05 Mar 2013
PROCEDURE FOR OBJECTION ON SANCTION IN CAPITAL MARKET
The Head of the Capital Market and Financial Institution Supervisory Agency (“Bapepam-LK”) issued, on 5 December 2012, her Decision No. KEP-642/BL/2012 regarding Submission of Objection to Sanctions (“Decree”). The rules and procedures for the submission of the objections are elaborated in Regulation No. XIV.B.2 on the same subject matter (the “Regulation”) which is attached to the Decree. The Regulation has been in effect since its issuance on 5 December 2012.
The issuance of the Regulation is a necessity that arises from the fact that while Bapepam-LK also serves quasi-judicial bodies which may impose sanctions to various institutions under their supervision, it does not have any regulation on how these institutions can defend themselves and appeal on the sanctions imposed.
Under Article 102 of Law No. 5/1995 regarding Capital Market, Bapepam may impose sanctions on issuers, public listed companies, the stock exchange, clearing and securities institutions, central securities depository, investment funds, investment advisors, investment managers, underwriters, broker dealers, securities administration bureau, custodians, trustees and capital market supporting professionals.
The Regulation basically provides the procedure for challenging or objecting to not only Bapepam-LK imposed sanctions but also to sanctions imposed by the Stock exchange, Clearing and Guarantee Institutions, or Central Securities Depository (“SRO”). The objecting party must file its objection by submitting an application for the objection to Bapepam-LK within 20 days as of the date the sanction is imposed. The objection must be made in writing and must state the reason for the objection as well as be supported by sufficient evidence.
One important feature of the Regulation is the provision of monetary fine temporary relief for parties imposed with a monetary fine during the period of the appeal process, i.e. starting from the time that party files the application for the objection until the issue of the respective Bapepam-LK decision. The relief only applies to monetary fines, which means that non monetary sanctions are instantly in effect or enforceable.
The Regulation allows the submission of one only objection for a sanction, and Bapepam-LK’s decision regarding the objection is final and binding. (by: Hamud M. Balfas).