An implementing regulation of Article 52 of Law No. 8 of 1995 on Capital Market (“Capital Market Law”) was recently released by the Capital Market and Financial Institutions Supervisory Board (Bapepam-LK) in the form of Head of Bapepam-LK Decision No. KEP-412/BL/2010 (“Decision”). One of the key features of the Decision is that it sets out a minimum standard for drafting a Trusteeship Agreement.
Generally, a Trusteeship Agreement is a notarized agreement concluded between an Issuer (emiten) and Trustee for the issuance of bonds. The agreement is mandatory in nature as it is stipulated in Article 52 of the Capital Market Law.
The Decision, under its Attachment (Rule No. VI.C.4), provides that there are 19 provisions that a Trusteeship Agreement must at least include. These provisions are, among other things, as follow:
The signatory parties’ profile (both the Issuer and the Trustee).
Sanctions.
The specific amount of bonds in Rupiah or other currencies.
The Issuer’s financial plan of the funds that it will obtain.
Time limitation of the payment of the bond.
Appointment, replacement, and termination of Trustee.
Interests.
Negligence.
Collaterals (if any).
The Trustee’s authorities.
The provisions that must be included in a Trustee Agreement are further elaborated in Point 4 of Rule No. VI.C.4.
In the event any provisions of the Decision, including Rule No. VI.C.4, have been violated, the Decision reserves Bapepam-LK the right to sanction the wrongdoer. Although the sanctions are not specified, it is fair to argue that the sanctions are those as set out in the Capital Market Law.
The Decision, including Rule No. VI.C.4, will take into force on the 60th day since 6 September 2010.
An implementing regulation of Article 52 of Law No. 8 of 1995 on Capital Market (“Capital Market Law”) was recently released by the Capital Market and Financial Institutions Supervisory Board (Bapepam-LK) in the form of Head of Bapepam-LK Decision No. KEP-412/BL/2010 (“Decision”). One of the key features of the Decision is that it sets out a minimum standard for drafting a Trusteeship Agreement.
Generally, a Trusteeship Agreement is a notarized agreement concluded between an Issuer (emiten) and Trustee for the issuance of bonds. The agreement is mandatory in nature as it is stipulated in Article 52 of the Capital Market Law.
The Decision, under its Attachment (Rule No. VI.C.4), provides that there are 19 provisions that a Trusteeship Agreement must at least include. These provisions are, among other things, as follow:
The signatory parties’ profile (both the Issuer and the Trustee).
Sanctions.
The specific amount of bonds in Rupiah or other currencies.
The Issuer’s financial plan of the funds that it will obtain.
Time limitation of the payment of the bond.
Appointment, replacement, and termination of Trustee.
Interests.
Negligence.
Collaterals (if any).
The Trustee’s authorities.
The provisions that must be included in a Trustee Agreement are further elaborated in Point 4 of Rule No. VI.C.4.
In the event any provisions of the Decision, including Rule No. VI.C.4, have been violated, the Decision reserves Bapepam-LK the right to sanction the wrongdoer. Although the sanctions are not specified, it is fair to argue that the sanctions are those as set out in the Capital Market Law.
The Decision, including Rule No. VI.C.4, will take into force on the 60th day since 6 September 2010.
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