Stock issuers' bad practices listed

Stock issuers' bad practices listed

JAKARTA (JP): The chairman of the Capital Market Supervisory
Agency, I Putu Gede Ary Suta, has said several stock issuers
still did not abide by disclosure principles and sought to
deceive minority shareholders.

Speaking at a dinner hosted by the Indonesian Issuers
Association on Monday night, Putu said issuers should realize
that Indonesia's stock markets were part of global markets and
had to avoid any wrongdoing.

Putu then identified the 16 most common problems with issuers.
They are:

- issuers are late presenting routine financial reports. The are
fined Rp 1 million (US$414) a day for this.

- incomplete and deliberately vague reports.

- the late announcement of material information.

- the use funds in ways other than those stated in prospectuses.
This can be done only with shareholder approval, including from
minority shareholders.

- conflict-of-interest deals.

- excessive rights issues.

- the divestment of ownership or investment in new companies
without minority shareholder approval.

- the incorporation of publicly-listed subsidiaries' assets into
their own assets.

- the restructuring of subsidiaries to deceive minority
shareholders and raise more money from the public.

- the acquisition of much-larger firms, which are in the same
group, by issuing rights shares to absorb more funds from the
public.

- the watering down stock by drastically increasing the number of
shares through share splits, bonus share and rights issues.

- the raising of more funds to finance other businesses.

- the loosening of internal controls.

- the use of inside information to benefit certain parties.

- inter-company transactions to benefit majority shareholders.

- the formation super holding companies overseas. (rid)