The Indonesian government recently introduced an Accelerated Board on the Indonesia Stock Exchange ("IDX"), which will cater to market demand to allow start-ups with small or medium-sized assets to have access to the capital markets through the stock exchange. Under the IDX regulation and the Financial Services Authority's regulation on the Accelerated Board, issuers with small or medium-sized assets receive certain leniencies with respect to, among others, asset size, operational activities, and minimum free float.
As a safeguard, the IDX requires the issuer to disclose its controllers, as well as observe a lock-up period of six months from the listing date against the issuer's controlling shareholders. The IDX regulation also allows a company that has been listed on the Accelerated Board to move to the Development Board or the Main Board.
As of the date of publication, the IDX, together with other stakeholders (particularly securities companies), is preparing the trading mechanism and infrastructure to support the Accelerated Board once it is up and running.
The enactment of the Ministry of Law and Human Rights regulation on disclosure of ultimate beneficial ownership marked another step in Indonesia's move towards a new era of corporate governance reform. Under this new regulation, all companies are now required to disclose their ultimate beneficial owners.
Some argue that the enactment of this regulation signals Indonesia's strong interest and commitment in becoming a full member of the Financial Action Task Force ("FATF"). Indeed, certain provisions in the new regulation closely mimic the recommendations under the FATF Guidance on Transparency and Beneficial Ownership. One such provision is the formulation of ultimate beneficial ownership that focuses on the natural persons who actually own and receive advantage from the company.
However, issues may arise when dealing with a complex ownership structure, as it may be difficult to identify the actual beneficial owner. Furthermore, the regulation also imposes a heavier burden on the notary, as well as the founder and executives of the company, who have an obligation to disclose beneficial owners.
In mid-2019, the Indonesian Competition Authority ("KPPU") announced that notifications for 12 acquisitions by eight Indonesian companies were not made within the specified timeframe. This announcement was the result of a systematic scrutiny by the KPPU over notifiable transactions occurring since 2010.
The announcement contained names of large and publicly listed companies. In addition, the value of the 12 transactions mentioned in the announcement varied from IDR 90 million to IDR 2 trillion. The KPPU highlighted that the maximum fine imposed against some business may well be beyond the value of the transactions. Meanwhile, the period of delay of the notification ranged from 11 months to 5 years.
On 1 October 2019, KPPU imposed a record-breaking fine of IDR20.66 billion (approx. US$1.46 million) on PT Citra Prima Sejati ("CPS") for its failure to notify the KPPU of two transactions within the required timeframe. These transactions involved CPS' acquisition of two Indonesian mining companies, PT Buana Minera Harvest and PT Mitra Bisnis Harvest, on 24 December 2013.
As the KPPU is silent on the period during which it would examine a transaction, businesses need to be cautious as it can effectively investigate any transaction that has not complied with the notification requirements since the Indonesian Merger Control Regulations came into effect in 2010, such as the recent investigation and eventual imposition of fine on CPS.
In contemplation of Indonesia's plan to produce electric and hybrid-powered vehicles by 2025, President Jokowi signed the long-awaited electric vehicles regulation in August 2019, which stipulates a number of fiscal and non-fiscal incentives for the electric vehicles industry. Fiscal incentives include import tariff incentives for battery-based electronic vehicles and their supporting machinery and materials, luxury goods sales tax deduction, certification and financing support. Meanwhile, non-fiscal incentives include an exception from road restriction.
Although the regulation will not be in force until the government issues a ministerial-level operative regulation (which must be issued within a year from the enactment of this regulation), these incentives are a positive move towards the right direction in combating pollution in Indonesia.
In August 2019, Indonesia repealed two regulations governing the sale and purchase of apartments and houses, and replaced it with one comprehensive regulation.
The new regulation governs not only the marketing of property and execution of a preliminary sale and purchase agreement (Perjanjian Pendahuluan Jual Beli or "PPJB") between a potential buyer and a developer, but also the payment mechanism during the marketing and post-signing period of PPJB.
With regard to the payment mechanism, a prospective buyer may cancel a transaction and receive a full refund from the developer if the developer fails to meet any of the deadlines during the marketing period. This applies even if the failure is not caused by the developer, although in this case, the amount refunded will be deducted by 10% plus any tax payable by the developer. This same refund mechanism applies to the post-signing period of the PPJB, except that the developer has the right to retain either the full payment or 10% of the payment if the failure is caused by the buyer.
