13 Mar 2023
Indonesia’s FSA Raises Registration Threshold to Encourage Private Securities Offerings
In 2021, the Indonesian Financial Services Authority (“OJK”) increased the threshold that triggers the requirement to register and seek OJK approval for a private offering of securities.
Previously, the registration threshold was IDR 1 billion (approx. USD 65,000), but this was increased to IDR 5 billion (approx. USD 327,000) under OJK Regulation No. 29/POJK.04/2021.[1] This regulation was followed by the issuing of an OJK circular in 2022 (the “Circular”),[2] which sets out guidelines for the conducting of private offerings that are valued at more than IDR 5 billion.
The Circular’s key elements are as follows:
Registration Threshold
Registration with the OJK (including the filing of a formal registration statement) is required for a private securities[3] offering that meets the following criteria:
Offeror Criteria
The Circular states that an offeror may be one of the following:
Requisite Documentation
The offeror must prepare a securities offering document for submission to the OJK. The document should comprise: (i) a letter of application for the registration statement[6] and (ii) an information memorandum, which should set out the following information:
If the securities are offered as:
additional information must be included in the information memorandum.
Submission Procedure
The offering document must be submitted to the OJK in either hard-copy or digital form. However, if the OJK has accepted a digital submission, subsequent processing will only be carried out digitally.
Should the offering exceed the threshold, the offeror must obtain prior OJK approval before proceeding, and the offering must be completed within 12 months of approval.
ABNR Commentary
The raising of the threshold that triggers the requirement to register an offering of securities with the OJK is a positive move as the lower the threshold, the harder it is for businesses to raise capital from the public due to the complex procedures that must be gone through at the OJK. So, anything that makes it easier for businesses in this regard is to be welcomed. In addition, the Circular provides clearer guidance as regards the procedures that businesses need to adhere to when making a private securities offering that is in excess of the threshold, thus helping to provide greater legal certainty and relieve the compliance burden on would-be issuers.
By partner Mr. Freddy Karyadi (fkaryadi@abrnlaw.com) and senior associate Ms. Anastasia Irawati (airawati@abnrlaw.com).
This ABNR News and its contents 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 in this legal update. 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.
[1] Peraturan OJK No. 29/POJK.04.2021 tentang Penawaran yang Bukan Merupakan Penawaran Umum
[2] Surat Edaran OJK No. 33/SEOJK.04/2022 tentang Pedoman Pelaksanaan Penawaran Efek yang Bukan Merupakan Penawaran Umum
[3] Securities are defined as negotiable instruments: debt acknowledgements, commercial papers, stocks, bonds, proofs of indebtedness, participation units in collective investment contracts, futures contracts on securities, and securities derivatives
[4] “Indonesians” include individuals, corporations, joint ventures, associations or organized institutions.
[5] Sharia-compliant bond-like instruments used in Islamic finance
[6] By using the template form attached to the Circular Letter