Regulation Update on OJK Regulation Number 45 of 2024: Greater Responsibilities for Controllers of Public Companies

Now, the Financial Services Authority (Otoritas Jasa Keuangan?– “OJK”) is further strengthening governance and regulatory oversight in the financial sector, especially for issuers and public companies, through Financial Services Authority No. 45 of 2024 on the Development and Strengthening of Issuers and Public Companies (“POJK 45”). POJK 45 is a derivative regulation oriented from Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“P2SK Law”) that covers various crucial aspects of issuers and public companies, such as the effective period of registration statements, changes in the number and price of securities offerings, and provisions regarding the minimum period of the initial offering period (bookbuilding). In addition, POJK 45 also regulates the requirements and procedures for changing the status of a Public Company to a Closed Company either due to delisting or voluntarily, as well as information disclosure regarding material conditions and the position of public shareholders in the liquidation process. These aspects expand OJK authority to take part in corporate governance.

Responsibilities of Controlling Shareholders

One of the new provisions that must be noted in POJK 45 is the new accountabilities of the controller of the public companies. By definition, Controller is an individual, legal entity, company, joint venture, association or organized group, either directly or indirectly that (a) own more than 50% of issued and paid-up capitals with voting right, or (b) have the ability to determine, either directly or indirectly, by any means the management and/or the policy of the public company. A detailed overview of Article 46 of POJK 45 is as follows:

Controller’s Obligations:?

a.???? Responsible for the organization of the annual General Meeting of Shareholders (“GMS”);

b.???? Responsible for the attendance at the GMS;

c.???? Responsible for the going concern of the Public Company; and

Responsible for the appointment of the board of directors and board of commissioners of the Public Company.

Controller’s Accountability for the Loss of the Public Company:

a.???? If the Controller, either directly or indirectly, with bad faith utilizes the Public Company for personal interest;

b.???? If the Controller involves in illegal acts committed by the Public Company; or

If the Controller, either directly or indirectly, unlawfully uses the assets of the Public Company, resulting the assets of the Public Company becoming insufficient to fulfill its financial obligations.

The Controller is declared to fulfill the accountability for the loss of the Public Company based on: 1) Independent Shareholders’ decision in the GMS; 2) Court decision; or 3) OJK decision.

POJK 45 has significant implications for businesses of the public companies, particularly in terms of legal risk mitigation and compliance with the increasingly stringent regulations and OJK’s expanded authority. With this new regulation, it is important for issuers and public companies to review their internal policies and legal strategies to ensure compliance.

For further information, please contact:

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Ferry F. Rajagukguk (Partner)

[email protected]

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Karina Anindhita Nugroho (Associate)

[email protected]