Financial Services Authority Regulation Number 27/POJK.04/2020 Concerning Bonus Shares

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 27 /POJK.04/2020
CONCERNING
BONUS SHARES
BY THE GRACE OF THE ALMIGHTY GOD,
THE COMMISSIONER COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering :
a. that with the shift of functions, duties, and authority for the regulation and supervision of financial services activities in the capital market sector, including the implementation of bonus share issuance, from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding the implementation of bonus share issuance, the provisions of existing legislation in the capital market sector regarding the implementation of bonus share issuance need to be changed into a Financial Services Authority Regulation;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Bonus Shares;
Considering :

1. Law Number 8 of 1995 concerning Capital Markets (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 to the State Gazette of the Republic of Indonesia Number 5253);
   DECIDING:
   Establishing : FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING BONUS SHARES.
   CHAPTER I
   GENERAL PROVISIONS
   Article 1
   In this Financial Services Authority Regulation, the following terms are defined as:
3. Share Premium is the excess of shareholder contributions above the nominal value after deducting equity equity issuance costs.
4. Public Company is an Issuer that has conducted a Public Offering of Equity Securities or a Public Company.
5. General Meeting of Shareholders, hereinafter referred to as GMS, is the organ of the Public Company that has authority not granted to the Board of Directors or Board of Commissioners as referred to in the Law concerning Limited Liability Companies and/or the Articles of Association of the Public Company.
6. Net Assets is the difference between total assets and total liabilities.
7. Retained Earnings is the accumulation of periodic business results after considering dividend distribution and corrections of previous period profits and losses.
8. Bonus Shares are shares distributed free of charge to shareholders based on the number of shares owned.
9. Stock Dividend is the portion of profits distributed to shareholders in the form of shares.
10. Cash Dividend is the portion of profits distributed to shareholders in the form of money.
11. Public Accountant is a person who has obtained a license to provide services as referred to in the provisions of existing legislation concerning public accountants and is registered with the Financial Services Authority.
    Article 2
    Bonus Shares that are Stock Dividends originate from the capitalization of Retained Earnings.
    Article 3
    Bonus Shares that are not Stock Dividends originate from the capitalization of:
    a. Share Premium; and/or b. other equity elements.
    CHAPTER II
    INFORMATION DISCLOSURE REGARDING BONUS SHARE DISTRIBUTION
    Article 4
    (1) Public Companies that will distribute Bonus Shares are required to submit information regarding the distribution of Bonus Shares to the Financial Services Authority no later than simultaneously with the GMS notification. (2) Information regarding the distribution of Bonus Shares must be announced to the public no later than simultaneously with the GMS announcement.
    Article 5
    (1) Information regarding the distribution of Bonus Shares as referred to in Article 4 must at least contain:
    a. a detailed explanation of the source of the capitalization of capital that becomes Bonus Shares; b. the value of each source of Bonus Share capitalization;
    c. the Bonus Share distribution ratio;
    d. the basis for setting the price used as the basis for Bonus Share distribution; e. an explanation regarding tax treatment of Bonus Shares that are Stock Dividends, both their impact on shareholders and on the Public Company; and f. administrative procedures related to the distribution of Bonus Shares. (2) In the event that the imposition of tax on Bonus Shares that are Stock Dividends as referred to in paragraph (1) letter e is less favorable for shareholders than if given in the form of Cash Dividends, this fact must be disclosed and accompanied by an explanation regarding the reason for not being given in the form of Cash Dividends.
    Article 6
    Public Companies or other Capital Market Actors in relation to investors are prohibited from providing misleading information regarding the plan for the distribution of Bonus Shares by Public Companies.
    CHAPTER III
    DISTRIBUTION OF BONUS SHARES
    Article 7
    The distribution of Bonus Shares must be proportional to the share ownership of each shareholder.
    Article 8
    The number of shares distributed for Bonus Shares that are Stock Dividends is determined based on the following:
    a. in the event that the market price of shares on the closing of trading 1 (one) day before the GMS is below the nominal value of shares, the number of shares distributed is determined based on the lowest share price at the nominal value of shares; or b. in the event that the market price of shares is equal to or higher than the nominal value of shares, the number of shares distributed is determined based on the market price of shares on the closing of trading 1 (one) day before the GMS.
    Article 9
    The number of shares distributed for Bonus Shares that are not Stock Dividends is determined based on the nominal value of shares.
    Article 10
    In the event that there is more than 1 (one) nominal value, the shares used as the basis for the distribution of Bonus Shares as referred to in Article 8 and Article 9 must be shares with the lowest nominal value.
    Article 11
    Public Companies that will implement the distribution of Bonus Shares are required to include the source of Bonus Shares in the latest annual financial statements audited by a Public Accountant.
    Article 12
    In the event that there is a GMS decision regarding the distribution of Bonus Shares, Public Companies are required to implement the distribution of Bonus Shares to entitled shareholders no later than 30 (thirty) days after the announcement of the summary of the GMS minutes deciding the distribution of Bonus Shares.
    Article 13
