Capital Increase of Open Companies Without Preemptive Rights

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 38 /POJK.04/2014
CONCERNING
CAPITAL INCREASE OF OPEN COMPANIES WITHOUT
GRANTING PREEMPTIVE RIGHTS
BY THE GRACE OF GOD THE ALMIGHTY,
THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering: that in order to improve the quality of information disclosure to the public and enhance supervision over the implementation of capital increases of Open Companies without granting Preemptive Rights, it is necessary to perfect regulations regarding Capital Increase Without Preemptive Rights by establishing a Financial Services Authority Regulation concerning Capital Increase of Open Companies Without Granting Preemptive Rights; Recalling: 1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608); : 2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement…

Supplement to the State Gazette of the Republic of Indonesia Number 5253); DECIDING:
Establishing: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING CAPITAL INCREASE OF OPEN COMPANIES WITHOUT GRANTING PREEMPTIVE RIGHTS.
CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Open Company means an Emitter that has conducted a Public Offering of Equity Securities or a Public Company.
2. Preemptive Rights, hereinafter abbreviated as HMETD, are rights attached to shares that provide the opportunity for the respective shareholders to purchase shares and/or other Equity Securities, whether convertible into shares or granting the right to purchase shares, before being offered to other Parties.
3. Implementation of Capital Increase means the date of capital deposit or the date of conversion of debt in the context of capital increase without granting HMETD.
4. General Meeting of Shareholders, hereinafter referred to as GMS, is the organ of the Open Company that has authority not delegated to the Board of Directors or…

or Board of Commissioners as regulated in the Law concerning Limited Liability Companies and/or the Articles of Association.
5. Open Company Share Ownership Program, hereinafter referred to as Share Ownership Program, is a program offering to employees, members of the Board of Directors, and/or members of the Board of Commissioners of the Open Company and/or Controlled Companies that meet the requirements to own shares of the Open Company.
CHAPTER II
REQUIREMENTS FOR CAPITAL INCREASE WITHOUT HMETD
Article 2
(1) An Open Company may increase capital without granting HMETD to shareholders as regulated in regulations in the Capital Market sector regarding Preemptive Rights, both for the purpose of improving financial position and other than for improving the financial position of the Open Company. (2) The capital increase of an Open Company without granting HMETD as referred to in paragraph (1) must first obtain approval from the GMS. (3) The GMS as referred to in paragraph (2) must be conducted in accordance with regulations as regulated in the Financial Services Authority Regulation regarding the Plan and Organization of GMS of Open Companies and the Articles of Association of the Open Company.
Article 3
Capital increase of an Open Company without granting HMETD for the purpose of improving financial position as referred to in Article 2 paragraph (1) may be carried out provided it meets the following conditions:
a. The Open Company is a bank that receives loans from Bank Indonesia or other government institutions in an amount greater than 100% (one hundred percent) of paid-up capital or other conditions that may result in bank restructuring by the competent Government agency; b. The Open Company, other than a bank, has negative net working capital and has liabilities exceeding 80% (eighty percent) of the assets of the Open Company at the time of the GMS approving the capital increase without granting HMETD; or
c. The Open Company is unable to meet financial obligations when due to unaffiliated lenders provided that the unaffiliated lenders agree to accept shares or convertible bonds of the Open Company to settle the loan.
Article 4
(1) Capital increase of an Open Company without granting HMETD other than for improving financial position as referred to in Article 2 paragraph (1) may only be carried out at most 10% (ten percent) of the paid-up capital stated in the Articles of Association amendment that has been notified and received by the Minister…

