OJK Revokes Circular Letter on Share Buybacks

Fathan Qorib, Andin Aditya Rahman
 
The Financial Services Authority (OJK) has officially revoked Circular Letter No. 1/SEOJK.04/2013on Other Conditions [deemed] as Significantly Fluctuating Market Conditions for Conducting Share Buybacks by Issuers and Publicly Listed Companies (Circular Letter) as of 14 May 2014.
 
In essence, the Circular Letter further defines the term “fluctuating market conditions” as mandated by Article 2 of OJK Regulation No. 2/POJK.04/2013on Share Buybacks by Issuers and Publicly Listed Companies in Significantly Fluctuating Market Conditions (Regulation). Under such conditions, issuers and publicly listed companies could undertake share buybacks as provided for under the Regulation.
 
Lucky F. Hadibrata, Deputy of Strategic Management at the OJK, said that the Circular Letter was revoked as market conditions on the Indonesian Stock Exchange have stabilized. To a certain extent, he continued, regional and national economies have indicated positive trends.
 
Despite its revocation, Mr. Hadibrata added that issuers and public companies may still complete share buybacks they are currently undertaking if they were prior to 14 May 2014 and in accordance with the Regulation.
 
Robinson Simbolon, OJK’s Deputy Commissioner, explained that the joint share price index decreased by more than 20 percent between 20 May and 27 August 2013. However, under the Regulation, this did not constitute a fluctuating market condition, despite the complications it caused to issuers and public companies.
 
With the intention of supporting issuers and publicly listed companies, under the Circular Letter the OJK determined this as a fluctuating market condition which opened up the opportunity for share buybacks in accordance with the Regulation.
 
(For more information regarding the Regulation on share buybacks, see: ILB No. 2227)
 
(hot/kc)