The Indonesian Financial Services Authority (Otoritas Jasa Keuangan – “OJK”) recently issued a new regulation No.10/POJK.04/2017 (“OJK Regulation No. 10/2017”), which amends regulation No.32/POJK.04/2014 concerning Plan and Procedure to Conduct General Meetings of Shareholders (“GMS”) for Public Listed Companies. OJK Regulation No.10/2017 was promulgated on 14 March 2017.
The 3 Key Changes
1. New procedures introduced for changes of shares’ rights
Where there has been a change of shares’ rights of a listed company that has more than one classification of shares, the following procedures must be complied with:
- The proposal of changes of shares’ rights must be from the shareholders, which represent 1/20 or more of the total shares with voting rights, unless the articles of association (“AoA”) provide a lower threshold. The proposal must be made to the Director at least 7 days before the Invitation of the GMS is issued;
- The GMS must only be attended by affected shareholders which include the following:
- Shareholders whose rights will be decreased if the changes are regarding the decrease of shares’ rights; or
- Shareholders whose rights are not increased if the changes are regarding the increase of shares’ rights.
- The GMS shall proceed if it fulfills the ¾ quorum of the total number of shares owned by the affected shareholders, unless the AoA of the company or other applicable laws set a higher quorum; and
- Any decision made at the GMS is valid if the decision is approved by ¾ of attendees who have shares with voting rights.
2. Shareholders without voting rights can participate in the GMS if it affects their rights.
Shareholders who do not have any voting rights but whose rights may be affected are also entitled to attend the GMS and participate in the decision-making process.
3. New article added on the appointment and dismissal of a listed company’s external auditor
OJK Regulation No. 10/2017 adds a new article concerning the appointment and dismissal of a public listed company’s external auditor. The appointment and dismissal of a public listed company’s external auditor must be decided in the GMS by considering the proposal of the board of commissioners. If the decision cannot be made at the GMS, such decision can be delegated to the board of commissioners accompanied by an explanation of (a) the reason for the delegation and (b) the criteria of the external auditor.
In conclusion, the new additions in OJK Regulation No. 10/2017 provide increased protection of minority rights, particularly related to the mechanism for change of shares’ rights.
This alert is for general information only and is not a substitute for legal advice.