Financial Services Authority Regulation Number 2/POJK.04/2013 Regarding Share Repurchases by Issuers or Public Companies in Conditions of Significant Market Fluctuation

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER: 2/POJK.04/2013
CONCERNING
SHARE REPURCHASES BY ISSUERS OR PUBLIC COMPANIES IN CONDITIONS OF SIGNIFICANT MARKET FLUCTUATION

BY THE GRACE OF GOD THE ALMIGHTY,
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to reduce the impact of significant market fluctuations, it is necessary to provide ease for Issuers or Public Companies to carry out share repurchase corporate actions without violating applicable statutory regulations; b. that based on the considerations in letter a, it is necessary to establish a Financial Services Authority Regulation regarding Share Repurchases by Issuers or Public Companies in Conditions of Significant Market Fluctuation;

Recalling:

1. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
2. Law Number 40 of 2007 concerning Limited Liability Companies (State Gazette Year 2007 Number 106, Supplement to the State Gazette Number 4756);
3. Law Number 8 of 1995 concerning the Capital Market (State Gazette Year 1995 Number 64, Supplement to the State Gazette Number 3608);
4. Bapepam and LK Regulation Number XI.B.2, Appendix of the Chairman of Bapepam and LK Decision Number: Kep-105/BL/2010 dated April 13, 2010 concerning Share Repurchases by Issuers or Public Companies;

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING SHARE REPURCHASES BY ISSUERS OR PUBLIC COMPANIES IN CONDITIONS OF SIGNIFICANT MARKET FLUCTUATION.

CHAPTER I
GENERAL PROVISIONS

Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Significant Market Fluctuation Conditions are:
   a. the composite stock index on the Stock Exchange falling cumulatively by 15% (fifteen percent) or more over 3 (three) consecutive trading days; or b. other conditions determined by the Financial Services Authority.
2. Company means an Issuer that has carried out a Public Offering of Equity Securities or a Public Company.

Article 2
Significant Market Fluctuation Conditions as referred to in Article 1 number 1 letter b begin and end with a determination by the Financial Services Authority.

Article 3
In the event of Significant Market Fluctuation Conditions, the Company may repurchase its shares without violating the provisions of Article 91, Article 92, Article 95, and Article 96 of Law Number 8 of 1995 Concerning the Capital Market, provided that this Regulation is met.

CHAPTER II
REQUIREMENTS FOR SHARE REPURCHASE BY THE COMPANY

Article 4
In the event of Significant Market Fluctuation Conditions, the Company may carry out share repurchases without Shareholders' Meeting approval.

Article 5
Share repurchases by the Company as referred to in Article 4 are at most 20% (twenty percent) of paid-up capital.

Article 6
(1) The Company may carry out share repurchases as referred to in Article 5 after submitting information disclosure to the Financial Services Authority and the Stock Exchange. (2) Information disclosure as referred to in paragraph (1) is carried out at the latest 7 (seven) Trading Days after the occurrence of Significant Market Fluctuation Conditions. (3) Share repurchases as referred to in Article 5 may only be carried out within a period of at most 3 (three) months after the information disclosure as referred to in paragraph (1). (4) Information disclosure regarding share repurchases as referred to in paragraph (1) contains the following information:
a. estimated schedule, cost of share repurchases, and estimated total nominal value of shares to be repurchased; b. estimated decrease in Company revenue as a result of implementing share repurchases and the impact on the Company's financing costs;
c. pro forma earnings per share of the Company after the implementation of the share repurchase plan, considering the decrease in revenue;
d. share price limits for share repurchases; e. time limits for share repurchases; f. the method to be used to repurchase shares; and g. management discussion and analysis regarding the impact of share repurchases on the Company's business activities and future growth.

Article 7
If share repurchases are carried out through the Stock Exchange, the buy transaction is carried out through one Stock Exchange Member.

