Bapepam allows issuance of warrant instruments
Bapepam allows issuance of warrant instruments
JAKARTA (JP): The Capital Market Supervisory Agency (Bapepam)
finally gave its assent, over the weekend, to the issuance of
warrant instruments on the domestic capital market.
Bacelius Ruru, the head of the capital market watchdog, said
that the long-awaited regulations on the sale of warrants would
be enforced to ensure certainty in warrant trading.
Besides stipulating guidelines on accounting standards for
warrant instruments, the regulation also requires issuers to
explain to the public the possible dilution impact of warrant
issuances on stock prices, Ruru said in a statement.
The warrants allowable under the newly-issued regulations
include the detachable, non-detachable and naked types. The
capital market instruments currently traded on local stock
exchanges are limited to equity stocks, bonds and rights shares.
Ruru said that the issuance of warrants on the local stock
market was unavoidable as the local exchange activities could not
be separated from the development of international capital
markets.
The new regulations bring to an end public confusion over the
offering of warrants, a popular derivative instrument in stock
exchanges in advanced countries.
A number of publicly-listed companies planned last year to
issue warrants as a sweetener for the issuance of their rights
shares. None of the plans were realized due to the absence of
capital market regulations on the instruments.
The planned issuance of warrants by publicly-listed Modern
Realty, for example, was canceled due to lack of support from
Bapepam, which considered the instrument to be too speculative,
sources said.
Over the weekend Bapepam also issued regulations regarding the
standardization of forms and the contents of annual reports
published by publicly-listed companies.
Ruru said that, besides giving information about current
activities and audited annual financial reports, public
companies' annual reports should also provide summary financial
information for the past five consecutive years.(hen)