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)