On 25 July 2018, the Indonesian Financial Services Authority (OJK) issued OJK Rule No. 9/POJK.04/2018 on Takeover of Public Companies (New Rule). The New Rule revokes Bapepam-LK Rule No. IX.H.1 on Takeover of Public Companies, as attached to Decision of the Chairman of Bapepam-LK No. Kep-264/BL/2011, dated 31 May 2011 (Rule IX.H.1). While the New Rule was issued on 25 July, it was only uploaded into the OJK's website early this week.
There are several changes introduced by the New Rule:
- Unlike Rule IX.H.1, the New Rule introduces a limitation on the mandatory tender offer (MTO) exemption with regard to a rights issue. Under the New Rule, the exemption only applies if the control is acquired as a result of a "shareholder obtaining shares by exercising its rights in proportion to its shareholding". Therefore, if the control is acquired in a rights issue other than through a shareholder exercising its rights in proportion to its shareholding (e.g., buying rights from other shareholders), it would be subject to the MTO requirements. This change may result in backdoor listings no longer be a preferred approach as they could trigger an MTO.
- The New Rule also limits the MTO exemption with regards to an increase of capital without pre-emptive rights. Under the New Rule, only control acquired as a result of an increase of capital without pre-emptive rights in the context of a debt restructuring where the public company is in financial distress that is exempted.
- The New Rule exempts a takeover that has been announced in the IPO prospectus of a public company from the takeover and MTO requirements set out under this rule.
- The New Rule maintains a mandatory sell-down requirement, but unlike Rule IX.H.1, the New Rule no longer regulates the extension of the mandatory sell-down period.