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)