Author: Capital Market, Banking and Finance Practice Group

A. GENERAL OVERVIEW

The Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) has issued OJK Regulation No. 3/POJK.04/2021 on the Implementation of Capital Market Activities which came into effect on 22 February 2021 (“POJK No. 3/2021”). In general, POJK No. 3/2021 governs broad activities of capital market, one of which is the provisions regarding delisting of public companies. Since previously OJK did not specifically regulate delisting procedures whereby the requirements of delisting were given on case-by-case basis, the POJK No. 3/2021 will presumably provide legal certainty for the implementation of delisting of public company in Indonesia.

Under the POJK No. 3/2021, a public company may delist its shares from the stock exchange (PT. Bursa Efek Indonesia – “BEI”) based on one of the following reasons, i.e.:

1. Application filed by public company;
2. Order of OJK; or
3. Request of the BEI.

This article will briefly explain the delisting procedures and requirements of each of the above-mentioned reasons.

B. DELISTING BASED ON THE APPLICATION FILED BY PUBLIC COMPANY  

A public company that intends to conduct voluntary delisting to change its status from public company to private company must comply with the following requirements:

1. obtain approval from its independent shareholders through a General Meeting of Shareholders (“GMS”);
2. re-purchase all shares owned by the public shareholders so that the number of the entire shareholders will be less than 50 (fifty) shareholders or other amount to be determined by OJK;
3. announce disclosure of information to public and submit such disclosure to OJK together with the notification to convene GMS for obtaining delisting approval from independent shareholders; and
4. submit application to OJK to revoke OJK registration statement approval.

The OJK application will be applied by enclosing various supporting documents among others:

1. to confirm that there is no pending obligations that are yet to be complied by the company against : (i) OJK, (ii) Custody and Settlement Institution (KSEI), (iii) Securities Administration Bureau (BAE), and (iv) BEI;
2. evidence of the amendment of the articles of association of the company has been approved by the Ministry of Law and Human Rights of the Republic of Indonesia (“MOLHR”); and
3. evidence that the company has fulfilled its obligation to repurchase its shares from the public shareholders.

Upon receiving the complete application from the public company, OJK will revoke the registration of the company as a public company by the latest of 14 Working Days (“WD”), and will issue letters to instruct the:

1. BEI to cancel the registration of the shares of the public company at BEI; and
2. KSEI to cancel the registration of shares at the KSEI;

-which must be followed up by each of the BEI and KSEI within 14 WD upon receipt of such instruction letter.  

C. DELISTING BASED ON ORDER OF OJK

OJK may order a public company to change its status from public company to private company based on certain conditions, among others: (i) violation of laws and regulations by the public company; (ii) there exist an order from the authorized authority to change the status of such public company to become a private company; and (iii) the public company has been declared bankrupt based on a binding court decision.

Such order from OJK must be copied to the BEI in which BEI is required to cease trading of the shares of such public companies immediately and no later than the following stock day after its receipt of order from OJK. Further, the order from OJK to change the status of public company must be followed up by the public company with the following actions, i.e.:

1. 1. Obtain approval from GMS of the public company;
2. 2. Announce disclosure of information to public no later than 2 WD upon receipt of order to change status from OJK;
3. 3. Re-purchase all shares owned by the public shareholders so that the number of the entire shareholders will be less than 50 (fifty) shareholders or less than other number as determined by OJK;
4. 4. Submit a statement letter to OJK confirming that the shareholders of the public company have complied with the shareholder requirement as mentioned in Number 3 above by enclosing the latest shareholders composition from KSEI and BAE; 
5. 5. Fulfill all its obligation to the OJK, BEI and KSEI; and
6. 6. Request approval for the amendment of the article of association regarding change of status from public company to private company to the MOLHR.

After all the above obligations have been fulfilled, the public company must submit to the OJK the evidence of such fulfilment within 14 (fourteen) WD at the latest after the approval date from MOLHR. OJK, at the latest 14 (fourteen) WD after receipt of the evidence of such fulfillment will revoke the effective registration of such public company and will issue letters to instruct the:

1. BEI to cancel the registration of the shares at BEI; and
2. KSEI to cancel the registration of shares at KSEI;

-which also must be followed up by each of the BEI and KSEI within 14 WD upon receipt of such instruction letter.  

D. DELISTING BASED ON THE REQUEST OF BEI

The BEI may request to cancel the listing of a public company if: (i) the public company experiences any condition or event that has a significant negative impact on the business continuity of public company; or (ii) the public company no longer comply with the listing requirements in the BEI.

Below are the procedures of delisting of public company based on the request from BEI:

1. BEI must notify OJK at the latest 2 (two) WD: (i) after the occurrence of one of the above-mentioned events; and (ii) before BEI cancel the listed securities of the public company;

2. The cancellation of listed shares of the public company must by followed by the public company with the change of status from public company to private company in accordance with the procedures and requirements of voluntary delisting of public company as mentioned in Section B above, except for the approval whereby a public company is required to not only obtain approval from independent shareholders but also approval from all shareholders;   

3. Before cancelling the listing of the shares of a public company, BEI must apply for change of status of the public company to become private company to OJK. OJK will then within 14 (fourteen) WD revokes the registration statement of such public company; and

4. BEI will cancel the listing of shares of the public company after the revocation of registration statement of public company by OJK.

E. DISSOLUTION AND BANKRUPTCY OF PUBLIC COMPANY

In the event that a public company does not obey the order from OJK or request from BEI to change its status to become a private company, OJK may file a petition on the dissolution or bankruptcy declaration against such public company to the Public Prosecutor's Office of the Republic of Indonesia.  

F. IMPLEMENTATION OF SHARES BUYBACK OF A PUBLIC COMPANY

A public company that conducts delisting is required to buyback its shares no later than 18 (eighteen) months after the public company announces disclosure of information to public in regard to delisting plan. However, the buyback of shares will not be mandatory if there are parties who make a tender offer of all shares owned by public shareholders so that the number of shareholders become less than 50 (fifty) shareholders or less than other numbers that are stipulated by the OJK. Specifically for delisting based on the request of BEI, the buyback of shares may be carried out up to the amount exceeding 10% (ten percent) of the paid-up capital of the public company, so that the number of shareholders is not more than 50 (fifty) parties or other numbers that are stipulated by OJK.

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