Indonesia: New OJK Regulation and the Impact on Employee Share Plans

Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) has enacted new rules to regulate, inter alia, share ownership plans granted by foreign listed entities to employees, directors, and commissioners of their subsidiaries (“Employee Plan”).

OJK Circular Letter No. 33/SEOJK.04/2022 dated December 30, 2022, regarding Guidelines for the Implementation of Securities Offerings Classified as Non-Public Offerings (“SEOJK 33/2022”) changes the process by which companies obtain an OJK stipulation that an Employee Plan is exempt from the standard registration statement requirements applicable to a public offering.

Such exemption is necessary if the Employee Plan fulfils the standard criteria of a public offering under the Indonesian Capital Markets Law. These criteria are:

1. the overall value of the offering is more than IDR 5 billion;
2. the offering is conducted in one or more securities offerings within a maximum period of 12 months; and
3. the offering is conducted in Indonesia or to Indonesian citizens by using mass media or offered to more than 100 parties or results in the purchase of securities by more than 50 parties.

OJK Stipulation Letter vs. No-Action Letter

Before the issuance of these new rules, the OJK would issue what was called a No-Action Letter to stipulate that an Employee Plan was exempt from the registration statement requirements applicable to a public offering. While the No-Action Letter was a well-established mechanism, the requirements for No-Action Letter applications were never formally documented in a circular letter or other legislation.

The OJK will no longer issue No-Action Letters. Now, under SEOKJK 33/2022, if an Employee Plan fulfils the standard criteria of a public offering, a company seeking a registration statement exemption will have to obtain an OJK Stipulation Letter.

Distinct from a No-Action Letter, obtaining a Stipulation Letter requires the submission of an application letter and an Information Memorandum with details of the Employee Plan. SEOJK 33/2022 sets out the list of details that the Information Memorandum must at a minimum contain.

Existing No-Action Letters

We understand that the OJK will send letters to past recipients of No-Action Letters indicating that in certain circumstances the issuer must file a new application for a Stipulation Letter to replace the No-Action Letter. The precise wording of the planned letter remains to be seen.

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