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)