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Print articleIndonesia - Material Transactions and Change of Primary Business Activities
January, 2010 -
The Head of the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) issued Decree No.KEP-413/BL/2009 on 25 November 2009 to assist issuers and public companies to perform their business activities while simultaneously protecting their investors.
The decree updates an earlier decision, No.Kep-02/PM/2002 and its Regulation No.IX.E.2. The decision repeals and replaces the previous decisions and amends Regulation No.IX.E.2. It has been in effect since 25 November 2009.
Material Transactions
Some basic changes have been made to Regulation No.IX.E.2, namely:
1. the amendment of provisions relating to what constitutes a material transaction. Under Article 1.a. 2) of Regulation No.IX.E.2, a material transaction is now any transaction, including acquisition, share participation, the purchase, sale, transfer, exchange or lease of business assets with a value equal to 20% or more of the equity of the company, which is conducted in one or a series of transactions;
2. the amendment of provisions relating to when a material transaction needs approval from the General Meeting of Shareholders. This approval requirement arises when the value of the material transaction is more than 50% of the equity of the company;
3. companies are obligated to publish information regarding material transactions to the public and submit evidence of the publication to Bapepam-LK if the value of the material transaction is equal to 20% up to 50% of the equity of the company; and
4. certain requirements on material transactions have been exempted, among others in material transactions between a principal company and its subsidiary under at least 99% share ownership, as well as material transactions conducted to comply with prevailing regulations or obtaining or releasing assets by the company due to court decision.
Change of Primary Business Activities
Primary business activities are those stated in the company’s articles of association and have been carried out by the company.
The company must obtain prior approval from the General Meeting of Shareholder to change its primary business activities and must comply with certain publication requirements. The change of primary business activities by reducing primary business activities is not required to obtain prior approval from the General Meeting of Shareholders but is subject to certain requirements under Article 4.b of Regulation No.IX.E.2.
The decree updates an earlier decision, No.Kep-02/PM/2002 and its Regulation No.IX.E.2. The decision repeals and replaces the previous decisions and amends Regulation No.IX.E.2. It has been in effect since 25 November 2009.
Material Transactions
Some basic changes have been made to Regulation No.IX.E.2, namely:
1. the amendment of provisions relating to what constitutes a material transaction. Under Article 1.a. 2) of Regulation No.IX.E.2, a material transaction is now any transaction, including acquisition, share participation, the purchase, sale, transfer, exchange or lease of business assets with a value equal to 20% or more of the equity of the company, which is conducted in one or a series of transactions;
2. the amendment of provisions relating to when a material transaction needs approval from the General Meeting of Shareholders. This approval requirement arises when the value of the material transaction is more than 50% of the equity of the company;
3. companies are obligated to publish information regarding material transactions to the public and submit evidence of the publication to Bapepam-LK if the value of the material transaction is equal to 20% up to 50% of the equity of the company; and
4. certain requirements on material transactions have been exempted, among others in material transactions between a principal company and its subsidiary under at least 99% share ownership, as well as material transactions conducted to comply with prevailing regulations or obtaining or releasing assets by the company due to court decision.
Change of Primary Business Activities
Primary business activities are those stated in the company’s articles of association and have been carried out by the company.
The company must obtain prior approval from the General Meeting of Shareholder to change its primary business activities and must comply with certain publication requirements. The change of primary business activities by reducing primary business activities is not required to obtain prior approval from the General Meeting of Shareholders but is subject to certain requirements under Article 4.b of Regulation No.IX.E.2.
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