GUIDE TO THE LEGAL GUIDE

INDONESIAN EQUITY
CAPITAL MARKETS
Published
March 2014
GUIDE TO THE
INDONESIAN EQUITY
CAPITAL MARKETS

in association with

The contents of this publication, current at the date of publication set out in this document, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such.
Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
Herbert Smith Freehills LLP and its subsidiaries and Herbert Smith Freehills, an Australian Partnership, are separate member firms of the international legal practice known as Herbert Smith Freehills.
© Herbert Smith Freehills 2014
Contents

02 Foreword
03 Glossary
04 Legal and regulatory framework
05 Initial public offerings
18 Reporting obligations of listed companies
19 Preemptive offerings by the issuer (rights issues)
23 Non-preemptive offerings by the issuer (primary placings)
24 Offerings by shareholders (secondary placings)
25 Miscellaneous
27 Appendix 1: Indicative IPO timetable
28 Appendix 2: Indicative rights issue timetable
02 INDONESIAN EQUITY CAPITAL MARKETS HERBERT SMITH FREEHILLS

Foreword

In recent years, Indonesia has seen and continues to post significant
economic growth. Much of the funding for the growth of this diverse
economy is being channelled through the country’s equity capital
markets, across a wide range of industry sectors.
The Indonesian capital markets regulatory environment also
continues to present complex questions against the backdrop of
innovative transaction structures and sustained international
investor interest. We expect these trends will continue.
We have prepared this guide to be a readable first point of reference
for IPOs and other equity capital markets transactions in Indonesia.
This guide updates our previous edition to take account of
Indonesian capital markets developments over the course of 2013.

For further information, please contact:

SINGAPORE
Michael Walter Siddhartha Sivaramakrishnan
Managing Partner - SE Asia Partner - US Securities
T +65 6868 8028 T +65 6868 8078
michael.walter@hsf.com siddhartha.sivaramakrishnan@hsf.com

Brian Scott Philip Lee

Partner Partner
T +65 6868 8089 T +65 6868 8085
brian.scott@hsf.com philip.lee@hsf.com

Nicola Yeomans Gareth Deiner

Partner Senior Associate
T +65 6868 8007 T +65 6868 8015
nicola.yeomans@hsf.com gareth.deiner@hsf.com

JAKARTA HONG KONG

David Dawborn Kevin Roy
Partner Head of US Securities – Asia
T +62 21 574 4010 T +852 2101 4102
david.dawborn@hsf.com kevin.roy@hsf.com

Tjahjadi Bunjamin Austin Sweeney

Partner - HBT Head of Corporate – Asia
T +62 21 574 4010 T +852 2101 4001
tjahjadi.bunjamin@hbtlaw.com austin.sweeney@hsf.com

Kristo Molina Matt Emsley

Partner - HBT Partner
T +62 21 574 4010 T +852 2101 4101
kristo.molina@hbtlaw.com matt.emsley@hsf.com
HERBERT SMITH FREEHILLS INDONESIAN EQUITY CAPITAL MARKETS 03

Glossary

10b-5 disclosure letter a confirmation provided by US counsel that, having participated in due diligence of the issuer
and its affairs, it is not aware of any material disclosure violations in the prospectus or
international offering memorandum
Bapepam Indonesian Capital Markets and Financial Institutions Supervisory Agency (Badan Pengawas
Pasar Modal dan Lembaga Keuangan) (now subsumed into OJK)
Bapepam rules the rules issued by the chairman of Bapepam
BAPMI Indonesian Capital Markets Arbitration Board (Badan Arbitrase Pasar Modal Indonesia)
BKPM Capital Investment Coordinating Board (Badan Koordinasi Penanaman Modal)
Capital Markets Law Indonesia’s Law No. 8 of 1995 regarding the Capital Markets
capital markets supporting professionals a distinct category under the Capital Markets Law that includes accountants, counsel,
independent appraisers and notaries
controlling shareholder any party who owns more than 50% of fully paid-up share capital, or has the ability to directly
or indirectly exert control over management
cornerstone investors investors (generally institutional) who agree to subscribe for a portion of the IPO in advance in
order to demonstrate interest in the offering to the broader market and thus increase the
chances of favourable pricing and of the transaction closing
EGM extraordinary general meeting of shareholders
HKSIR 400 Hong Kong Standard on Investment Circular Reporting Engagements 400, issued by the Hong
Kong Institute of Certified Public Accountants
international offering memorandum an English-language document containing the same substantive disclosure as the prospectus
ICA international coordination agreement, entered into by the ISAs and the issuer as part of the
international underwriting arrangements
IDR Indonesian Rupiah, the official currency of Indonesia
IDX Indonesia Stock Exchange
IDX rules Decision of the Board of Directors of IDX No. Kep-00001/BEI/01-2014
IFRS-IASB International Financial Reporting Standards as issued by the International Accounting Standards Board
Indonesian company law Indonesia’s Law No. 40 of 2007 regarding the Company Law
Indonesian GAAP generally accepted accounting principles in Indonesia (Pernyataan Standar Akuntansi Keuangan, or PSAK)
ISA international selling agent, the term used for an international underwriter of an Indonesian IPO
KPEI Clearing Guarantee Institution (Kliring Penjaminan Efek Indonesia)
KSEI Central Securities Depository (Kustodian Sentral Efek Indonesia)
MD&A management’s discussion and analysis of financial condition and results of operations, a section
in a prospectus
OJK Financial Services Authority (Otoritas Jasa Keuangan), the successor to Bapepam
overallotment option an option available to the underwriting syndicate that allows the sale of additional shares,
usually up to 15% of the base size of an IPO, to investors purchasing in the IPO
prospectus a disclosure document used in connection with a public offering that is prepared in accordance
with the rules issued by Bapepam for that purpose
public company any Indonesian company with 300 or more shareholders and paid-up capital of at least IDR3 billion
public offering an offering of securities required to be registered with the OJK and to be made pursuant to a
prospectus meeting the requirements of the Capital Markets Law
Rule 144A offering an internationally marketed offering that includes offers and sales to qualified institutional
investors in the United States
SAA selling agency and managers agreement; entered into by the ISAs and the domestic
underwriters as part of the international underwriting arrangements
SAS 72 Statement on Auditing Standards No. 72, issued by the American Institute of Certified Public Accountants
Securities Act of 1933 United States federal statute covering offers and sales of securities using the means and
instrumentalities of United States interstate commerce
substantial shareholder any owner directly or indirectly holding 20% or more of an issuer's share capital
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