Reporting of ownership or change of ownership
- Parties that need to report
- Members of the board of directors and board of commissioners who directly or indirectly hold shares with voting rights
- Parties (including organized groups1) that directly or indirectly hold at least 5% shares with voting rights
- Parties (including organized groups) that directly or indirectly control a public company
- Parties that inherit shares with voting rights
- Contents of the report
The report must include all information previously required by POJK 11/2017. But in addition, POJK 4/2024 now requires the report to also include, among others:
- Type of transaction (e.g., inheritance or grant)
- Classification of shares
- If the reporting party is the controller, whether such controller will retain its control over the public company
- If the reporting party is representing an organized group, details of members of the organized group
- Exemptions
The above reporting obligation is not applicable:
- To a change of ownership of shares with voting rights that occurs as a result of corporate actions conducted by public companies (a) in the form of capital increase either with or without the granting of pre-emptive rights or (b) without any transactions undertaken by shareholders
- To a change in the decimal places only in the percentage of ownership of shares with voting rights (e.g., it does not apply to a change of ownership percentage from 6.1% to 6.99%, but would apply to a change from 6.1% to 7%) — the 0.5% threshold provided in POJK 11/2017 no longer exists
- To holders of shares with no voting rights
- Timeline
The reporting party must report to OJK its ownership of, or change of its ownership of, shares with voting rights in public companies within five working days after the relevant transaction date (the transaction date is counted as day one). The following is an illustration of the shares reporting timeline under POJK 4/2024.
Reporting of activities of encumbrance over public company shares
- Parties that need to report
Any shareholder who encumbers 5% or more of the shares with voting rights must report that it has done so.
The 5% threshold is a cumulative threshold calculated from the total shares with voting rights issued by the public company.
- Contents of the report
The following are some of the disclosures that will be required in the reports under POJK 4/2024:
- Details of the party who encumbers public company shares
- Amount and percentage of the encumbered shares
- Loan amount
- Date and period of the security agreement
- Exemptions
This reporting obligation is not applicable for a change in the decimal places in the percentage of encumbered shares with voting rights (e.g., it does not apply to a change of percentage from 6.1% to 6.99%). For example, a shareholder who has encumbered 6.10% of shares with voting does not need to fulfill this reporting obligation for an additional encumbrance of shares in the amount of up to 0.89% shares with voting rights.
- Timeline
Similar to the timeline for Reporting of Ownership or Change of Ownership above.
Media of reporting and form of reporting
POJK 4/2024 stipulates that the above report must be made offline until an online reporting system is available. Once the online reporting system is available, the reports will have to be submitted within three working days after the event instead of five working days as currently permitted. POJK 4/2024 envisages that there will be a further implementing regulation on that online reporting system. We expect the implementing regulation to also stipulate the following:
- Whether or not offline reporting can be done if there is a technical disruption that prevents the parties submitting reports online on the last day of the reporting period
- Failure to submit reports when a force majeure occurs
The attachments of POJK 4/2024 provide the forms for Reporting of Ownership or Change of Ownership and Reporting of Activities of Encumbering Public Company Shares.
Administrative sanctions
Failure to comply with POJK 4/2024 is subject to administrative sanctions in the form of:
- Written warning
- Monetary penalties
- Restriction of business activities
- Freezing of business activities
- Revocation of business licenses
- Cancellation of approvals
- Cancellation of registrations
POJK 4/2024 further stipulates that OJK may:
- Conduct certain actions (e.g., prohibit members of the board of directors, members of the board of commissioners and shareholders of public companies from being a main party2 in financial institutions) against parties that breach the provisions of POJK 4/2024
- Announce the imposition of administrative sanctions and the actions conducted under the first point above
Point to ponder
Certain adjustments will need to be made to some finance documents for loan transactions to reflect the requirements of POJK 4/2024.
1 Organized group means parties who are planning, agreeing or deciding to cooperate to achieve certain objectives.
2 Under OJK Rule No. 27 of 2016 on the Assessment of Fit and Proper Test of Main Parties in Financial Services Institutions, a main party is a party that owns, manages, supervises and/or has significant influence over financial services institutions.
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*We would like to thank Cesario Putra Benyamin, Associate, and Veronika Hutting, Knowledge Lawyer in HHP Law firm for their contribution to this alert.
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