Government urged to draft law on cross ownership<\/p>\n
JAKARTA (JP): The government should draft a new law to
\nregulate cross shareholding through corporate restructuring,
\nwhich has become a trend among conglomerates, lawyer Sofyan A.
\nDjalil suggested.<\/p>\n
Sofyan, managing partner at Sofyan Djalil & Partners law firm,
\nsaid the recent cross shareholders-driven restructuring by the
\nSalim and Lippo groups should encourage the government to
\nregulate such practices.<\/p>\n
He acknowledged that the recent restructuring conducted by the
\ntwo giants did create synergy and benefit both majority and
\nminority shareholders.<\/p>\n
\"But it is not free from public suspicion. Some people
\nconsider it as unethical. And in the absence of adequate legal
\nbasis, there is no mechanism for the public to prevent such
\npractices,\" Sofyan said.<\/p>\n
Last year, the Lippo Group restructured its financial-related
\nfirms, which included PT Lippo Securities, PT Lippo Life and PT
\nLippo Bank.<\/p>\n
The restructuring initially sparked controversy as it involved
\ncross ownership and mutual holding practices and was to be
\nfinanced by public funds through the issuing of rights.<\/p>\n
But the Lippo Group succeeded in its restructuring plan after
\nthe Riady family avoided cross shareholding.<\/p>\n
The Riady family sold its shares in Lippo Bank to Lippo
\nInsurance and then sold its shares in Lippo Insurance to Lippo
\nSecurities. Lippo Securities issued rights shares to finance the
\nacquisition.<\/p>\n
After restructuring, the Riady family still controls Lippo
\nBank and Lippo Insurance through Lippo Securities, in which it
\nowns 37.44 percent stake.<\/p>\n
And earlier this month, minority shareholders approved PT
\nIndocement Tunggal Prakarsa's plan to spin-off and sell all of
\nits 50.1 percent ownership in PT Indofood Sukses Makmur to focus
\non its cement business. Both firms are under the Salim Group.<\/p>\n
The Salim Group intends to proceed with the second stage in
\nits restructuring plan, selling Indofood's shares to the group's
\nfoodstuff listed-firm QAF Ltd of Singapore.<\/p>\n
This will give the Singaporean company a 50.1 percent stake in
\nIndofood. QAF intends to issue rights shares to fund the
\nacquisition.<\/p>\n
The chairman of the Capital Market Supervisory Agency, I Gede
\nPutu Ary Suta, said his agency could not prevent Salim's
\nrestructuring plan as it did not deviate from any existing
\nregulation.<\/p>\n
Sofyan said the absence of an antitrust law in Indonesia had
\nmade it possible for majority shareholders to take whatever
\ndecision on even a publicly listed corporation, Sofyan said.<\/p>\n
\"In the absence of an antitrust law, any kind of restructuring
\nis basically legal. This, of course, could create unfair
\ncompetition and punish consumers,\" Sofyan said.<\/p>\n
He acknowledged that Indonesia had already governed cross
\nshareholding, albeit in an obscure manner, through the 1995
\nCompany Law and several rulings issued by the Capital Market
\nSupervisory Agency.<\/p>\n
The law says the supreme authority in a corporation should lie
\nwith a shareholders meeting. This gives majority shareholders
\nenough room to exert their authority for their own benefit.<\/p>\n
But the law also gives minority shareholders the right to sue
\nthe company or demand the company buy back their shares at
\nreasonable prices if their interests are not accommodated.<\/p>\n
The Capital Market Supervisory Agency also requires publicly
\nlisted firms to ask for the approval of minority shareholders
\nwhenever restructuring carries a conflict of interests. (rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-urged-to-draft-law-on-cross-ownership-1447893297",
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