15/06/2010
BAPEPAM-LK REGULATION ON SHARE BUYBACKS
The Head of the Capital Market and Financial Institutions Supervisory Board (“Bapepam-LK”) on 13 April 2010 issued Decision No. KEP- 105/BL/2010, which contains Bapepam-LK Regulation No. XI.B.2 regarding Buyback of Shares Issued by Issuers or Public Companies (“Regulation”). The Regulation repealed and replaced Decisions of the Head of Bapepam-LK No. KEP-45/PM/1998 and No. KEP-401/PM/2008 on the same subject matter.
Among the considerations for the issuance of the Regulation stated by the Head of Bapepam-LK is the need for implementing regulations that are in line with the provisions on share buybacks of the new company law (Law No. 40 of 2007)”.
The following are the provisions of note:
• A share buyback must be done within 18 months as of the issue of the approval of the General Meeting of Shareholders. The buyback may be done through the stock exchange, or by way of a tender offer outside of the stock exchange. The Regulation also contains provision on how the share buyback either in the exchange or outside of the exchange must be conducted.
• A company that conducts a share buyback to fulfill Article 62 of Law No. 40/2007 must first fulfill disclosure requirements. Article 62 of the Law No. 40/2007 basically provides circumstances where a shareholder will have the right to require the company to repurchase his/her such as where the shareholder deems an act by the company as detrimental to him/her.
• Bought back shares may be: sold back to the public (either through the exchange or outside of it; withdrawn (causing reduction in the company’s issued capital); distributed to the employees under the employees’ share purchase plan; or distributed under one of the company’s equity conversion programs.
The Regulation has been in force since the day of its issue of 13 April 2010. (by: Hamud M. Balfas).