Capital Markets, Listed Entities & M&A

Market Condition Pushes the OJK to Relax Buyback Procedures

Indonesia's financial services authority, Otoritas Jasa Keuangan or "OJK", recently issued a circular that allows all issuers or public companies to conduct a buyback of shares without convening a general meeting of shareholders. 

In OJK Circular Letter No. 3/SEOJK.04/2020 on Other Conditions as Significantly Fluctuating Market Conditions in the Implementation of Shares Buyback by Issuers or Public Companies ("Circular"), the OJK states that the trading condition in the Indonesia Stock Exchange (IDX) has experienced significant pressure as evidenced by the decline in the Composite Stock Price Index (IHSG) by 18.46% from the beginning of 2020 until the date of the Circular. The economy is also slowing down due to regional and national pressure, including as a result of the COVID-19 outbreak. 

The revision to the buyback procedure is an attempt by the government to provide economic stimulus to the market and at the same time reducing the adverse impact from the current market condition.