13 Sep 2021
OJK Introduces Further Capital-Market Incentives and Relaxations to Counter Covid Turbulence


The Financial Services Authority (“OJK”) has once again stepped up to the mark to safeguard the stability of the Indonesian capital markets against the backdrop of the ongoing Covid-19 pandemic.


The financial services regulator’s latest intervention comes in the form of Circular No. 20/SEOJK.04/2021 on Further Incentives and Relaxations of Provisions Related to Issuers / Public Companies for the Maintenance of Capital Market Performance and Stability in Response to Corona Virus Disease 2019 (“Circ. 20”).[1] The circular, which entered into force on 10 August 2021, is an implementing instrument for OJK Regulation 7/POJK.04/2021.[2]


The key changes introduced by Circ. 20 may be summarized as follows:


A. Extension to Period of Validity of Financial Statements


For the purpose of certain capital markets transactions, such as an initial public offering (“IPO”), rights issue, bond issuance, merger, material transaction or affiliated party transaction, the OJK previously required that the financial statements submitted by the company must have covered a period that ended not more than 6 months prior to the date of the transaction.


For example, financial statements for the period ending December 31 would only be accepted by the OJK for a transaction to be undertaken or approved by company shareholders or the OJK before June 30 of the following year.


This 6-month period has now been extended to 8 months. In the case of an IPO, should financial statements older than 6 months be relied on, the prospectus must also provide the most recent summary of the company’s financial data.


B. Extension to Period of Validity of Appraisal Reports


As with company financial statements, the OJK would previously only accept an appraisal report issued no earlier than 6 months prior to a transaction. The 6-month period has now also been extended to 8 months.


C. Extension to Book-building Period


For an IPO, the book-building process was previously capped at a maximum of 21 business days. This has now been extended to 42 business days subsequent to the publication of the abridged prospectus or the issuance of a “pre-effective statement” by the OJK.


D. Postponement of Public Offering Period or Cancellation of Public Offering


Previously, due to circumstances beyond its control, a company could postpone a public offering period by up to 3 months from the date of issuance of the effective statement by the OJK. Under Circ. 20, there is no longer any time restriction on the postponement of a public offering period. A public company may either apply to the OJK for postponement or cancellation. Upon OJK approval for the application, the company must announce the postponement or cancellation to the public.


E. Extension to Deadline for Submission of Periodic Reports


Circ. 20 extends the following deadlines:


  1. Annual financial statements and annual report: extended by 2 months from the previous deadlines (which was 3 months from end of company’s financial year for annual financial statements, and 4 months from end of financial year for annual report);

  2. Interim (mid-year) financial statements: extended by 1 month from the previous deadline of up to 3 months from end of company’s financial year (depending on whether audited or unaudited); and

  3. Audit Committee's evaluation report: extended by 2 months from the previous deadline of 6 months from end of company’s financial year.


F. Extension to Deadlines for General Meetings


Circ. 20 extends the deadline for the convening of a public company’s annual general meeting of shareholders by 2 months from the previous deadline of 6 months from the end of company’s financial year, while that for a general meeting to approve the resignation of a director or commissioner is extended by 60 days from the end of the previous deadline of 90 days from date of receipt of the resignation letter.


G. Further Relaxation of Private Placement Rules


In the light of the financial difficulties experienced by many companies as a result of COVID-19, Circ. 20 further relaxes the requirements for conducting a private placement[3] by stipulating the following additional circumstances in which it may be undertaken:


  1. Certain financial conditions caused by COVID-19:

    1. current ratio, i.e., current assets divided by short-term liabilities, is less than 110% based on the latest financial statements available to the public;

    2. liabilities exceed 70% of assets based on the most recent financial statements available to the public; and

    3. decrease in income based on the latest annual financial statements compared with that in the previous year's annual financial statements.

  2. A public financial services institution that experiences difficulties, as determined by the OJK;

  3. A Non-HMETD conducted as part of a capital injection by the Government under the National Economic Recovery Program; and/or

  4. The public company is in default of its loan obligations to an unaffiliated lender, or to an affiliated lender in the case of a public company that is owned or invested in by the state.


In addition to than the above, the OJK has discretion to identify other parameters or circumstances in which a Non-HMETD may be undertaken for the purpose of strengthening the finances of a public company that has been weakened by the pandemic.


H. Expansion of E-Reporting and e-Disclosure


The types of reports and information that may be submitted electronically has been expanded to include, for example, supplementary information reports related to a public offering, changes in shareholding reports, and information disclosures related to such actions as acquisitions and tender offers.


I. e-IPO System


Since January 2021, the OJK has required companies conducting an IPO to use the e-IPO system. Unlike the previous manual system, the e-IPO system requires that minimum share allotments be allocated to retail investors. Given that this could undermine the success of an IPO in a situation where, for example, an inadequate number of orders from retail investors has been received, Circ. 20 now allows the OJK to grant a waiver from the e-IPO requirement upon application by the company.


J. Extension of Deadline for Resale of Buyback Shares


Originally, a public company that undertook a share buyback had to resell the shares within 2 years after the end of the permitted 3-year holding period.[4] In circumstances where this is not possible, Circ. 20 now gives the company an additional 1 year (“Hard Deadline”) to do so, meaning that it will have a total of 3 years to resell the shares after the end of the 3-year holding period.


Circ. 20 also provides greater flexibility in that periods of significant market turbulence, as determined by the OJK, may be excluded when calculating the Hard Deadline.


The above incentives and relaxations are to continue in effect until further notice.


ABNR Commentary


The OJK is to be commended for the concerted efforts it has made to maintain stability in the Indonesian capital markets since the onset of the pandemic by providing incentives and relaxing certain capital-market requirements. These moves have proved crucial given the unprecedented economic turbulence over the last year and a half, and have helped ensure that the IDX has performed much better than anyone could have predicted in early 2020. As part of this latest round of relaxations, the OJK’s decision to allow companies to opt out of the e-IPO system and to further relax the circumstances in which private placements are permitted will be particularly welcome.


By partner Ms. Chandrawati Dewi ( and senior associate Mr. Novario Hutagalung (


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] Surat Edaran Otoritas Jasa Keuangan Nomor 20 /Seojk.04/2021 Tentang Kebijakan Stimulus dan Relaksasi Ketentuan Terkait Emiten atau Perusahaan Publik dalam Menjaga Kinerja dan Stabilitas Pasar Modal Akibat Penyebaran Corona Virus Disease 2019

[2] Peraturan Otoritas Jasa Keuangan Nomor 7 /Pojk.04/2021 Tentang Kebijakan Dalam Menjaga Kinerja dan Stabilitas Pasar Modal Akibat Penyebaran Corona Virus Disease 2019

[3] Known in Bahasa Indonesia as Penambahan Modal Tanpa Memberikan Hak Memesan Efek Terlebih Dahulu, frequently abbreviated as Non-HMETD

[4] Under Indonesian company law, a company may only hold buyback shares for up to 3 years.  After that, the company must decide whether to: (i) sell/re-issue the buyback shares; or (ii) reduce the capital of the company.