Article 8
Any Party that is:
a. commissioners, directors, employees, and Principal Shareholders of the Company; b. individuals who, due to their position, profession, or business relationship with the Company, allow them to obtain insider information; or
c. Parties who have ceased to be Parties as referred to in letter a and letter b within the last 6 (six) months,
are prohibited from carrying out transactions on the Company's shares during the share repurchase period or on the same day as the sale of shares resulting from the repurchase carried out by the Company through the Stock Exchange.

CHAPTER III
TRANSFER OF SHARES RESULTING FROM REPURCHASE

Article 9
Shares resulting from repurchases may be transferred by means, including:
a. sold either on the Stock Exchange or outside the Stock Exchange; b. withdrawn by way of capital reduction;
c. implementation of an Employee Stock Option Plan or Employee Stock Purchase Plan;
d. implementation of debt-to-equity conversion of the Company's debt; and/or e. implementation of warrants.

Article 10
(1) The transfer of shares carried out by means as referred to in Article 9 letter a may be carried out without Shareholders' Meeting approval. (2) The transfer of shares as referred to in paragraph (1) must meet the following provisions:
a. implemented after 30 (thirty) days:

1. since the Company's share repurchase was fully implemented; or
2. after the end of the share repurchase period as referred to in Article 6 paragraph (3); and
   b. the share transfer price must not be lower than the average repurchase price of the Company's shares and with the provisions:
3. for shares of Companies listed and traded on the Stock Exchange, must not be lower than the daily closing price on the Stock Exchange one day before the share sale date or the average of the daily closing prices on the Stock Exchange over the last 90 (ninety) days before the share sale date by the Company, whichever is higher;
4. for shares of Companies not listed on the Stock Exchange, must not be lower than the fair market price determined by the Appraiser; or
5. for shares of Companies listed on the Stock Exchange, but for 90 (ninety) days or more before the share sale date by the Company were not traded on the Stock Exchange or their trading was temporarily suspended by the Stock Exchange, must not be lower than:
   a) the fair market price determined by the Appraiser; or b) the average of the daily closing prices on the Stock Exchange in the last 12 (twelve) months calculated backwards from the last trading day or the day trading was temporarily suspended, whichever is higher.

Article 11
In the event that the Company carries out a corporate action resulting in a change in the nominal value of shares resulting from repurchases, the calculation of the share repurchase price is adjusted to follow the ratio between the nominal value of shares at the time of repurchase and the nominal value of shares resulting from the said corporate action.

Article 12
(1) In the event that there are still shares resulting from repurchases held by the Company during a period of 3 (three) years since the completion of the share repurchase, the Company must begin to transfer the shares resulting from repurchases within a period of at most 2 (two) years. (2) In the event that the obligation to transfer shares as referred to in paragraph (1) cannot be implemented or has not been completed by the Company, then within a period of at most 1 (one) year after the end of the period as referred to in paragraph (1), the Company must have completed the transfer of the said shares.

Article 13
In the event that the transfer as referred to in Article 12 paragraph (2) is carried out by means as referred to in Article 9 letter a, then the share sale price must be at least at the price:
a. for shares of Companies listed and traded on the Stock Exchange, must not be lower than the daily closing price on the Stock Exchange 1 (one) day before the share sale date or the average of the daily closing prices on the Stock Exchange over the last 90 (ninety) days before the share sale date by the Company, whichever is higher; b. for shares of Companies not listed on the Stock Exchange, must not be lower than the fair market price determined by the Appraiser; or
c. for shares of Companies listed on the Stock Exchange, but for 90 (ninety) days or more before the share sale date by the Company were not traded on the Stock Exchange or their trading was temporarily suspended by the Stock Exchange, must not be lower than:

1. the fair market price determined by the Appraiser; or
2. the average of the daily closing prices on the Stock Exchange in the last 12 (twelve) months calculated backwards from the last trading day or the day trading was temporarily suspended,
   whichever is higher.

Article 14
In the event that the transfer as referred to in Article 12 is carried out by means as referred to in Article 9 letter a, the Company may extend the period for fulfilling the obligations as referred to in Article 12, if Significant Market Fluctuation Conditions occur.

Article 15
In the event that the conditions as referred to in Article 14 have ended, the Company must immediately continue the transfer of shares as referred to in Article 12.

