On 16 December 2015, the Financial Services Authority (“OJK”) has enacted the Financial Services Authority Regulation No. 32/POJK.04/2015 concerning the Increase of Capital of Public Companies with Preemptive Right (Rights Issue) (“OJK Regulation No. 32/2015”). OJK Regulation No. 32/2015 revokes prior regulations concerning rights issues, namely:
1. The Decree of the Chairman of the Capital Market and Financial Institution Supervisory Board (“Bapepam-LK”) No. KEP-26/PM/2003 dated 17 July 2003 with Regulation No. IX.D.1 as its appendix, concerning Preemptive Rights (“Regulation IX.D.1”); and
2. The Decree of the Chairman of Bapepam-LK No. KEP-08/PM/2000 dated 13 March 2000 with Regulation No. IX.D.2 as its appendix, concerning the Guidance on the Form and Contents of the Registration Statement in the Framework of a Rights Issue (“Regulation IX.D.2”).
NEW PROVISIONS IN OJK REGULATION NO. 32/2015
1. A General Meeting of the Shareholders (“GMS”) should now be held before the registration statement to OJK. Article 8 paragraph (3) of OJK Regulation No. 32/2015 further stipulates that the period between the General Meeting of the Shareholders (“GMS”) resolutions and the effective date of the registration statement shall not be more than 12 months.
2. Article 9 paragraph (1) and (2) of OJK Regulation No. 32/2015 stipulates certain conditions in relation to capital injection for shares paid in forms other than money, among others that:
a. such payment in kind for the shares has to be directly related to the use of funds plan; and
b. it is required to engage an assessor who needs to determine the fair value of such payment in kind for the shares that is used as capital injection and the fairness of such transaction. The period between the date of assessment and the date of payment in kind for the shares shall not exceed 6 months.
3. Article 10 of OJK Regulation No. 32/2015 stipulates that in the event a capital injection for shares is paid in the form of a receivable that has been compensated as capital injection, then such receivable has to be published in the company’s latest audited financial report.
4. Article 14 paragraph (1) of OJK Regulation No. 32/2015 stipulates that in the event a public company uses part or all of its capital obtained from the rights issue for a material transaction that requires a GMS approval, then said public company is required to comply with the prevailing Capital Market regulations on Material Transaction and the Change of its Core Business, and is still required to hold a GMS to obtain approval for such material transaction.
5. Article 16 of OJK Regulation No. 32/2015 stipulates that in the event there is any change to the GMS resolutions in relation to the rights issue, then the relevant public company is required to hold a GMS again to obtain approval for such changes, before it delivers the registration statement for rights issue to OJK.
6. Article 45 of OJK Regulation No. 32/2015 stipulates the administrative sanctions, which include a revocation of the business license.
DIFFERENCE BETWEEN OJK REGULATION NO. 32/2015 AND REGULATION NO. IX.D.1 AND OTHER IMPLEMENTATION REGULATIONS
1. The fundamental difference is the timeline, where a GMS is now required to be held prior to the registration statement to OJK and publication to the public (vide Article 8 paragraph (1) jo. Article 21 paragraph (1) item (c) of OJK Regulation No. 32/2015).
2. It is now explicitly regulated that when a public company intends to increase its capital with the purpose to do a transaction with a certain value, then a standby buyer is required (vide Article 12 of OJK Regulation No. 32/2015).
3. The requirement to publish the disclosure of information should now be made at the same time as the registration statement to OJK (vide Article 21 of OJK Regulation No. 32/2015) and through at least 1 Indonesian language daily newspaper with national circulation or through the stock exchange’s website, and in the said public company’s website. However, in prior, the public company is also required to publish certain information on the proposed rights issue no later than at the same time with the GMS announcement (vide Article 15 of OJK Regulation No. 32/2015).
4. Particularly when it regards to a rights issue of debt securities, certain additional information has to be included in the disclosure of information and registration statement to OJK, including the price and interest rate (in case the interest rate is floating then it is required to set out the method on determining such floating interest rate; in case the price and interest rate of such debt security cannot yet be determined, then it is required to set out the indicative execution price and interest rate, and/or the method on determining the execution price and interest rate) and rating and rating agency (vide Article 21 paragraph (2) of OJK Regulation No.32/2015).
5. Any amendment or additional information required by OJK must be provided to OJK within 10 business day as of the request by OJK, with the risk of the registration statement being nullified if the company is late (vide Article 22 paragraph (4) of OJK Regulation No. 32/2015).
6. The trading period for the rights issue can start after the end of the distribution of the rights issue, and can take place for minimum 5 business days and maximum 10 business days (vide Article 34 of OJK Regulation No. 32/2015).
With the enactment of OJK Regulation No. 32/2015, the previous Decree of the Chairman of Bapepam-LK No. KEP-712/BL/2012 dated 26 December 2012 with Regulation No. IX.C.11 as its appendix, concerning the Ranking of Debt Securities and/or Sukuk becomes invalid (vide Article 50 of OJK Regulation No. 32/2015).
OJK Regulation No. 32/2015 came into force on 22 December 2015.