New bourse bill must anticipate hostile takeovers

JAKARTA (JP): Christianto Wibisono, director of the Indonesian Business Data Center, suggested yesterday that the government and the House of Representatives eliminate loopholes in the stock market bill to prevent hostile takeovers and privatization practices.

Speaking in a discussion on the stock market bill conducted by the House's ruling Golkar faction, Christianto warned the government and the House that practices of company acquisitions through stock exchanges, including hostile takeovers and privatization, are becoming sophisticated.

"The bill needs to be rewritten in more detail and not one- sided, especially concerning conflicts between independent shareholders in an internal acquisition," Christianto said.

The House is scheduled to form a special team to deliberate the stock exchange bill later this week. The bill is expected to be passed into law later this year.

Hostile takeovers and privatization are actions taken by certain investors to obtain majority stakes in companies listed on a stock exchange.

Hostile takeovers and privatization come under scrutiny after obscure businessman Jopie Widjaya and his business associates acquired a majority stake in the publicly-listed Bank Papan Sejahtera.

Hostile

Economist Sjahrir called the acquisition of the bank as a hostile takeover, while Chairman of the Capital Market Supervisory Agency Bacelius Ruru called it as a process of going private.

In the United States, where stock market laws are advanced, hostile takeovers and privatizing are regulated clearly. Laws require investors to follow complicated and transparent procedures before acquiring a company through a stock exchange.

"When investors silently raid a company -- when they are already holding a certain percent of shares or when they are at a trigger point -- they are required to announce their intention to take over the company and offer an open tender-over," Christianto said.

According to Indonesia's legal basis for stock markets, those who already hold five percent of a company's shares through stock markets are required to report it to the Stock Markets Supervisory Agency.

"When an investor holds five percent of a company's shares it is not enough for him to report it to related institutions. He has to announce his intention and strategies," Christianto said.

In the case of Bank Papan Sejahtera, in which "the unwanted practice" has already happened, Christianto suggested that the investors -- Jopie and his associates -- have to undergo the privatization processes by acquiring the rest of the bank's shares with prices at the level of privatizing transactions. (rid)