|Oene Marseille||Emir Nurmansyah|
The Financial Services Authority of Indonesia (Otoritas Jasa Keuangan, or OJK) is expected to release a circular letter abolishing the mandatory tender offer requirements for participants of the tax amnesty programme that buy or become the controller of more than 50% of the shares of a public company.
The ongoing tax amnesty programme is intended to encourage Indonesian citizens to repatriate their undeclared assets. It provides for a one-time tax on the value of the repatriated assets at a relatively low rate (as low as two percent) in exchange for declaration of the assets. The rate will progressively rise after September 30 2016.
The OJK's new rule is designed to encourage shareholders of public companies to come forward and declare their previously undeclared holdings of shares in public companies (possibly, these shares had been previously held under nominee arrangements).
Under the current capital market rule, the prospective owner or controller of more than 50% of the shares of an Indonesian public company must make a tender offer on the remaining shares. The OJK's new rule would exempt shareholders who declare their additional shareholding in this way from the tender offer requirements. In other words, if the shareholding percentage after the tax amnesty declaration reaches more than 50%, the shareholder would not be required to make a tender offer of the stake held by the minority shareholders.
The Indonesia stock exchange has also previously offered incentives targeted at participants of the tax amnesty programme. These include a reduction in the crossing fee to transfer shares. This was intended to encourage investment of the repatriated assets in the domestic capital market.
Oene Marseille and Emir Nurmansyah