INDONESIA Law and Practice Contributed by: Ira A Eddymurthy and A Charlie R Malessy, SSEK Law Firm
in this regard includes OJK Reg, 21/2015 and OJK CL 32/2015. Article 1 and Article 2, paragraph 1 of OJK Reg, 21/2015 state that the OJK has the authority to issue guidelines concerning corporate govern - ance for public companies through a circular letter, and every public company is required to implement these guidelines. To realise these pro - visions, the OJK has issued OJK CL 32/2015 containing corporate governance guidelines for public companies, as outlined in the annex to said letter (the “GCG Guidelines” ). OJK CL 32/2015 specifies that the GCG Guide - lines therein cover five main aspects, namely: • the relationship between public companies and their shareholders; • the function and role of the board of commis - sioners (BOC); • the function and role of the board of directors (BOD); • the participation of stakeholders; and • information transparency. Although explicitly mandating that every public company adhere to the recommendations pro - vided in the GCG Guidelines, both OJK Reg, 21/2015 and OJK CL 32/2015 adopt “comply or explain” approach concerning non-compliance with the GCG Guidelines. In this regard, should a public company fail to fulfil the recommenda - tions outlined in the GCG Guidelines, the OJK will not immediately impose sanctions. Rather, the OJK will initially require the public company to explain the reason for its non-compliance and any alternative approaches taken (if any). This is evident in the obligations set forth in Articles 3 and 4 of OJK Regulation No 21/2015, where every public company is required to disclose information regarding the implementation of the
recommendations set out in the GCG Guidelines in their annual reports, which must contain at least: • a statement regarding the implementation of the recommendations set out in the GCG Guidelines; and/or • an explanation for any non-compliance with the recommendations set out in the GCG Guidelines, which must include at least the reasons for such non-compliance and any alternative actions taken in lieu of implement - ing the GCG Guidelines (if applicable). Should the public company fail to provide such explanations, the OJK may impose administra - tive sanctions in the form of a reprimand letter and/or fines or take other specific actions and publicly announce the imposition of such sanc - tions. 2. Corporate Governance Context 2.1 Hot Topics in Corporate Governance On 31 December 2024, the OJK issued OJK Reg, 45/2024. This regulation was enacted to implement the mandate under Law 4/2023 and is intended to further develop and strengthen Indonesia’s capital markets sector. OJK Reg, 45/2024 also revokes, in whole or in part, a number of existing regulations governing key aspects of the capital markets, including the reg - istration and delisting of public companies and issuers, rights issues by public companies and the disclosure of material information or facts. One of the key changes introduced by OJK Reg, 45/2024 relates to corporate governance, particularly in connection with the disclosure of material information or facts and the responsi - bilities of controllers of public companies. Under
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