Minister competent at the time of the GMS announcement, with the following provisions:
a. Capital increase of an Open Company without granting HMETD other than in the context of the Share Ownership Program is carried out within 2 (two) years since the GMS for the capital increase of the Open Company without granting HMETD referred to; and b. Capital increase of an Open Company without granting HMETD in the context of the Share Ownership Program is carried out within 5 (five) years since the GMS for the capital increase of the Open Company without granting HMETD in the context of the Share Ownership Program referred to. (2) If at the time the Open Company carries out capital increase without granting HMETD as referred to in paragraph (1) letter a, there is still an implementation of capital increase of the Open Company without granting HMETD in the context of the Share Ownership Program as referred to in paragraph (1) letter b that has not completed its time limit, the capital increase of the Open Company without granting HMETD as referred to in paragraph (1) letter a may only be carried out at most 10% (ten percent) of the paid-up capital at the time of the GMS announcement regarding the capital increase of the Open Company without granting HMETD referred to, minus the amount of capital increase of the Open Company without granting HMETD for the Share Ownership Program that has not been implemented. (3) If…

(3) If at the time the Open Company carries out capital increase without granting HMETD in the context of the Share Ownership Program as referred to in paragraph (1) letter b, there is still an implementation of capital increase of the Open Company without granting HMETD as referred to in paragraph (1) letter a that has not completed its time limit, the capital increase of the Open Company without granting HMETD in the context of the Share Ownership Program as referred to in paragraph (1) letter b may only be carried out at most 10% (ten percent) of the paid-up capital at the time of the GMS announcement regarding the capital increase of the Open Company without granting HMETD in the context of the Share Ownership Program referred to, minus the amount of capital increase of the Open Company without granting HMETD as referred to in paragraph (1) letter a that has not been implemented.
Article 5
(1) Deposits for shares in forms other than money may only be carried out in the capital increase of an Open Company without granting HMETD for the purposes as referred to in Article 4 paragraph (1).
(2) Deposits for shares in forms other than money as referred to in paragraph (1) must meet the following requirements:
a. directly related to the needs of the Open Company; and b. using an Appraiser to determine the fair value of forms other than money used as deposits and the fairness of the deposit transaction for shares in…

in forms other than money.
CHAPTER III
INFORMATION DISCLOSURE
Article 6
(1) An Open Company that increases capital without granting HMETD to shareholders as referred to in Article 2 paragraph (1) must announce information about the capital increase without granting HMETD to shareholders simultaneously with the GMS announcement by fulfilling the Transparency Principles which at least contain:
a. reasons and objectives of the capital increase without granting HMETD; b. estimated implementation period (if any);
c. plan for the use of funds from the capital increase without granting HMETD (if it can be determined);
d. management analysis and discussion regarding the financial condition of the Open Company before and after the capital increase without granting HMETD; e. risks or impacts of the capital increase without granting HMETD on shareholders including dilution; f. information in table form regarding the details of share capital structure before and after the capital increase without granting HMETD which at least covers:

1. authorized capital, issued and fully paid-up capital along with information regarding the number of shares, nominal value, and total nominal value;

2. details…

3. details of share ownership by shareholders owning 5% (five percent) or more, directors, and commissioners which include information regarding name, number of shares owned, total nominal value, and percentage of share ownership;

4. treasury shares (portepel), which include information regarding the number of shares and nominal value; and

5. proforma share capital if Securities are converted (if any); and
   g. information regarding prospective investors (if any) including the existence or non-existence of Affiliation relationships with the Open Company.
   (2) In the event that the capital increase of the Open Company without granting HMETD is used for the settlement of debt and/or conversion of debt of the Open Company, in addition to the information disclosure requirements as referred to in paragraph (1), the Open Company must add information in the announcement in the form of:
   a. history of the debt to be settled; and b. use of funds from the debt to be settled and/or converted.
   (3) In the event that the investor carrying out the capital increase without HMETD is an affiliated party, in addition to the information disclosure requirements as referred to in paragraph (1), the Open Company must add information in the announcement in the form of:
   a. the nature of the Affiliation relationship; and b. explanation, considerations, and reasons for carrying out the capital increase without HMETD by the investor who is an affiliated party compared to if it were carried out by a non-affiliated party. (4) In the event that the capital increase of the Open Company without granting HMETD results in a change of control as referred to in the Financial Services Authority Regulation regarding Takeover of Open Companies by a new controller who is an individual, in addition to the information disclosure requirements as referred to in paragraph (1), the Open Company must add information in the announcement regarding the prospective new controller in the form of:
   a. name; b. address;
   c. nationality;
   d. beneficial owner (if any); and e. Affiliation relationship with the Open Company (if any).
   (5) In the event that the capital increase of the Open Company without granting HMETD results in a change of control as referred to in the Financial Services Authority Regulation regarding Takeover of Open Companies by a new controller who is a Party other than an individual, in addition to the information disclosure requirements as referred to in paragraph (1), the Open Company must add information in the announcement regarding the prospective new controller in the form…

