83 regulations issued to support Capital Mart Law
83 regulations issued to support Capital Mart Law
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam) issued 83 regulations here yesterday to support the implementation of the newly introduced Capital Market Law.
The issuance of the regulations marked the full implementation of the Capital Market Law, which was approved by the House of Representatives (DPR) late last year.
Bapepam's new regulations were mostly taken from the agency's existing capital market rulings, covering almost all issues in stock and bond trading activities, including licensing procedures and capital requirements of a stock exchange operator and its supporting agencies.
The new elements in the regulations include the increase of the foreign ownership portion in listed securities companies to 85 percent and in listed mutual funds to 100 percent from 49 percent previously. Foreign ownership in other types of companies is still limited to a maximum of 49 percent.
The other new aspects also include the issuance of detailed guidelines on the transactions of shares of mutual funds and the improvement of the regulations on the activities of a stock exchange operator, stock clearing and settlement agencies.
The new regulations also strengthen the control on share and bond issuers, especially that related to the accounting quality and the utilization of proceeds raised from share or bond issuance.
A public accountant is, for example, required to immediately report to the capital market watchdog if they find a breach taking place in a listed company or if they feel the financial condition of a listed company is at a critical stage.
The requirement to report the utilization of funds raised from the public is also being imposed on bond issuers. Such a requirement was previously imposed on share issuers only.
Bapepam Chairman I Putu Gede Ary Suta said that activities related to tender offers, transactions involving conflicts of interest, disclosure of information, merger and takeovers are still bound by the old rulings.
"Issuing regulations regarding those subjects is much more difficult. We need much longer to avoid contradictions with other rulings," he told newsmen during the launching of the new regulations.
The required capital for a stock exchange operator and its supporting agencies, such as clearing, settlement and rating agencies as well as securities firms is being kept at previous levels.
The minimum paid-up capital of an exchange operator remains at Rp 7.5 billion (US$3.2 million), while that of clearing and settlement agencies is still set at Rp 15 billion.
Domestic and foreign joint-venture securities companies operating both as underwriters and brokers are, as before, required to have a minimum paid-up capital of Rp 10 billion.
If the securities companies operate only as brokers or as fund managers, the minimum paid-up capital is set at Rp 500 million for a domestic firm and Rp 1 billion for a foreign joint-venture.
The minimum paid-up capital for securities companies engaged both in brokerage and fund management is set at Rp 1 billion for a domestic firm and Rp 2 billion for a foreign joint venture.
Putu said that if securities companies' services cover not only underwriting but also brokerage and fund management activities, the minimum-paid up capital is set at Rp 10.5 billion for a domestic firm and Rp 11 billion for a foreign joint venture.
He said that unlike existing foreign joint ventures, many domestic companies have yet to adjust to the new capital requirements, which were actually introduced last year.
"The local securities companies have to adjust their capital to new requirements in two years beginning Jan. 1," he said.
Most of the new regulations, however, do not stipulate strict punishments, except for fines on companies which file financial reports late, or break other important rules.
The fines are set at Rp 500,000 for each day late for a stock exchange operator, Rp 1 million for share issuers and Rp 100,000 for capital market supporting agencies such as stock administration agency, trustee and securities firms.
Unlike before, individuals such as the director, the commissioner of a listed company, and those holding over five percent of listed companies' shares, could also be fined if they do not report important events that could affect share prices. The fine for individuals is also set at Rp 100,000 per day late.
The new Capital Market Law, which replaces outdated 1952 capital market regulations, contains 16 chapters and 123 articles, covering all activities in the capital market.
The regulations related to technical aspects of the activities of the stock exchange and other capital market supporting agencies are regulated by Bapepam. (hen)