Shareholders in JSX subordinate to government
Shareholders in JSX subordinate to government
JAKARTA (JP): Those holding shares in PT Bursa Efek Jakarta,
also known as the Jakarta Stock Exchange (JSX), must understand
that the JSX is an unusual limited liability company, over which
the government has the highest authority and not the
shareholders, said House member SGB Tampubolon.
To support his conclusion, Tampubolon referred to a recent
regulation issued by Indonesia's Capital Market Supervisory
Agency (Bapepam), a statutory government body, allowing the
government to appoint the JSX's new directors and commissioners.
In a normal limited liability company, it is the shareholders,
as the highest authority, who call for the election of new
directors or commissioners.
Tampubolon told The Jakarta Post on Saturday that the new
capital market law not only strengthens the government's
authority over the country's stock exchanges but exempts the
exchanges from Law No.5/1995 regarding limited liability
companies.
"While deliberating the capital market bill last year, we
raised questions about the extent of the government's authority
over the stock exchanges, including the stipulations that empower
the government to "select" the exchanges' directors and
commissioners," he said.
The Indonesian Democratic Party (PDI) faction, according to
Tampubolon, was not comfortable with the term "select", which
effectively ruled out the possibility of any PDI members becoming
exchange directors.
"But we ultimately accepted the formulation as the finance
minister argued that the law will allow the government to protect
the interests of both the exchange's shareholders as well as the
public's.
"So I would say that if Bapepam is now preparing another
election of JSX directors, it must be for the benefit of the
shareholders and the public," he said.
Many people, he said, would like to hold positions in the JSX
management and on its board of commissioners.
An executive at a local securities firm, JA Sereh, said the
new JSX president is likely to be a government official.
"Most JSX members expect a president who will be acceptable to
the government," Sereh said.
Sereh, a retired commissioner of the former over the counter
market, told the Post over the weekend that having a good rapport
with the government will allow the exchange's president to
fulfill the shareholders' expectations which sometimes require
the government's approval for their realization.
"Rumor has it that some Bapepam officials might be nominated,"
he said.
He argued, however, that with the increase of foreign
brokerages operating on the stock exchange, the market needs a
professional with a sound understanding of the stock market
mechanism.
"It would be dangerous to find out later that the management
cannot keep pace with market developments," he said, adding that
foreigners will continue to dominate trading on the JSX for the
foreseeable future.
Sources at the exchange confirmed that Bapepam has instructed
the JSX to conduct a general shareholders meeting on April 15 to
elect new directors and commissioners.
There will be an extraordinary meeting prior to the general
shareholders meeting. The meeting is expected to approve a new
statute of the JSX to comply with the new capital market law.
In line with the new procedures for nominating directors and
commissioners, Bapepam has also determined the following
guidelines:
* To make a nomination the shareholder must have a minimum of
0.2 percent of the total trading value and frequency recorded in
the previous twelve months (March 1, 1995 to Feb. 29, 1996).
* JSX shareholders who qualify must submit the names of their
candidates to Bapepam on March 25.
Bapepam will announce which candidates have been approved on
April 8 and notify all JSX members of the names by April 11. (08)