    (1) Public Companies are required to submit to the Financial Services Authority a report on the distribution of Bonus Shares that has been examined by a Public Accountant. (2) The report as referred to in paragraph (1) must be submitted no later than 14 (fourteen) days after the implementation of the distribution of Bonus Shares.
    Article 14
    Every Capital Market Actor involved in the preparation of historical data regarding share prices and financial information per share is required to adjust such information against the effects of the distribution of Bonus Shares and explain the method used in such adjustment.
    CHAPTER IV
    ADMINISTRATIVE SANCTIONS
    Article 15
    (1) Every party that violates the provisions as referred to in Article 4, Article 5, Article 6, Article 10, Article 11, Article 12, Article 13, and Article 14, shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) are also imposed on parties causing the occurrence of violations as referred to in paragraph (1). (3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority. (4) Administrative sanctions as referred to in paragraph (1) consist of:
    a. written warning; b. fines, namely the obligation to pay a certain amount of money;
    c. restriction of business activities;
    d. suspension of business activities; e. revocation of business licenses; f. cancellation of approvals; and/or g. cancellation of registrations.
    (5) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without being preceded by the imposition of administrative sanctions in the form of written warnings as referred to in paragraph (4) letter a. (6) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g. (7) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with the provisions of existing legislation.
    Article 16
    In addition to administrative sanctions as referred to in Article 15 paragraph (4), the Financial Services Authority may take specific actions against every party that violates the provisions of this Financial Services Authority Regulation.
    Article 17
    The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 15 paragraph (4) and specific actions as referred to in Article 16 to the public.
    CHAPTER V
    CLOSING PROVISIONS
    Article 18
    At the time this Financial Services Authority Regulation takes effect, the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-35/PM/2003 concerning Bonus Shares, along with Regulation Number IX.D.5 which is its attachment, are revoked and declared invalid.
    Article 19
    This Financial Services Authority Regulation takes effect on the date of its enactment.
    This copy is consistent with the original
    Deputy Director of Legal Consultancy and
    Banking Regulation Harmonization 1
    Legal Directorate 1
    Legal Department signed
    Wiwit Puspasari
    In order 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 April 22, 2020 CHAIRMAN OF THE COMMISSIONER COUNCIL FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed WIMBOH SANTOSO Enacted in Jakarta on April 23, 2020 MINISTER OF LAW AND HUMAN RIGHTS REPUBLIC OF INDONESIA, signed YASONNA H. LAOLY STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 117 EXPLANATION OF FINANCIAL SERVICES AUTHORITY REGULATION REPUBLIC OF INDONESIA NUMBER 27 /POJK.04/2020 CONCERNING BONUS SHARES
    I. GENERAL
    That since December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial services activities in the capital market sector, insurance, pension funds, financing institutions, and other financial service institutions have shifted from the Minister of Finance and the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority. In light of the above, it is necessary to reorganize the structure of existing regulations, particularly those related to the capital market sector, by converting Capital Market Supervisory Agency and Financial Institutions regulations related to the capital market sector into Financial Services Authority Regulations. This reorganization is carried out so that Financial Services Authority Regulations related to the capital market sector are consistent with Financial Services Authority Regulations in other sectors. Based on the background thinking and aspects thereof, it is necessary to replace the existing legislation in the capital market sector regulating Bonus Shares, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-35/PM/2003 concerning Bonus Shares, along with Regulation Number IX.D.5 which is its attachment, with a Financial Services Authority Regulation concerning Bonus Shares.
    II. ARTICLE BY ARTICLE
    Article 1
    Sufficiently clear.
    Article 2
    Sufficiently clear.
    Article 3
    Sufficiently clear.
    Article 4
    Sufficiently clear.
    Article 5
    Sufficiently clear.
    Article 6
    What is meant by "other Capital Market Actors" includes, among others, Public Accountants and legal consultants registered with the Financial Services Authority. Examples of information considered misleading include statements that:
    a. Bonus Shares are a substitute for Cash Dividends promised by Public Companies; b. Bonus Shares originating from the capitalization of Share Premium and/or other equity elements are an indication of the Public Company's ability to generate profits;
    c. share prices at the time of Public Offering become lower due to the plan for the distribution of Bonus Shares; and
    d. the distribution of Bonus Shares is equivalent to dividend yield, such as:

1. using the distribution of Bonus Shares in such a way as to create the impression that it is the same as the yield of Cash Dividends;
2. adding the percentage of Bonus Share distribution with the dividend yield and stating it as dividend payment or as investment yield; and
3. dividend yield remains unchanged due to the change from Cash Dividends to Stock Dividends.
   Article 7
   Sufficiently clear.
   Article 8
   Sufficiently clear.
   Article 9
   Sufficiently clear.
   Article 10
   Sufficiently clear.
   Article 11
   Sufficiently clear.
   Article 12
   Sufficiently clear.
   Article 13
   Sufficiently clear.
   Article 14
   Sufficiently clear.
   Article 15
   Sufficiently clear.
   Article 16
   What is meant by "specific actions" includes, among others, requesting Public Companies to postpone the distribution of Bonus Shares.
   Article 17
   Sufficiently clear.
   Article 18
   Sufficiently clear.
   Article 19
   Sufficiently clear.
   SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6503