The enactment of Indonesia's Financial Services Authority's (OJK) Regulation No. 29 of 2023 on Share Buyback by Public Companies ("New Regulation") brings significant changes to share buyback practices for public companies. Under the new framework, stringent provisions tighten the conditions for buybacks, mandating careful planning and execution to ensure compliance. Notably, restrictions on buybacks now include prohibitions on concurrent buybacks under fluctuating market conditions and requirements to transfer previously bought treasury shares within a specified timeframe. Moreover, the regulation introduces extended methods for treasury share transfers, including distributing shares to existing shareholders and utilising shares for asset acquisitions or debt repayments, all under the umbrella of heightened transparency and accountability. Enhanced disclosure requirements further bolster transparency by requiring public companies to provide detailed information on buyback funding sources and progress, reinforcing market stability and investor confidence.
The New Regulation emphasises timeliness and efficiency, shortening buyback periods and expanding transfer methods, all while mandating consistent reporting to regulatory authorities. By imposing stricter standards and enhancing disclosure, the regulation aims to ensure that buybacks do not compromise companies' financial stability or market dynamics. Additionally, the provision for a smooth transitional period allows ongoing processes to continue under the previous regulatory frameworks, ensuring uninterrupted operations while facilitating compliance with the new guidelines. In essence, the New Regulation not only enhances regulatory clarity and compliance but also promotes market efficiency and stability, safeguarding the interests of both investors and public companies alike in Indonesia’s financial landscape.
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