting obligation only captured a direct shareholder holding 5% or more – there was no obligation on an indirect shareholder or ultimate beneficial owner to report its indirect ownership in the public company to the OJK. Although there was a requirement to disclose the ownership percentage of the public company’s controlling shareholder2 and substantial shareholder3 up to the ultimate beneficial owner in the public company’s annual report, this obligation fell on the company rather than the shareholders.
While the new OJK regulation has enhanced the transparency of public company ownership in Indonesia, there are no proposals at the moment to introduce general disclosure obligations on controllers or beneficial owners of private companies along the lines of the PSC register in the UK or the register of controllers in Singapore.
Key terms of the new OJK regulation
We set out below key provisions under the new OJK regulation.
Reporting requirement by director or commissioner.
A director or commissioner of a public company is now required to report to the OJK not only his/her direct ownership, but also his/her indirect ownership of shares in the public company in which he/she holds office, including any subsequent change to such direct or indirect ownership.
Reporting requirement by ultimate beneficial owner.
A party that owns, directly or indirectly, 5% or more of the paid-up capital of the public company is required to report its ownership to the OJK. The new OJK regulation indicates that the requirement to report an indirect ownership is intended to capture the ultimate beneficial owner of the shares in the public company. Any subsequent change to such direct or indirect ownership will only need to be reported to the OJK if the change, through one or more transactions, constitutes 0.5% or more of the public company’s paid-up capital.
Timing of report.
The report must be submitted to the OJK by the shareholder in a prescribed form attached to the new OJK regulation no later than 10 days from the effective date of the acquisition or disposal triggering the filing. Shareholders may submit the report to the OJK through a proxy authorised pursuant to a written power of attorney, in which case the time period to submit the report is 5 days.
Scope of information to be reported.
The scope of information to be reported has been enhanced and now includes information, among others, on (i) the share ownership status (direct or indirect) and (ii) in the event of an indirect ownership, the details (e.g. name, address and nationality) of the ultimate beneficial owner and the direct shareholder that is registered in the public company’s shareholders register on behalf of the ultimate beneficial owner.
Internal policy on share ownership reporting.
All Indonesian public companies must now implement a policy requiring their directors and commissioners to notify the company of their share ownership in the company no later than 3 working days from the effective date of the acquisition or disposal. The implementation of this policy must be reflected in the public company’s annual report or website.
Consequences of non-compliance.
The consequences of non-compliance are the same as those in the previous OJK regulation, namely (i) administrative sanctions on the party who violates, or the party who causes the violation of, the provisions of the new OJK regulation and/or (ii) “certain actions” imposed in relation to the public company. However, the new OJK regulation clarifies that “certain actions” in this context would include, among others, a deferral by the OJK of the issuance of the declaration of effectiveness for, by way of example, a merger statement, consolidation statement or registration statement in connection with a rights issue of the public company.
1 A “public company” is a company with at least 300 shareholders and has a minimum paid-up capital of IDR 3 billion. In this context, the term “public company” includes both listed and unlisted public companies.
2 A “controlling shareholder” is a party that owns more than 50% of the issued shares or that has an ability to determine, directly or indirectly, by whatever means, the management and/or policy of the company.
3 A “substantial shareholder” is a party that directly or indirectly owns 20% or more of the issued shares with valid voting rights in the company.
For further information, please contact:
Wlliam Kirschner, Widyawan & Partners
william.kirschner@linklaters.com
