it is conducted through an Operator licensed by OJK; the shares offering is carried out for a maximum of 12 months; and. OJK may impose administrative sanctions for violation of the Equity Crowdfunding Rule (i.e., warning letters, fines, limitation of business activity, suspension of business, revocation of business license, cancellation of approval and cancellation of registration). A possible key concern in offering shares by way of Equity Crowdfunding Services is whether an Issuer would need to carry out procedures applicable for public offering. Finally, OJK introduces a whole new equity crowdfunding procedure highlighting the roles of each party in an equity crowdfunding, the offering process and exemptions to public. 25 of 1992 concerning co-operatives includes principal savings, mandatory savings, reserve funds and grants. To find out more about the cookies we use and how to change your settings if you do not want cookies to be placed on your device, please read our, Indonesia: OJK (Finally) Released Equity Crowdfunding Regulation, Industrials, Manufacturing & Transportation, must be in a form of limited liability company or cooperative, must have capital of at least IDR 2.5 billion, is a registered electronic system provider at the Ministry of Communications and Informatics ("MOCI"), must obtain a license as a Provider from OJK. An ECF provider that carries out equity crowdfunding activities (such as providing, managing and operating crowdfunding services for users) are required to seek a ‘doing business’ licence from the OJK. Within that period, the offering can be done more than once with an offering period of 60 days for each offering. The Provider should transfer the funds to the Issuer at the latest 21 days after the end of an offering period. The Financial Services Authority (Otoritas Jasa Keuangan – OJK) issued OJK Regulation No. Pursuant to the Equity Crowdfunding Regulation, the agreement to carry out the crowdfunding services between the ECF provider and the issuer may be drawn in a deed. : For Provider-Investor Agreements, the terms can be made standard where Investors can express their consent electronically. In addition to the prescribed administrative sanctions, OJK may also carry out certain actions against parties in violation of OJK Regulation No. The Issuer must record the Investor’s shares ownership in the company’s shareholders’ register. International Bar Association 37/2018 provides a strategic alternative funding for start-up companies and micro, small, and medium enterprises which wil… 37/2018 as the carrying out of services on the offering of shares by issuers to sell shares directly to investors through an open electronic system network (“Equity Crowdfunding Service”). The actual trading in this secondary market, however, can only be conducted between Investors registered with the same Provider. [4]A co-operative ECF provider shall have its own capital of IDR 2.5m when applying for a ‘doing business’ licence. the total paid-up capital of the Issuer does not exceed Rp30,000,000,000. The Equity Crowdfunding Regulation also makes it mandatory for ECF providers to provide a safe and reliable information technology system. In carrying out the activities, Providers should really be mindful of the applicable restrictions, e.g., providing investment advice, providing financial assistance for Investors to invest in a certain Issuer listed in its Platform or having an affiliation relationship with Issuer. Investors will receive evidence of ownership in the form of securities ownership register found in the securities account at the custodian. They cannot be (i) companies that are controlled directly or indirectly by a business group or conglomerate (ii) public companies or subsidiaries of public companies and (iii) companies with total assets of more than IDR 10 billion, not including land and building assets. 37/2018. The distribution of shares can be physical delivery (for scrip shares) or electronic delivery through a custodian by opening a securities account (for scriptless shares). 37/POJK.04/2018 on Equity Crowdfunding (“OJK Regulation No. An operator is the entity providing, administering and operating the Equity Crowdfunding Service (“Operator”). The offering of shares by the issuer through the ECF provider is not considered by law as a public offering under Law No. Any interests generated from such funds while in escrow account will be proportionately transferred back to the Investor. Such trading can only be done by fellow Investors who are registered with the Operator. the total amount of funds raised through the shares offering does not exceed Rp10,000,000,000, or any other maximum amount as determined by OJK. 37/2018 provides a strategic alternative funding for start-up companies and micro, small, and medium enterprises which will further encourage the growth of national economy. Secondary Market in a Platform. As a result, the OJK finally enacted OJK Regulation No. The Operator must proportionally refund the Investors the funds received along with all interests generated while in escrow account within 2 business days after such offering is declared null and