04 Sep 2020
Capital Markets: Indonesia’s FSA Tightens Material-transaction Rules for Public Companies


The Indonesian Financial Services Authority (Otoritas Jasa Keuangan / “OJK”) has issued a new regulation that tightens the rules on material transactions and shareholder-approval requirements in public companies, while at the same time providing some leeway for those in the financial-services sector in certain circumstances. The new rules are set out in OJK Regulation No. 17/POJK.04/2020 on Material Transactions and Changes in Business Activities (the “Regulation”),[1] which comes into force in October 2020.


  1. Expanded Definition of Material Transaction

    The Regulation restates the material-transaction threshold rules as follows:


    1. For the acquisition or disposal of a controlled company or business segment:
      1. transaction value is equal to or more than 20% of the public company's equity; or
      2. total assets that are the subject of the transaction divided by public company's total assets are equal to or more than 20% of public company’s total assets; or
      3. the net profit in the current year of the subject of the transaction divided by the public company's current-year net profit is equal to or more than 20% of public’s company’s net profit; or
      4. operating revenue of the subject of the transaction divided by the public company's operating revenue is equal to or more than 20% of the public company’s operating revenue (operating revenue is calculated based on the total revenue earned on the business products or services sold by the company over a specified period).


    2. If the public company has negative equity, the applicable threshold is 10% or more of its total assets.

    4. In the event that the dilution of a public company's ownership of a controlled company results in the controlling company’s financial statements being deconsolidated from the public company’s financial statements, the public company should comply with the requirements of OJK Regulation 17/2020, provided that:
      1. the total assets of the controlled company divided by the total assets of the public company; or
      2. the net profit of the controlled company divided by the net profit of the public company; or
      3. the revenue of the controlled company divided by the revenue of the public company;

      are equal to 20% or more.


    If a transaction satisfies any of the above thresholds, it will be deemed a material transaction.


  3. Shareholder Approval Requirements

    The Regulation requires the approval of independent shareholders if a material transaction:

    1. needs GMS approval and is an affiliated transaction;
    2. contains a conflict of interest; or
    3. potentially disrupts the going-concern status of the public company.


  5. Change of Business Activities

    Previously, only a change in a company’s principal business activity required GMS approval, public disclosure and a feasibility study. Now all three are needed if the company intends to, among other things, do any of the following:

    1. incorporate a new business activity in its articles of association (AOA), where it is intended to pursue such business activity;
    2. engage in a business activity that is stated in the AOA but which was never previously acted upon;
    3. permanently reduce all or part of the business activities that have been pursued by the company; and/or
    4. replace its current business activities with new ones.


  7. Exemptions for Financial Services Sector

    The OJK may, at its discretion in certain circumstances, exempt a public company in the financial-services sector from the material transaction (i) appraisal, (ii) public disclosure, and/or (iii) shareholder approval requirements prescribed by the Regulation. If such exemption is provided, the company will only need to report the transaction to the OJK within 2 business days of its occurrence.


Contact us


Should you have any queries on the above or require legal advice as to how you can best protect your interests during this time of uncertainty, please contact the persons below, call us on +6221-2505125 or email us at


Mr. Emir Nurmansyah (

Mr. Nafis Adwani (

Mr. Agus Ahadi Deradjat (


[1] Peraturan Otoritas Jasa Keuangan No. 17 /Pojk.04/2020 Tentang Transaksi Material dan Perubahan Kegiatan Usaha


This edition of ABNR News and the contents hereof are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained herein. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.