|Freddy Karyadi||Oene Marseille|
The background to the issuance of the new regulation is the convergence of the Financial Accounting Standard Statement (Pernyataan Standar Akutansi Keuangan, or PSAK) to IFRS under which it was considered that PSAK 51, regarding accounting for quasi-reorganisation, was not compatible with the concept under IFRS. In relation to this point, the Board of Financial Accounting Standards Indonesian Institute of Accountants (Dewan Standar Akuntansi Keuangan Ikatan Akuntan Indonesia/DSAK-IAI) published its Statement of Revocation of Financial Accounting Standard (Pernyataan Pencabutan Standar Akuntansi Keuangan/PPSAK) No 10, revoking PSAK 51, effective on January 1 2013.
Considering these points, and in order to harmonise the regulations of Bapepam and LK with the PSAK as well as to give legal basis and guidance for an issuer or public company that intends to carry on quasi-reorganisation, Bapepam-LK duly revised the relevant regulation.
There are several requirements for an entity wishing to carry out quasi-reorganisation.
- The first is that the entity is required to have a material negative profit balance in its audited annual financial report over the last three years. To provide clarity for the application of this requirement, the new regulation sets a provision regarding the limitation of a material negative profit balance. A negative profit balance will be deemed material if the absolute value of the balance exceeds 60% from the paid-up capital and exceeds 10-times more than the annual profit average continuing for the past three years.
- Secondly, the entity is required to show a business profit or operational profit and annual profit in the audited annual financial report for three consecutive years and in the audited financial report used as the basis of implementation of quasi-reorganisation. The new regulation sets out this requirement as the proof that the entity that will carry out quasi-reorganisation has good business prospects.
- Under the previous regulation (Decision of the Head of Bapepam No KEP-16/PM/2004), quasi-reorganisation was carried out by re-evaluating the asset and liabilities account in a reasonable value and eliminating negative profit balance. In the new regulation, it is set out that the entity is not required to carry out a re-evaluation of the asset and liabilities account. This revision is being made to comply with the provisions in the related PSAK.
- The new regulation also includes a new provision that quasi-reorganisation be carried out by eliminating the negative profit balance using equity with a positive value in the following order of priority: premium shares (saham agio), difference of the capital from the treasury shares transaction, difference of exchange rate of the paid-up capital, difference of transaction with the non-controlling party, difference of transaction value with the controlling entity, and share capital.
This provision is new as it was never set out in Regulation No IX.L.1 (2004), although it was included in PSAK 51.
Oene Marseille and Freddy Karyadi
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