The Financial Services Authority ("OJK") Rule Number 22/POJK.04/2021 on Multiple Voting Shares

On 1^st of December 2021, the Financial Service Authority (“OJK”) issued Rule Number 22/POJK.04/2021 concerning the Implementation of Shares Classification with Multiple Voting Rights by the Entity with Innovation and High Growth Rate that Exercises the Public Offering of Equity Security in a Form of Shares (“POJK 22/2021”). With this implementation rule, the OJK is determined to accelerate the new economy development to accommodate the investors who actively pursue the opportunity in innovation.

Generally, the whole substance of POJK 22/2021 is introducing the new way of holding shares. Within this regulation, OJK allows the shareholder to have multiple voting rights in one single share for those who positively using technology to invent products that increases productivity and economy growth.

To be precise, there are eight most notable concerns of this rule as stated below:

1. The Issuer that is possible to implement the Multiple Voting Rights Shares are the one that use technology to escalate economy growth by using technology to create an innovative product that would be useful for the society;
2. The Issuer may first stipulate about the Multiple Voting Rights Shares in its Articles of Association and the entity that is entitled to hold such shares are the one that has significant contribution in technology utilization while inventing new products;
3. Other than that, the Issuer has got to be a company that at least has IDR2.000.000.000.000,00, has been operating for 3 years or more with a compound growth rate in the last 3 years of minimum 30%, has never been entered into public offering of equity shares, and several other criteria determined by the OJK;
4. The implementation of Multiple Voting Rights Shares must be effective no less than 10 years starting when the Registration Statement is stated effective, and this period can be extended up to 10 years upon the Independent Shareholders’ Approval in the General Meeting of Shareholders;
5. It is also important for the holder of Multiple Voting Rights Shares to know that they need to hold such shares at least 2 years after the Registration Statement is effective before transfer it to other parties. This is to prevent the shareholders that has knowledge upon the technology to leave the company in a crucial time. Nevertheless, in case the holder of Multiple Voting Rights Shares dies or be in remission before 2 years, then the prohibition to transfer such shares shall be ceased and if in 6 months such shares are not subscribed by the other Multiple Voting Right Shares shareholders or any entitled entity, then the Multiple Voting Right Shares will turn into usual Shares;
6. After the 2 years, the shareholder of Multiple Voting Rights Shares may offer its shares to one or more of the other Multiple Voting Rights Shares shareholders in negotiation market by report such offering to the OJK minimum 2 days before the transfer of Multiple Voting Rights Shares and announce the information through the Stock Exchange website minimum a day after reporting to the OJK;
7. By implementing this kind of shares, this POJK 22/2021 stipulates the automatic voting ratio between Multiple Voting Right Shares and usual Shares. The highest ratio is 40:1 which will be the case if the Multiple Voting Right Shares Shareholders merely own the shares in the amount of 2,44% to 3,49% of total shares, while the lowest ratio is 10:1 if the Multiple Voting Right Shares Shareholders have 10% to 47,36% of the total shares. it is also convenience since the General Meeting of Shareholders is not required as the voting ratio will decrease and increase automatically pursuant to the percentages of ownership;
8. The Issuer may execute capital increment with the Right Issue method. Nevertheless, if the subscribers is not an entity entitled to hold such shares, then the shares will turn into usual Shares and if the offering is not with Right Issue, then the shares will become usual Shares unless it is furthermore subscribed by the Multiple Voting Right Shares shareholders.