Article 16
(1) The Company must announce information disclosure to the public and submit proof of announcement and supporting documents to the Financial Services Authority at the latest 14 (fourteen) days before the implementation of the sale of shares resulting from repurchases. (2) In the event that the obligation to submit information disclosure as referred to in paragraph (1) falls on a Saturday or a holiday, then the submission of information disclosure or the said report must be submitted on the first working day thereafter. (3) The announcement as referred to in paragraph (1) for the sale of shares resulting from repurchases carried out outside the Stock Exchange must include at least:
a. identity of the Party to receive the shares; b. time of implementation of the share sale;
c. business activities of the Party to receive the shares, if the said Party is a business entity; and
d. the nature of the Affiliation relationship of the Parties carrying out transactions with the Company (if any).
(4) The announcement as referred to in paragraph (1) for the sale of shares resulting from repurchases carried out on the Stock Exchange must include at least:
a. name of the Stock Exchange Member appointed to carry out the share sale; b. time of implementation of the share sale; and
c. total number of shares to be sold.

Article 17
In the event that shares resulting from repurchases are sold through the Stock Exchange, the following provisions must be met:
a. the sell transaction must be carried out through 1 (one) Stock Exchange Member; b. the sell transaction may only be carried out after 30 (thirty) minutes from the opening until 30 (thirty) minutes before the closing of trading; and
c. the number of shares resold on each day is at most 20% (twenty percent) of the total number of shares that have been repurchased by the Company.

Article 18
In the event that shares repurchased have been sold at a price lower than the repurchase price, such loss must be clearly disclosed in the Company's financial report.

Article 19
In the event that the transfer of shares resulting from repurchases is:
a. an Affiliation Transaction and does not contain a Conflict of Interest; or b. a Material Transaction, then the Company only needs to comply with this Regulation.

CHAPTER IV
SANCTION PROVISIONS

Article 20
Without prejudice to the applicability of criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose sanctions on any party that violates the provisions of this Regulation, including parties who cause the violation to occur.

CHAPTER V
CLOSING PROVISIONS

Article 21
This Financial Services Authority Regulation shall come into force on the date of its promulgation.

To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on August 23, 2013
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,
Signed,
MULIAMAN D. HADAD

Promulgated in Jakarta on August 26, 2013
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,
Signed,
AMIR SYAMSUDIN

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2013 NUMBER 143 Copy in accordance with the original HEAD OF THE LEGAL ASSISTANCE DIVISION LEGAL DIRECTORATE, Signed, MUFLI ASMAWIDJAJA

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER: 2/POJK.04/2013
CONCERNING
SHARE REPURCHASES BY ISSUERS OR PUBLIC COMPANIES IN CONDITIONS OF SIGNIFICANT MARKET FLUCTUATION

I. GENERAL
Share repurchase corporate actions are one of the corporate actions that can be carried out by Issuers or Public Companies as regulated in Law Number 40 of 2007 concerning Limited Liability Companies and Bapepam and LK Regulation Number XI.B.2, Appendix of the Chairman of Bapepam and LK Decision Number Kep-105/BL/2010 dated April 13, 2010 concerning Share Repurchases by Issuers or Public Companies.

That in order to reduce the impact of significant market fluctuations causing pressure on the domestic stock exchange, it is necessary to provide ease for Issuers or Public Companies to carry out share repurchase corporate actions without violating applicable statutory regulations and while still maintaining orderly, fair, and efficient trading of Securities.

In relation to the above, the Financial Services Authority establishes a Financial Services Authority Regulation regarding Share Repurchases by Issuers or Public Companies in Conditions of Significant Market Fluctuation.

II. ARTICLE BY ARTICLE EXPLANATION
Article 1
Clear enough

Article 2
Clear enough

Article 3
Clear enough

Article 4
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Article 5
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Article 6
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Article 7
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Article 8
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Article 9
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Article 10
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Article 11
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Article 12
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Article 13
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Article 14
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Article 15
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Article 16
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Article 17
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Article 18
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Article 19
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Article 20
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Article 21
Clear enough

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5439