OJK Issues New Regulations on General Meeting of Shareholders using Conventional and Electronic Means
On April 21, 2020, the Indonesia Financial Service Authority (Otoritas Jasa Keuangan or “OJK”) issued 2 (two) new regulations in relation to the General Meeting of Shareholders for Public Companies (“GMS”), as follows:
- OJK Regulation No. 15/POJK.04/2020 dated April 21, 2020 on Planning and Implementation of GMS for Public Companies (“OJK Reg. 15/2020”) – replacing the previous OJK Regulation No. 32/POJK.04/2014 of 2014 dated December 8, 2014 as amended by OJK Regulation No. 10/POJK.04/2017 of 2017 dated March 14, 2017.
There are no material changes to the process of GMS under the OJK Reg. 15/2020. However, this new regulation introduces new provisions allowing: (i) BOC to propose convening a GMS and (ii) GMSto be carried out through electronic means.
- OJK Regulation No. 16/POJK.04/2020 on the Implementation of GMS Through Electronic Means by Public Companies (“OJK Reg. 16/2020”). Preceded by OJK Circular Letter on March 18, 2020 on the Implementation of GMS (as discussed in our previous newsflash, OJK now specifically regulates the implementation of GMS through electronic means (“E-GMS”).
In brief, this OJK Reg. 16/2020 allows public companies to hold E-GMS, through a system provided by either: (i) an E-GMS Provider (ii.e., the Indonesia Central Securities Depository (“KSEI”)) or other party appointed by OJK; or (ii) the said public company itself.
Please see our previous newsflash on KSEI’s current rules on E-GMS and provision of authorization via electronic means.
Further, this OJK Reg. 16/2020 sets out, among others, the requirements and obligations that must be complied with by the E-GMS Provider or the public companies in preparing and carrying out the E-GMS.
The following are the key points to be noted under the OJK Reg. 15/2020 and OJK Reg. 16/2020.
OJK Reg. 15/2020 – Planning and Implementation of GMS
- Deadline for Convening Annual GMS
Previously, public companies were required to convene their annual GMS 6 (six) months after the end of their respective financial year at the latest. Under OJK Reg. 15/2020, OJK, under certain circumstances, has the discretion to determine another deadline for public companies to convene their GMS. Such circumstances may include potential of significant fluctuation on market condition – as evident in the recent market condition, amid the COVID-19 outbreak.
- BOC Request to Convene GMS
OJK Reg. 15/2020 now permits Board of Commissioners (“BOC”) of public companies to request their Board of Directors (“BOD”) to convene GMS. Under the previous regime, only one or more shareholders holding at least 1/10 or more voting shares are entitled to request BOD to convene GMS.
- Submission of Additional Information Relating to GMS
Prior to convening GMS, public companies need to complete the following actions: (i) submission of the agenda of the GMS to OJK; (ii) announcement of GMS to shareholders (GMS Announcement); and (iii) issuance of GMS invitation to shareholders (GMS Invitation).
In submitting the GMS agenda to OJK, the Public Company must now include: (i) an explanation on whose request the GMS is going to be held (i.e., either the shareholder’s request or court decision) and (ii) details of the party(ies) requesting the GMS (i.e., name and share percentage of the relevant shareholder(s) in such public company and/or the relevant court decision, as applicable).
In addition, OJK Reg. 15/2020 stipulates that in the event a GMS is to be attended only by independent shareholders, the GMS announcement must also include the following information:
- The subsequent GMS that will be convened if the first GMS fails to meet the attendance quorum of the independent shareholders; and
- The voting quorum required for each meeting.
With respect to the GMS Invitation, OJK Reg. 15/2020 now also requires informing shareholders of possibility of a shareholder to be represented by a proxy by providing a power of attorney through the E-GMS mechanism.
- In the event that the result determined in the resolution of a GMS is not implemented within 12 (twelve) months from the date of such GMS, public companies must provide an explanation on the reasons behind the failure to implementing the next GMS and include such information in the annual report.
- Appointment and termination of public accountant in providing audit services relating to the annual financial information must be resolved in GMS, taking into account the proposal from the BOC and the recommendation of the audit committee.
Lastly, it is to be noted that Public Companies also need to amend their Articles of Associations to be in line with the provisions of OJK Reg. 15/2020 within 18 (eighteen) months from April 21, 2020 – i.e., by October 21, 2021.
OJK Reg. 16/2020 – GMS THROUGH ELECTRONIC MEANS
- E-GMS System
OJK Reg. 16/2020 provides that public companies may hold GMS through electronic means (using teleconferencing media, video conferencing, or other electronic media facilities) – through a system (an electronic GMS system which supports the provision of information, implementation, and reporting of the said GMS) provided by either:
- E-GMS Providers, which can be:
- KSEI – through its “eASY.KSEI” system; or
- Other parties designated by the OJK (must be an Indonesian legal entity based in Indonesia).
- The Public Company itself.
