Capital Market

The development of the Indonesian capital market over the past two decades has shown significant growth, both in terms of the number of issuers, financial instruments, and participation by domestic and foreign investors.

Overview

The development of the Indonesian capital market over the past two decades has shown significant growth, both in terms of the number of issuers, financial instruments, and participation by domestic and foreign investors. In line with the increasing role of the capital market as a source of long-term financing for corporations and the government, the Financial Services Authority (OJK) has strengthened the regulatory framework through various regulations, including Law Number 8 of 1995 concerning the Capital Market, along with its implementing regulations, and Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK). These regulations aim to create an orderly, fair, efficient, transparent, and accountable capital market, while protecting investor interests and maintaining the stability of the national financial system.

 

The entry of foreign investors into capital market activities, whether through public offerings (IPOs), corporate actions, or transactions in the secondary market, reflects the high level of global confidence in the Indonesian economy. Foreign investment contributes positively to increased market liquidity, strengthened issuers’ capital structures, and the transfer of better corporate governance practices. However, capital market transparency also presents legal challenges, particularly regarding share ownership transparency, control of public companies, and the potential for misuse of nominee and beneficial ownership structures that can obscure the ultimate beneficial owner (UBO).

 

In practice, a number of corporate actions such as mergers and acquisitions of public issuers, rights issues, private placements, and mandatory tender offers often involve complex transaction structures, both legally and financially. The main challenges lie in compliance with the disclosure principle, reporting obligations to the Financial Services Authority (OJK) and the Indonesia Stock Exchange (IDX), and protection of minority shareholders. Weaknesses in oversight and compliance with capital market regulations have the potential to create legal risks, conflicts of interest, and even administrative and criminal sanctions for market participants.

 

Therefore, strengthening the legal aspects of the capital market is crucial to ensure that all fundraising activities and securities transactions comply with the principles of prudence, transparency, and market integrity. Our lawyers have in-depth understanding and practical experience in the capital market sector, including providing assistance to issuers, public companies, investors, and capital market support professionals. With a comprehensive and compliance-based approach, we are ready to provide strategic legal advice to support sustainable capital market transactions, protect investor interests, and maintain public confidence in the Indonesian capital market system.

Legal Services in the Capital Markets Sector

  1. Provision of Legal Advice/Opinions in the Capital Markets sector, covering compliance with the Capital Markets Law, Financial Services Authority (OJK) regulations, Indonesia Stock Exchange regulations, and clearing and custodian institution provisions, including aspects of information disclosure, share ownership, and investor protection.
  2. Assistance to Clients in capital market activities, including:
    • Initial Public Offerings (IPOs), including preparation of transaction structures, prospectuses, and coordination with the OJK, the IDX, and capital market support professionals;
    • Corporate actions of public companies, such as rights issues, private placements, stock splits, share buybacks, mergers, acquisitions, and consolidations;
    • Mandatory and voluntary tender offers in accordance with capital market laws and regulations.
  3. Preparation and Review of Capital Market Documents, including:
    • Prospectuses and prospectus summaries;
    • Disclosure of information and reports to the OJK and the IDX;
    • Underwriting agreements;
    • Agreements between issuers and strategic investors or controlling shareholders.
  4. Assistance with Cross-Border Capital Market Transactions, including:
    • Legal due diligence on issuers or acquisition targets;
    • Analysis of compliance with foreign ownership and UBO reporting requirements;
    • Compliance with relevant international capital market regulations.
  5. Preparation and Harmonization of Internal Policies for Public Companies, including:
    • Good Corporate Governance (GCG);
    • Information disclosure and compliance policies;
    • Risk management and internal controls in accordance with OJK and IDX regulations.
  6. Assistance with Capital Market Dispute Resolution, including:
    • Disputes between issuers and investors;
    • Allegations of information disclosure violations, insider trading, and market manipulation;
    • Assistance in audits and administrative sanctions by the Financial Services Authority (OJK).
  7. Assistance for Issuers, Public Companies, and Investors in:
    • IPO and post-IPO compliance processes;
    • Restructuring of share ownership and control of public companies;
    • Negotiating strategic transactions in the capital market;
    • Compliance with periodic and incidental reporting.

With our experience and in-depth understanding of the dynamics of capital market law, we are committed to providing professional, strategic legal services oriented toward protecting client interests and the sustainability of the Indonesian capital market.

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