Summary: | On 23 August 2013, the Financial Services Authority (\"OJK\") issued OJK
Rule No. 2/POJK.04/2013 on Buyback of Shares in The Event of Significantly
Fluctuating Market Conditions as a response to the significant fluctuation in the
capital market where the share price of the majority of Indonesian publicly listed
companies dropped drastically.
Unlike buyback of shares in normal condition pursuant to Regulation No.
Kep-105/BL/2010 (Regulation No. XI.B.2) where the issuers or public companies
can only buyback up to 10% and require Shareholders General Meeting approval,
under the new regulation the issuers and a public companies may buyback up to 20%
of its issued capital without the necessity of obtaining approval from its Shareholders
General Meeting provided that the Indonesia Stock Exchange�s Composite Index has
declined by 15% or more over three consecutive days, or, in a catch-all provision, �in
such other circumstances as may be determined by the OJK.� In its Circular No.
1/SEOJK.04/2013, the OJK announced that the decline of 23.91% in the IDX�s
Composite Index between 20 May 2013 and 27 August 2013 came within the
definition of �such other circumstances.�
In the new regulation, before the Buyback of shares can be conducted, the
relevant company must submit certain information to OJK and IDX no later than 7
exchange days after the occurrence of the Significantly Fluctuating Market
Conditions. Immediately after submitting the disclosure of information to OJK and
IDX, the publicly listed company can start the Buyback of shares. The Buyback of
shares can only be conducted within 3 months after the date of the disclosure of
information while in the normal condition buyback of shares can only be conducted
within 18 months after the date of Shareholders General Meeting approval.
This thesis aimed at elaborating the effect of OJK Rule No. 2/POJK.04/2013
towards shareholder protection due to the difference between buyback of shares in
normal condition and in the event of significantly fluctuating market.
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