04 Aug 2020
Tighter Rules on Private Placements of Debt Securities Come Into Force in Indonesia


Private placements of debt securities, such as medium term notes, have been a hugely popular way for Indonesian corporates to raise fresh funds in recent years. This is due in no small part to the fact that they were not specifically regulated by the Indonesian Financial Services Authority (Otoritas Jasa Keuangan / “OJK”) so that issuance process was relatively straightforward and hassle free. However, the freewheeling days may now be over as the OJK has stepped in to better regulate the sector through OJK Regulation No. 30/2019 (the “Regulation”),[1] which was promulgated on 29 November 2019 but only came into force on 1 June 2020.


The Regulation (i) restricts the circumstances in which capital may be raised via a debt private placement; (ii) requires a range of documents to be submitted to the OJK before a debt private placement may be conducted; and (iii) requires the outcome of a debt private placement to be reported to the OJK. It is important to note, however, that unlike an issuance of debt securities via a public offering, which needs prior OJK approval, a debt private placement may be immediately carried out upon submission of required documents to OJK.


Note: For purposes of convenience, the term “private placement” as used in this update refers to private placements of both conventional and shariah securities.


Key Features of the Regulation


A. Criteria for securities offered in a debt private placement


The securities offered in a debt private placement must meet the following criteria:


  1. maturity of more than 1 year, with issuance amount of at least IDR 1 billion (approx. USD 70,572), or less than Rp 1 billion but issued in a number of tranches so as to reach an aggregate amount of at least IDR 1 billion within 1 year; or
  2. maturity of not more than 1 year and not subject to supervision by any other authority, with issuance amount of at least IDR 1 billion, or less than Rp 1 billion but issued in a number of tranches so as to reach an aggregate amount of at least IDR 1 billion within 1 year.


Further, the securities must be:


  1. issued in scripless form and stored collectively in a depository and settlement institution (i.e., the Indonesian Central Securities Custodian - Kustodian Sentral Efek Indonesia / KSEI);
  2. be rated and 100% guaranteed/insured if issued by a non-Issuer (Emiten)[2] or non-Public company;
  3. capable of repurchase only after 1 year from the date of issuance or distribution;
  4. transferable in units of at least Rp 25 million or multiples thereof; and
  5. held by no more than 49 parties.


B. Who can issue and buy securities in a debt private placement?


The issuance must be undertaken by:


  1. an Issuer (Emiten) or Public Company;
  2. a business entity or legal entity in Indonesia (e.g., a limited liability company, foundation, cooperative, limited liability partnership (CV) or civil partnership (firma));
  3. a supranational institution (e.g., the World Bank, International Monetary Fund, Asian Development Bank, or Islamic Development Bank); or
  4. a collective investment scheme that is permitted to issue debt securities under capital-markets law.


Private-placement debt securities may only be purchased by professional investors, which consist of (i) financial-services institutions in the form of banks, pension funds, insurance companies, investment managers and securities brokerages, and (ii) parties that have the capacity to carry out investment risk analyses on securities and which meet the requirements stipulated in OJK Regulation No. 11 of 2018 on offerings of securities to professional investors.


C. Who else is involved?


An arranger and monitoring agent must be appointed unless the securities are issued by (i) an Issuer (Emiten) or Public Company, (ii) collective investment scheme or (iii) parties that issue securities solely to mutual funds in the form of a limited participation collective investment scheme (similar to a closed-end mutual fund).


At a minimum, the arranger must:


  1. assist the Issuer during the issuance process; and
  2. ensure that the professional investor has read the memorandum of information and/or other information-disclosure documents prior to confirming its subscription.


As for the monitoring agent, it must at a minimum:


  1. monitor the implementation of the Issuer’s obligations;
  2. inform securities holders in the event of negligence or violation by the Issuer, or a situation that may adversely affect their interests;
  3. analyze and periodically monitor the business management of the Issuer; and
  4. provide all information requested by KSEI and general meetings of the securities holders.


D. What about offshore private placements?


The Regulation initially gave rise to concerns on the part of those involved in offshore debt private placements as the requirements it imposes would significantly disrupt established practice. In order to allay these concerns, the OJK issued a letter on 12 June 2020 that exempts securities that are (i) issued outside Indonesia; and (ii) are not offered to Indonesian purchasers. This means, for example, that private placements under Rule 144A/Reg. S of the US Security Act should not be affected provided that the above two requirements are fulfilled.


E. ABNR Commentary


The Regulation clearly impacts the practice of debt private placements as it developed in Indonesia. Whereas previously such offerings were conducted based on generally accepted market practice and documentation rather than specific rules set by the regulator, and there was no need for a credit rating from a ratings agency, now the procedure seems similar to that for a conventional debt or sukuk issuance. This clearly has the potential to reduce the attractiveness of the private-placement mechanism.


From the wider perspective, however, the Regulation should help provide greater legal and economic certainty. In particular, it allows the authorities to better monitor the private-placement exposure of Indonesian corporates. This, together with the requirement for a credit rating from a ratings agency, should go at least some way towards reducing the prospect of destabilizing defaults.


[1] OJK Regulation Number 30/POJK.04/2019 on the Issuance of Debt Securities or Sukuk Without a Public Offering (Penerbitan Efek Bersifat Utang dan/atau Sukuk Yang Dilakukan Tanpa Penawaran Umum)

[2] An issuer (emiten) is defined by the Capital Markets Law as any party that makes a public offering, while a public company is a company that has at least 300 shareholders and a paid-up capital of at least Rp 3 billion (approx. USD 207,200) or such other number of shareholders and paid-up capital as may be required by law.


Contact Us


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


Mr. Emir Nurmansyah (

Mr. Nafis Adwani (

Mr. Agus Ahadi Deradjat (


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.