From : A.M Oktarina Counsellors at Law
Contributors : Pramudya Yudhatama, S.H., Khaifa Muna Noer Uh’Dina, S.H., Raysha Alfira, S.H., Putri Shaquila, S.H.
Reviewer : Noverizky Tri Putra Pasaribu, S.H., L.L.M (Adv).
Nowadays, there are many companies in practice that want to list their names for Initial Public Offering (“IPO“), that is one example such as, launching from the news “Multi Garam Utama (FOLK) Mau IPO, Incar Dana Publik Rp 60 M” and also “IPO, Ingria Pratama Bidik Dana sebesar Rp 353, 9 Miliar” who will conduct their IPO as we know, the IPO system itself provides many benefits for companies if they conduct an IPO, but keep in mind the mechanism and procedure in registering a company to conduct an IPO is not that simple. Of course, there are still many companies that want to IPO, but have not been able to meet the requirements and/ or mechanisms of their own IPO that are also regulated in various related regulations. So what are the mechanisms and conditions for companies that want to conduct an IPO?
B. Legal Basis
Although we are familiar with hearing IPO, we need to know based on the IPO (Go Public) Guide from the official website of the Indonesia Stock Exchange (“IDX”), namely IPO means a solution from the capital market for companies to obtain funding through the offering of part of the company’s shares to the public or commonly called going public. It may also be interpreted as a public offering that means securities offering activities carried out by issuers to sell securities to the public based on the procedures regulated in the Law on the Capital Market and it is implementing regulations, that we may find listed in Article 1 paragraph (1) POJK 41/POJK.04/2020. This process also makes the company transform from a closed company to a public company that will be managed better, more professionally and transparently.
In terms of practice, the IPO mechanism involves several other agencies besides the IDX, and has its own interrelationships. The implementation of these regulations is also more or less found in institutions such as the Financial Services Authority (“OJK”) and the Capital Market Supervisory Agency (“Bapepam“).
Then in carrying out the IPO process there are several requirements and procedurals that must be met first. In the provisions of POJK 76/POJK.04/2017 Article 1 paragraph 3, that there are provisions for the definition of the number of shares in becoming a public company, that reads:
“A Public Company is a company whose shares have been owned by at least 300 (three hundred) shareholders and have a paid-up capital of at least IDR 3,000,000,000.00 (three billion rupiah) or a number of shareholders and paid-up capital determined by Government Regulation“.
And it has also been regulated in Law 40/2007 Article 1 number 8:
“A Public Company is a Company that meets the criteria for the number of shareholders and paid-up capital in accordance with the provisions of laws and regulations in the field of capital market“.
So what is the mechanism? in terms of procedures for submitting IPO registration statements, it has been regulated as follows:
(vide POJK 76/POJK.04/2017 CHAPTER II Article 2 – Article 18)
In addition, it is also regulated in Law 8/1995 and Law 4/2023 the provisions regarding the procedures for the process of parties conducting public offerings or commonly referred to as issuers and public companies in the IPO mechanism include the following:
In Chapter IX issuers and public companies, the first part regarding the registration statement of Article 73 of Law 8/1995 that :
“Every Public Company is required to submit a Registration Statement to Bapepam”.
Regarding the procedure for submitting the registration statement in the second part of Law 4/2023 Article 74, that the registration statement becomes effective on the 20 (twenty) working day from the receipt of the complete registration statement or on an earlier date declared effective as Article 74 paragraph (1) of the Law 8/1995 that reads as follows:
In the case of submitting a registration statement that has been received by OJK, OJK may request changes and additional information if the issuer or public company submits that it has submitted changes or additional information and has been received by OJK with the period of submission of such changes or additions. As explained in Article 74 paragraph (1) – paragraph (7) of Law 4/2023 that reads as follows :
Furthermore, related to the registration statement document submitted by the issuer or public company to the OJK, the Bapepam Institution must still pay attention to the completeness, clarity of documents related to the registration statement meeting the principle of openness without an assessment of the advantages or weaknesses of the securities of an issuer or public company as explained in Article 75 of Law 8/1995 that reads :
If the statement of registration of securities to the Stock Exchange does not meet the requirements, the offer made by the issuer or public company, it may be null and void as explained in Article 76 of Law 8/1995 that reads:
“If in the Registration Statement it is stated that the Securities will be listed on the Stock Exchange and it turns out that the listing requirements are not met, the offering of the Securities is null and void and the payment of the said Securities order must be returned to the orderer”.
Furthermore, in the third part regarding prospectuses and announcements regarding registration statements made by issuers or public companies, there is a prohibition on containing incorrect information so as not to cause a misleading picture with a statement that Bapepam has authorized and conducted research on the advantages or weaknesses of a security offered by issuers or public companies as explained in Article 78 paragraph (1) – paragraph (3) Law 8/1995 as follows:
There is a prohibition related to the announcement of prospectuses that contain incorrect information in the mass media as explained in Article 79 of Law 8/1995 that reads as follows:
If there is a violation related to the registration statement regarding the public offering, that contains incorrect information in accordance with the provisions of this law and its implementing regulations, the parties responsible for the registration statement have responsibility for losses incurred by their opinions or statements by being sentenced to a claim for compensation within the specified period, as explained in Article 80 of Law 8/1995 that sound:
Another case if the party offering or selling securities by filing a prospectus with incorrect information but the party knows about it, then the party must be responsible and cannot file a claim for compensation for losses for securities transactions made, as explained in Article 81 Law 8/1995 that reads as follows:
In the case of securities offerings made by issuers or public companies, OJK is obliged to provide securities ordering rights to shareholders proportionally, that is done if the issuer or public company issues shares or securities that may be exchanged with the majority approval of independent shareholders as explained in Article 82 of Law 4/2023 that reads:
With the offering activity to buy securities, issuers or public companies must comply with applicable regulations, as explained in Article 83 of Law 8/1995 that reads as follows:
“Every Party that makes a tender offer to purchase Securities of Issuers or Public Companies must follow the provisions regarding disclosure, fairness, and reporting stipulated by Bapepam”.
If there is a cancellation of the listing of shares on the stock exchange, a public company is required to change it is status and voluntarily change it is status as a closed company after fulfilling the requirements regulated by the OJK as explained in Article 84A of Law 4/2023 that reads:
However, it should be noted in practice in the capital market, “For companies that carry out activities in the capital market, the provisions of laws and regulations regarding limited liability companies apply, as long as they do not conflict with the provisions of laws and regulations in the field of capital markets”. As stated in Law 4/2023 Article 69D paragraph (1).
Launching from the IDX website, currently we may see the guidelines clearly through the guidelines that we may download on the official IDX website regarding IPO guidelines. This certainly makes it easier for potential investors and also prospective companies who want to do an IPO or may also be called go public.
Basically, there are many advantages for companies to conduct public offerings or IPO or commonly called companies going public, some of that are, access to funding in the stock market, gaining additional trust for access to loans, growing professionalism, improving company image and much more. But of the many benefits for companies that conduct IPO, of course, they still have some consequences that will borne by the company where with the entry of public investors, the founding shareholders no longer own the company with full ownership and must also share the vote in the general meeting of shareholders.
For further information, please call:
(source: https://www.cnbcindonesia.com/market/20230720072955-17-455703/multi-garam utama–folk–mau-ipo-incar-dana-publik-rp-60-m),