Listing Mechanism on the Jakarta Stock Exchange (JSX)

Listing Mechanism on the Jakarta Stock Exchange (JSX), July 2000

On July 2000, the JSX released new listing regulations setting out the general provisions and the requirements and procedures for listing on the Stock Exchange. The new regulations have been released as part of the JSX’s efforts to keep pace with other stock exchanges and strengthen the competitiveness of the JSX within the region. Another objectives are to improve corporate governance, provide greater legal certainty in listing and delisting from the JSX and increase compliance with disclosure requirements. Combined, these measures are expected to strengthen investor confidence in Indonesia’s capital market…..
G. Good Corporate Governance IN THE NEW LISTING REGULATIONS
These regulations specifically require listed companies to uphold good corporate governance, among others the following:

• All JSX-listed companies must have Independent Commissioners in proportion to the number of shares held by non-controlling, or public, shareholders, subject to the requirement that the number of Independent Commissioners must be not less than 30% (thirty percent) of all members of the Board of Commissioners. Independent Commissioners are members of the Board of Commissioners not affiliated with the controlling shareholders and/or other commissioners and/or directors and not serving concurrently as director in another affiliated company, and are appointed in a General Meeting of Shareholders by the public shareholders.
• All listed companies must have an Audit Committee comprising at least 3 (three) members, one of whom is an Independent Commissioner and the others independent professionals in accounting and/or finance recruited from outside the company. The tasks of the Audit Committee are: i) analyze the financial information released by the company, such as the Financial Statement and financial projections; ii) examine the adequacy of the examination conducted by the public accountant; iii) analyze the effectiveness of the company’s internal control; iv) examine the presence of any suspected errors in resolutions of meetings of the Board of Directors or irregularities in the implementation of these resolutions.
• All listed companies are required to have a Corporate Secretary as an absolute must. This position must be held one of the members of the Board of Directors or a corporate officer specifically appointed to this function. He or she must have access to material and relevant information on the company, and must be familiar with capital market regulations. Under the new regulations, the role of the Corporate Secretary is defined in more specific terms.

• Á listed company must also make efforts to ensure that composition of share ownership is distributed among controlling shareholders and minority shareholders in such a way that shares held by the minority shareholders represent at least 5% of paid up capital or 10,000,000 shares over a period of 6 consecutive months.
• All listed companies operating in forestry must have ecolabelling certification.
• Listed companies are prohibited from any corporate actions that may give rise to cross holding or other corporate actions likely to disadvantage shareholders, such as transactions (loans or corporate guarantees or other transactions) with affiliated parties and/or other parties for unreasonably high fees or profit, changes to the core business that could incur losses for shareholders, and window dressing.
• Any delay in submission of the financial statement of a company listed on the Main Board beyond 10 stock exchange working days will result in downgrading of that company to the Emerging Board.
•  For stricter implementation of disclosure, the JSX reserves the right to ask any company planning to issue shares for any additional explanations or information as may be needed. If a company planning to issue shares is already listed as a public company or listed on another stock exchange, the JSX may require a public expose with equivalent quality of information as disclosed in the prospectus.
• If the JSX becomes aware of any abnormal conditions and/or important developments deemed likely to affect the survival of the listed company and/or incur losses for investors, the JSX or its appointee reserves the right to request any necessary explanations/information or conduct further examination of the documents and condition of that company. The JSX also requires listed companies to hold a public expose at least once a year. The JSX will conduct ongoing monitoring of any listed companies with deteriorating performance tending towards any of the criteria for delisting and make announcement accordingly on the Stock Exchange. For each of the delisting criteria, a deadline will be established in which the listed company will be required to submit a corporate plan detailing the remedial measures to be taken. This corporate plan must be prepared in two languages, Indonesian and English, and announced on the Stock Exchange.

(Copied from the JSX website: www.jsx.co.id)

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