On 21 June 2017, the Indonesian Financial Services Authority (Otoritas Jasa Keuangan or “OJK“) issued OJK Rule No. 26/POJK.04/2017 on Disclosure of Information for Issuers and Public Companies against which Petition for Bankruptcy is Filed (“Rule No. 26/2017“). Rule No. 26/2017 revokes and replaces Bapepam Rule No. X.K.5 as attached to the Decision of the Chairman of Bapepam No. Kep-46/PM/1998 regarding the same.
Rule No. 26/2017, coming into effect on 22 June 2017, does not provide significant changes from the previous rule and a specific form for the purpose of disclosure. However, OJK sets out administrative sanctions for any party breaching Rule No. 26/2017 and further provides an example for triggering the disclosure.
Key Provisions
It is mandatory for an issuer and a public company which fails or unable to avoid failure of settling its payment obligation to unaffiliated creditor(s) to promptly make a report to OJK and stock exchange where its securities are listed at the latest two working days from the date of failure or aware of inability to avoid such failure. The disclosure must include among others:
- principal and interest of the loan;
- period of the loan;
- names of the creditor;
- purpose of the loan; and
- reasons for the failure or inability to pay the loan.
In the event a petition for a bankruptcy is filed to Commercial Court against the issuer or the public company, it must immediately make a report to OJK and stock exchange no later than two working days following the petition is known. OJK clarifies that the petition for bankruptcy is known and triggers the mandatory disclosure when the issuer or the public company has received a summons from the Commercial Court.
Parties, mentioned under article 85 of Law of the Republic of Indonesia No. 8 of 1995 on Capital Markets among others stock exchange, mutual funds, securities companies, investment advisors and custodian banks which file a petition for bankruptcy against the issuer or the public company, are also required to immediately make a report to OJK and stock exchange no later than two working days as from the date of filing.
Moreover, Rule No. 26/2017 also obliges the stock exchange to announce information mentioned in the above on the same day of the report is received.
Sanctions for Non-Compliance
OJK is authorised to impose administrative sanctions on parties that violate (including cause the violation of) Rule No. 26/2017, which are:
- warning letters;
- fines;
- limitation of business activities;
- suspension of business activities;
- revocation of business licenses;
- cancellation of approvals; and/or
- cancellation of registration.
Please note that fines, limitation and suspension of business activities, revocation of business licenses, and cancellation of approvals and registrations can be imposed with or without warning letters. Fines may be imposed separately, or cumulatively with other administrative sanctions as mentioned in numbers 3, 4, 5, 6 or 7 above.
The administrative sanctions are imposed without depriving existing capital market criminal sanctions.
In addition, OJK is also authorised to carry out certain actions besides the administrative sanctions against whom violates Rule No. 26/2017 like delaying the issue of an effective statement for public offering transactions.
Our Corporate and Securities Practice Group
We act as strategic partners for our clients advising on a full range of corporate needs strategizing on corporate growth plans and subsequent need to access the capital markets.
Our lawyers handle all aspects of securities offerings, from due diligence to drafting of the required disclosure documents to be filed with capital market authority and stock exchange, preparing related agreements as well as providing day-to-day assistance to our clients, including counsel on broker-dealer compliance and corporate governance.
Our Insolvency Litigation Practice
We represent creditors and debtors in both bankruptcy and suspension of payment proceedings in commercial courts. We help clients in finding the best solution to their bad debts and troubled receivables.
Our litigators frequently work with administrators, receivers, creditors and financially distressed companies.