It is to be noted that:
- If the Public Company convenes GMS using the system hosted by E-GMS Provider, the Public Company must comply with the terms and conditions set by the E-GMS provider; and
- All systems of E-GMS, whether hosted by OJK’s appointed provider or by the Public Company itself, must be connected with KSEI and the relevant Securities Administration Bureau (Biro Administrasi Efek or “BAE”) as to ensure the said meeting is attended by the rightful shareholders.
- Requirements for E-GMS Provider
In carrying out its role, E-GMS Provider and Public Companies (which provide their own E-GMS system – except letter (h) below) must comply with the following requirements:
- Be registered as an electronic system provider (Penyelenggara Sistem Elektronik or “PSE”) to the Ministry of Communication and Informatics;
- Provide access rights to the users (Public Companies, BAE, shareholders, other participants as allowed by the provider);
- Determine and follow a set of standard operating procedures for the implementation of the system;
- Ensure the implementation of the E-GMS;
- Ensure the safety and reliability of the system;
- Notify the users in case of changes or development to the system, including the addition of services and features of the E-GMS;
- Provide an audit track record of all data processing activities at the system for the purpose of supervision, law enforcement, dispute resolution, verification, and examination;
- Provide replacement facilities for data centers and disaster recovery centers which relate to the implementation of E-GMS at a safe location within Indonesia territory and located in a separate area from the main data centers;
- Meet various minimum standards which apply to information technology systems, information technology security, system disruptions and failures, and the management of information-transfer technology systems;
- Save all data on the implementation of the E-GMS; and
- Accept liability for any losses that are incurred as a result of any errors or omissions which occur during the provision and management of E-GMS.
For E-GMS system that is provided by the Public Company itself, all above-mentioned requirements are also applicable to such company, except for item (h) above.
OJK Reg. 16/2020 also requires KSEI to issue a procedure and guidelines for its system within 6 (six) months after its enactment – which will fall on October 21, 2020. Such procedure and guidelines will contain, among others, requirements and procedures for the registration and/or granting of access rights to E-GMS users, including cancellation of E-GMS user registrations, protection of personal data according to the relevant laws and regulation, etc.
- Procedures and Requirements for E-GMS
In convening an E-GMS, OJK Reg. 16/2020 requires the following:
- Public Companies must include information regarding the implementation plan of E-GMS in the notification of the GMS agenda to OJK, the GMS Notification, and the GMS Invitation;
- Public Companies must also hold a Physical GMS (that will be used as the main location to convene the E-GMS) which must be held and attended by at least the following parties:
- Chairman of the said GMS;
- 1 (one) director and/or 1 (one) commissioner; and
- Supporting professionals in capital market – namely the Public Accountant, Appraiser, Legal Consultant, and Public Notary.
In certain conditions, the Public Company may not have to carry out the above-mentioned physical GMS or otherwise limit the physical presence of the parties, either partially or wholly, in convening an E-GMS. Such conditions will be determined by the government or proceeded with approval from OJK.
Determination of Total Attendees
The shareholders or their proxies can attend the GMS either physically or electronically when Public Companies decide to hold a GMS through the E-GMS mechanism. The total attending shareholders will be calculated based on the shareholders or their proxies attending the E-GMS physically or electronically.
The number of shareholders/proxies that can attend the GMS physically can be determined by the Public Company on a first come first served basis up to the determined number.
OJK Reg. 16/2020 also stipulates that E-GMS must have the following features:
- Ability to display the rules, materials of the GMS and the agenda of the GMS needed for shareholders to make decisions for each item listed in the agenda of the GMS;
- Ability to allow all participants of the GMS to participate and interact in the GMS;
- Ability to provide calculation system to determine the attendance quorum;
- Ability to collect and count casted votes, including if there are more than 1 (one) shares classifications;
- Ability to record all interactions in the GMS, both in the form of audio, visual, audiovisual, and non-audiovisual electronic recordings; and
- Ability of granting power of attorneys electronically.
Under this OJK Reg. 16/2020, voting through electronic means can be submitted from after the GMS Notification is sent until the opening of each agenda on the GMS date. This electronic vote may be changed or canceled up to the point where the GMS Chairman commences the voting process over each of the GMS agenda. Shareholders who have voted electronically before the actual GMS will still be considered validly attending the GMS.
In its implementation, the E-GMS Provider, who has recorded and stored the already-submitted votes, must keep the said votes confidential until the time of the votes’ count.
Minutes of E-GMS
The results of the E-GMS must be made into an E-GMS minutes and made in the form of a notarial deed, without requiring the signatures of the GMS participants.
OJK may impose administrative sanctions or specific measures for violation of OJK Reg. 16/2020 ranging from written warnings to cancellation of registration. OJK may also publish a public announcement regarding the imposition of administrative sanctions and other specific measures.
- Transitional Provisions
Public Companies that have delivered the agenda of the GMS to the OJK prior to the enactment of OJK Reg. 16/2020 may follow the provisions stipulated this OJK Reg. 16/2020.
Furthermore, until KSEI’s procedures and guidelines for the system to hold E-GMS is issued by OJK under OJK Reg. 16/2020 (i.e, by October 21, 2020 at the latest), KSEI may act as E-GMS Provider based on an agreement with the users.
June 3, 2020
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- June 3, 2020