in the form of:
a. name of the Party; b. domicile address or headquarters address;
c. line of business;
d. legal form of the Party; e. composition of management and/or supervisors; f. capital structure; g. beneficial owner; and h. Affiliation relationship with the Open Company (if any).
Article 7
In the event that the capital increase of the Open Company without granting HMETD is carried out in the context of improving the financial position of the Open Company as referred to in Article 3, in addition to the information disclosure requirements as referred to in Article 6, the Open Company must add information in the announcement in the form of:
a. information about creditors who agree and will participate in the restructuring of the Open Company's debt; b. terms and conditions of the debt restructuring;
c. share price at the time of Implementation of Capital Increase; and
d. explanation of the accounts that caused the financial position of the Open Company to be in the condition as referred to in Article 3.
Article 8
(1) Announcements as referred to in Article 6 and Article 7 must be carried out at least through:
a. 1 (one) daily newspaper in Indonesian language with national circulation or the Stock Exchange website; and b. the website of the Open Company.
(2) Proof of announcement as referred to in paragraph (1) letter a must be submitted to the Financial Services Authority at the latest 2 (two) working days after the announcement.
Article 9
(1) Information as referred to in Article 6 and Article 7 along with supporting documents must be submitted by the Open Company to the Financial Services Authority in the form of printed documents and electronic copies of the supporting documents simultaneously with the GMS announcement. (2) Information along with supporting documents as referred to in paragraph (1) must be available to shareholders from the GMS announcement until the implementation of the GMS.
Article 10
(1) The Open Company must announce to shareholders and submit to the Financial Services Authority changes and/or additional information as referred to in Article 6 and Article 7 at the latest 2 (two) working days before the implementation of the GMS. (2) The announcement as referred to in paragraph (1) must be carried out at least through:
a. 1 (one) daily newspaper in Indonesian language with national circulation or the Stock Exchange website; and b. the website…

b. website of the Open Company.
(3) Proof of announcement as referred to in paragraph (2) letter a must be submitted to the Financial Services Authority at the latest 2 (two) working days after the announcement.
CHAPTER IV
IMPLEMENTATION OF CAPITAL INCREASE OF OPEN COMPANIES WITHOUT GRANTING HMETD
Article 11
The share price at the Implementation of Capital Increase for Open Companies whose shares are not listed and not traded on the Stock Exchange must be at least equal to the fair market price determined by the Appraiser.
Article 12
The time period between the date of the appraisal issued by the Appraiser for the deposit of shares in forms other than money as referred to in Article 5 and for the share price at the Implementation of Capital Increase for Open Companies whose shares are not listed and not traded on the Stock Exchange as referred to in Article 11 with the Implementation of Capital Increase is not more than 6 (six) months.
Article 13
Capital increase of an Open Company without granting HMETD implemented through a Public Offering must follow the provisions of legislation in the Capital Market sector regarding Public Offerings.
CHAPTER V…