void. Towards the end of 2018, the Financial Services Authority (Otoritas Jasa Keuangan or “ OJK ”) issued OJK Regulation No. 37/2018 also applies to the offering of other equity securities other than shares as may be further determined by OJK. TEKNOLOGI INFORMASI (EQUITY CROWDFUNDING) DENGAN RAHMAT TUHAN YANG MAHA ESA DEWAN KOMISIONER OTORITAS JASA KEUANGAN, Menimbang : a. bahwa teknologi informasi telah digunakan untuk mengembangkan industri keuangan yang dapat mendorong tumbuhnya alternatif pembiayaan bagi masyarakat; b. bahwa OJK perlu mendukung pelaku usaha pemula Jakarta 12710, Indonesia, Equity Crowdfunding In Indonesia – Update from OJK Socialization Event, OJK Regulation No. Providers are Indonesian legal entities that provide, manage and operate a Platform. implement the basic principles of Users' protection, as follows: simple, fast and affordable Users' dispute resolution through the functions of internal dispute resolution and external dispute resolution. OJK has also held a socialization event regarding OJK Regulation No. An Issuer may, but is not required to, determine a minimum amount of funds to be raised; this amount may not be altered during the offering period. Gatot Subroto Kav. Such system may provide a reasonable price as a reference for the seller and buyer and provide a communication system for the Investor and Issuer as user to sell and purchase shares. The purchase of shares is done by Investors transferring funds to the agreed escrow account stated in the relevant Provider-Investor Agreement. The OJK can also stipulate another total amount of funds through an OJK Circular Letter[2]. Provider-Investor Agreements could include a provision giving power of attorney to the Provider to act as a proxy for Investors as shareholders of certain Issuers, including attending General Meetings of Shareholders and for execution of certain deeds and other related documents. While it is not specifically regulated, from the application documents listed under the Equity Crowdfunding Rule, it seems that a Provider can be owned by foreign entities. The Equity Crowdfunding Rule describes the activity of equity crowdfunding as part of financial services activity falling under the capital market sector. In recent years, Indonesia has experienced an increasing number of start-up companies and financial technology (fintech) companies. 37/2018”) on 31 December 2018. 37/POJK.04/2018 on equity crowdfunding on 31 December 2018 (Equity Crowdfunding Regulation). Under the Equity Crowdfunding Regulation, the issuance of shares can only be carried out by an Indonesian legal entity in the form of an Indonesian limited liability company. 52 The Equity Crowdfunding Regulation sets out administrative sanctions, imposed by the OJK, for any violation. Given the efficient and flexible process, Equity Crowdfunding may potentially cut the long and complicated funding mechanism compared to conventional initial public offering process in the Indonesia Stock Exchange. The issuance of a series of regulations in recent years, and finally this new rule, indicates that OJK is improving the fintech market in breadth and depth. The Equity Crowdfunding Rule nevertheless is silent on the limitation of foreign ownership. Based on these criteria, equity crowdfunding may be a perfect fundraising option for start-up companies and micro, small, and medium enterprises. Equity Crowdfunding Agreements. An Issuer must be in the form of a limited liability company, and should not be (i) a company controlled (directly or indirectly) by a business group or conglomerate; (ii) a public company or a subsidiary of a public company; (iii) a company with assets more than Rp10,000,000,000, excluding land and building; or (iv) a company meeting any other criteria as may be determined by OJK. These include: limitations on the business activities of the ECF provider; freezing of the business activities of the ECF provider; revocation of the ‘doing business’ licence; The Equity Crowdfunding Regulation requires that any ECF providers carrying out crowdfunding services before the enactment of the Equity Crowdfunding Regulation are obliged to file an application for a ‘doing business’ licence by no later than six months after the enactment of the Equity Crowdfunding Regulation. The total amount of funds collected through the offering is not more than IDR 10 billion, unless determined otherwise by OJK. The system could provide a fair market value as a point of reference, as well as communication tools for Users to communicate in the trading. Indonesia has a number of companies engaged in equity crowdfunding activities but no regulations have been enacted, thereby creating uncertainties for equity crowdfunding providers (an ECF provider), users such as the parties in need of funds (issuers) and the parties providing the funds (investors). Is it a Public Offering? Additionally, they must provide audit records of activities within the crowdfunding services electronic system for the purpose of the supervision, law enforcement, dispute settlement, verification, testing and other inspections that may occur.

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