The Financial Services Authority (OJK) has issued OJK Regulation Number 15/POJK.04/2022 concerning Stock Split and Reverse Stock by Public Companies (“POJK 15/2022”). Subsequently, based on POJK 15/2022, the Indonesia Stock Exchange (IDX) issued Regulation I-I regarding Stock Split and Reverse Stock by Listed Companies Issuing Equity Securities. The implementation of stock split or reverse stock by listed companies must comply with the provisions of the OJK and IDX regulations.
IDX has the authority to approve, reject, postpone, and revoke the application for principal approval or listing approval after reviewing the information and documents submitted by the listed company, taking into account not only formal aspects but also the substance of the requirements and investor protection.
Principal approval obtained by a listed company shall become legally null and void if the company does not carry out the stock split or reverse stock within 30 (thirty) days after the General Meeting of Shareholders (GMS) that approves the plan, if IDX does not approve the listing application of the resulting shares, or if the company fails to obtain GMS approval.
Furthermore, IDX may revoke the principal approval before the GMS if the following conditions occur: failure to meet the average closing price requirement over 25 (twenty-five) consecutive trading days in the regular market, significant stock price fluctuations, and/or significant events or conditions that negatively impact the company’s business continuity, either financially or legally.
Listed companies whose principal approval is null and void or revoked by IDX may reapply for principal approval for a stock split or reverse stock no sooner than 6 (six) months from the date the previous approval was revoked or became void.
To apply for principal approval for a stock split, the requirement is that the average closing price over 25 (twenty-five) consecutive trading days in the regular market before the application is submitted, multiplied by the stock split ratio, must be at least IDR 100 (one hundred Rupiah). If the company’s shares have been suspended by IDX for 25 (twenty-five) consecutive trading days before the application, the average closing price is calculated based on the average of the highest daily trading prices in the past 12 (twelve) months, counted backward from the last trading day or suspension date.
The listed company must submit a stock valuation report prepared by an appraiser together with the application for principal approval if, within the past 12 (twelve) months, the company’s shares were suspended as part of trading supervision by IDX. In addition to this condition, IDX may also request a stock valuation report prepared by an appraiser and/or considerations from OJK before granting principal approval.
As for the requirements for a reverse stock approval application, the listed company must appoint one party to purchase odd-lot shares. The purchase price for the odd-lot shares shall be the higher of the price at the time of the reverse stock or the price during the odd-lot share purchase period. The company must also submit a valuation report prepared by an appraiser if requested by IDX.
In essence, the OJK and IDX regulations have comprehensively regulated the procedures for stock split and reverse stock by listed companies issuing equity securities. Therefore, through the comprehensive provisions in POJK 15/2022 and IDX Regulation I-I, the process of stock split and reverse stock is expected to be carried out transparently, accountably, and in a way that ensures investor protection and the stability of the Indonesian capital market.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Dewi Susanti