CHAPTER V
ANNOUNCEMENT AND NOTIFICATION OF
IMPLEMENTATION OF CAPITAL INCREASE
Article 14
(1) The Open Company must announce to the public and notify the Financial Services Authority regarding the Implementation of Capital Increase at the latest 5 (five) working days before the Implementation of Capital Increase. (2) The announcement as referred to in paragraph (1) must be carried out at least through:
a. 1 (one) daily newspaper in Indonesian language with national circulation or the Stock Exchange website; and b. the website of the Open Company.
(3) Proof of announcement as referred to in paragraph (2) letter a must be submitted to the Financial Services Authority at the latest 2 (two) working days after the announcement.
Article 15
(1) The Open Company must announce to the public and notify the Financial Services Authority regarding the results of the Implementation of Capital Increase, which include information such as:
a. the party making the deposit; b. the number and price of shares issued; and
c. the plan for the use of funds,
at the latest 2 (two) working days after the Implementation of Capital Increase.
(2) The announcement as referred to in paragraph (1) must be carried out at least through:
a. 1 (one) daily newspaper in Indonesian language with national circulation or the Stock Exchange website; and b. the website of the Open Company.
(3) Proof of announcement as referred to in paragraph (2) letter a must be submitted to the Financial Services Authority at the latest 2 (two) working days after the information is announced.
CHAPTER VI
OTHER PROVISIONS
Article 16
In the event that the capital increase of an Open Company without granting HMETD is an Affiliated Transaction, the Open Company is exempt from following the provisions as referred to in regulations in the Capital Market sector regarding Affiliated Transactions and Conflicts of Interest in Certain Transactions.
Article 17
In the event that capital increase without HMETD is a transaction containing a Conflict of Interest, the Open Company, in addition to fulfilling this Financial Services Authority Regulation, must also fulfill the provisions as referred to in regulations in the Capital Market sector regarding Affiliated Transactions and Conflicts of Interest in Certain Transactions.
Article 18
Further provisions regarding the implementation of this Financial Services Authority Regulation are regulated in a Circular Letter of the Financial Services Authority.
CHAPTER VII…

CHAPTER VII
SANCTION PROVISIONS
Article 19
(1) Without prejudice to criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties who cause the violation to occur, in the form of:
a. written warning; b. fine, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and g. cancellation of registration.
(2) Administrative sanctions as referred to in paragraph (1) letter b, letter c, letter d, letter e, letter f, or letter g may be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of a fine as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letter c, letter d, letter e, letter f, or letter g.
Article 20…

Article 20
In addition to administrative sanctions as referred to in Article 19 paragraph (1), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.
Article 21
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 19 paragraph (1) and specific actions as referred to in Article 20 to the public.
CHAPTER VIII
TRANSITIONAL PROVISIONS
Article 22
Open Companies that have submitted the meeting agenda regarding the capital increase of the Open Company without granting HMETD to the Financial Services Authority before this Financial Services Authority Regulation takes effect shall continue to follow Regulation Number IX.D.4, Appendix of the Decision of the Head of the Capital Market and Financial Institution Supervisory Board Number: KEP-429/BL/2009 dated December 9, 2009 concerning Capital Increase Without Preemptive Rights.
CHAPTER IX
CLOSING PROVISIONS
Article 23
At the time this Financial Services Authority Regulation takes effect, the Decision of the Head of the Capital Market and Financial Institution Supervisory Board Number:
KEP-429/BL/2009 dated December 9, 2009 concerning Capital Increase Without Preemptive Rights along with Regulation Number IX.D.4 which is its
appendix is revoked and declared invalid.
Article 24
This Financial Services Authority Regulation takes effect on the date of its enactment.
To ensure that everyone knows it, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Established in Jakarta on December 29, 2014
CHAIRMAN OF THE COMMISSIONERS COUNCIL,
FINANCIAL SERVICES AUTHORITY,
Signed.
MULIAMAN D. HADAD
Enacted in Jakarta on December 30, 2014
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,
Signed.
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 395 Copy in accordance with the original Director of Legal Affairs I Ministry of Law, Signed.
Signed.
Tini Kustini