Govt introduces stock exchange bill to protect investors
Govt introduces stock exchange bill to protect investors
JAKARTA (JP): Minister of Finance Mar'ie Muhammad presented a capital markets bill to the House of Representatives yesterday which is intended to provide increased protection for investors and improve the efficiency of stock exchanges.
"A strong legal basis for stock exchanges is a must in order to give legal certainty and security to all the parties concerned, especially investors," Mar'ie told the House's plenary session.
To protect investors the new bill requires any company wishing to float shares on stock markets to disclose its real circumstances.
"The board of directors and board of commissioners of any publicly-listed company, as well as its underwriters, are responsible for any investor losses which result from inaccurate or misleading information provided by them," Mar'ie said.
The minister said that, under the bill, any company with more than 300 shareholders was automatically subject to such transparency requirements. Companies would be required to report to the Capital Market Supervisory Board (Bapepam), he said.
Violations of the rules would result in one of a wide range of penalties, Mar'ie said, from administrative penalties to imprisonment.
In addition to the transparency requirements, the bill, which will replace the 1952 Bourse Law, also contains rules on stockbrokers, clearing houses, underwriters and custodian institutions as well as investment companies.
Under the new bill, stock exchanges will be given freedom to organize themselves but they will not be permitted to be dominated by one or a number of their shareholders.
Requirements
Mar'ie said that the bill eased the requirements for public listings, so that small and medium-sized businesses would be able to raise cheap funds through capital markets.
Indonesia currently has three stock markets -- the Jakarta Stock Exchange, the Surabaya Stock Exchange and the over-the- counter (parallel) capital market in Jakarta. The latter two exchanges are to be merged.
Mar'ie said the new bill would accommodate the establishment of investment companies, either open-ended or closed, to provide opportunities for small investors who wanted to invest their money in stocks.
Under the new bill, commercial banks are allowed to act as custodian institutions when handling business at the exchanges in the name of clients who have current accounts at the banks.
The bill acknowledges the secrecy of investors' accounts at clearing or custodian houses. (rid)