This content is from: Local Insights

New rules for securities companies

Freddy KaryadiOene Marseille

On August 31 2010, the 2003 regulations were replaced when the Ministry of Finance issued the Regulation of the Minister of Finance of the Republic of Indonesia No: 153/PMK.010/2010 regarding Ownership of Shares and Capitalization of Securities Companies. This measure is in line with the General Principles of the International Organization of Securities Commission (Iosco) which provide that in relation to the developing potential risk borne by securities companies, increase of performance of securities companies needs to be conducted continuously with adherence to the prudence principles, such as the original structure of capitalisation and its maintenance.

In order to create a fair, transparent and accountable capital market, financial conditions and operational capabilities of securities companies need to be strengthened by increasing the amount of issued capital of securities companies.

Thus the regulation increases the minimum amount of issued capital of securities companies by Rp20 billion ($2.24 million) with the following details:

(i) investment managers increase from Rp5 billion to Rp25 billion;
(ii) underwriters and investment manager increase from Rp55 million to Rp75 billion; and
(iii) securities companies conducting business as brokerage administering consumer's securities account and as Investment Manager increase from Rp35 billion to Rp55 billion.

All of those increments would be done gradually and completed no later than December 31 2012.

Foreign investors may own up to 85% shareholding in a securities company. However, if such foreign investor is a licensed securities company or is under the regulation of the capital market in its jurisdiction, the threshold is increased up to 99%.

Oene Marseille and Freddy Karyadi

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