PUBLIC COMPANIES’ REPORTING OBLIGATION ON OWNERSHIP OF OR CHANGES IN SHARES OWNERSHIP AND REPORTS ON SHARE-PLEDGES

April 25, 2024

On February 28, 2024, the Financial Services Authority (Otoritas Jasa Keuangan, “OJK”) issued and enacted Regulation No. 4 of 2024 regarding the Reports on Ownership of or Any Changes in Shares Ownership in Public Companies and Reports on Share-Pledging Activities in Public Companies (“POJK 4/2024”).

Based on the consideration of POJK 4/2024, OJK was aware of the needs to adjust the reporting mechanism of the shares ownership in public companies or any changes to such ownership to accord the international standards or the result of comparative studies with other countries. In addition to this, given that shareholders in public companies may likely conduct share-pledging activities, it is essential to set out a specific provision to require public companies to report such share-pledging activities.

In principle, POJK 4/2024 is intended to increase the quality of information disclosure by certain shareholders and the quality of supervision, which includes the procurement of an electronic-based reporting system.

POJK 4/2024 will come into effect within 6 (six) months as of its enactment (i.e., August 28, 2024). Upon its coming into effect, OJK Regulation No. 11/POJK.04/2017 dated March 14, 2017 on Reports of Ownership of or Any Changes to the Ownership of Shares in Public Companies is revoked and declared invalid.

We set out below key provisions of POJK 4/2024.

1. Reporting Obligation of Ownership of or Any Changes in Ownership of Public Companies
  Members of the Board of Directors (“BOD”) or members of the Board of Commissioners (“BOC”) of a public company who own direct or indirect shares with voting rights, must submit the report of ownership of voting rights over shares of the public company and any changes to such ownership (each report, an “Ownership Report”) to OJK.In addition to the members of the BOD and BOC, the parties with any of the following criteria is required to submit an Ownership Report to OJK:
  - any party who owns share with voting rights of at least 5% (five percent). Please note that if there is any decrease to the ownership percentage of shares with voting rights so that it becomes less than 5% (five percent), such a party is required to notify the change of ownership of voting rights over shares to OJK through the submission of an Ownership Report[1]; and
  - any party who is a controller of a public company, which refers to any party who owns more than or less than 5% (five percent) of shares with voting rights.
  The submission of an Ownership Report to OJK must be conducted no later than 5 (five) days as of (i) the occurrence of voting rights over shares, or (ii) any changes to the ownership of voting rights over shares of a public company. Please also note that the information on an Ownership Report shall be made available to the public.
  
  If the changes to the ownership of voting rights over shares occur due to inheritance, then the party who receives the inheritance of shares must notify the relevant changes to OJK through the submission of an Ownership Report.
  
  POJK 4/2024 also provides an exemption to the reporting obligation, provided that the change of ownership of voting rights over shares occurs due to the following reasons:
  - A capital increase of a public company, either with or without a pre-emptive right;
  - Any corporate action of a public company without involving any transactions by the shareholders.
2. Content of the Ownership Report
  An Ownership Report shall encompass at least the following information:
  - name, address, and citizenship;
  - name of the public company’s shares;
  - number of shares and shares ownership percentage with voting rights over the public company’s shares before and after the transaction;
  - type of the transactions being carried out;
  - number of shares purchased, sold, or transferred;
  - description of shares classification, which refers to the information on whether the shares are classified as ordinary shares or shares with multiple voting rights;
  - if the change of ownership is due to a payment transaction, to include the information on the sale or purchase price of each share;
  - date of transaction;
  - purpose of transaction;
  - shares ownership status, both directly and indirectly;
  - if there is any indirect share ownership, to include the information on shareholders who are listed in the list of shareholders of public company for the interest of the beneficial owners;
  - if an Ownership Report is submitted through a proxy, to include the information on the name of the shareholder who grants the authorization to such proxy;
  - if an Ownership Report is made by a certain organized group, to include the information on the details of members of such organized group.
  In addition to the above items of information, if the changes of ownership are undertaken by the controlling shareholder of a public company, an Ownership Report shall include an explanation on whether such a controlling shareholder wishes to maintain its control towards the relevant public company.
3. Reporting Obligation of Share-Pledging Activities in Public Companies
  Shareholders of a public company who pledge the public company’s shares of at least 5 (five) percent) of the voting rights is obliged to submit reports on such share-pledging activities (each report, a “Share-Pledging Report”) to OJK. The five percent is calculated from 1 (one) share-pledging activity or the accumulation of several share-pledging activities. The obligation to submit a Share-Pledging Report shall apply to any change to the percentage unit of the number of shares of the public company during the occurrence of the share-pledging activities.The submission of a Share-Pledging Report to OJK must be conducted no later than 5 (five) days as of the signing of the share-pledging agreement.
4. Content of the Share-Pledging ReportA Share-Pledging Report shall encompass at least the following information:
  - name, address, and citizenship;
  - name of the public company’s pledged shares;
  - number of shares and ownership percentage of the pledged shares;
  - amount of loan encumbered with the pledge of shares;
  - if there is any change to the number of the pledged shares, to include the information on the type of transaction or event that results in such a change,
  - date and period of agreement;
  - if there is any affiliate relationship, to include the information on the nature of the affiliate relationship between the parties.
5. Submission of the Ownership Report and the Share-Pledging Report through Electronic System
  POJK 4/2024 also includes the government’s intent to establish an electronic system to support the submission of the reporting obligation set out in POJK 4/2024. Upon the availability of such electronic system, an Ownership Report and a Share-Pledging Report must be submitted electronically to OJK no later than 3 days as of (i) the occurrence of ownership of voting rights over shares of a public company or any change to such ownership, or (ii) the signing of the share-pledging agreement. If the foregoing electronic system is not available, an Ownership Report and a Share-Pledging Report shall be submitted to OJK through printed or electronic documents.
6. Administrative Sanctions
  Failure to submit an Ownership Report or a Share-Pledging Report may result in the imposition of administrative sanctions as set out in POJK 4/2024. Whilst administrative sanctions will be imposed on the party who expressly violates POJK 4/2024, it is also provided that members of a BOD and a BOC of a public company who cause the violation shall also be subject to the imposition of administrative sanctions by OJK.
  
  The applicable administrative sanctions under POJK 4/2024 are as follows:
  - written reprimand;
  - fine which constitutes an obligation to pay a certain amount of money;
  - restriction of business activities;
  - suspension of business activities;
  - revocation of business activities;
  - cancellation of approval; and/or
  - cancellation of registration.
  Please be informed that the above administrative sanctions are not in sequential order. It is fully the discretion of OJK to determine the type of administrative sanctions to be imposed on the relevant violating party(ies). Additionally, the fine may be imposed individually or jointly with the imposition of other administrative sanctions as mentioned above.
  
  In addition to the administrative sanctions, OJK may implement certain actions to any party who violates the provisions under POJK 4/2024. The imposition of administrative sanctions and the implementation of such certain actions may be made publicly available by the OJK.

AKSET

Please contact Johannes C. Sahetapy-Engel (jsahetapyengel@aksetlaw.com), Adhitya Ramadhan (aramadhan@aksetlaw.com), or Almira Siti Nadiva Zulfandiari (azulfandiari@aksetlaw.com) for further information.

Disclaimer:

The foregoing material is the property of AKSET and may not be used by any other party without prior written consent. The information herein is of general nature and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. Specific legal advice should be sought by interested parties to address their particular circumstances.

Any links contained in this document are for informational purposes and are available and relevant at time this publication is made. We provide no liability whatsoever in respect of any information or content in such links.