Legal Updates for July 2023

IDX Tightens Supervision on Listed Companies with the Introduction of the Watchlist Board

In June of this year, the Indonesia Stock Exchange (“IDX”) issued the Board of Directors of the IDX Decree No. Kep-00081/BEI/05-2023 on Regulation No. I-X on the Placement of Equity Securities Listing on the Watchlist Board (“Decree”) to introduce a new listing board, namely the Watchlist Board, to the public.

Previously, the Board of Directors of the IDX had issued Decree No. Kep-00079/BEI/05-2023 on Regulation No. II-S on the Trading of Equity Securities Under Special Monitoring (“Previous Regulation”).

It used to be the case under the Previous Regulation that the IDX would specifically note companies with unusual market activities to be under “special monitoring” (“Special Monitoring List”). If a company is on the Special Monitoring List, it will have an "X" next to its name code. However, there was no specific listing board for these companies.

Now, with the introduction of the Watchlist Board, the IDX formalises its practice and investors can easily find issuers or listed companies with unusual market activities.

As OJK Expands Requirements on Anti-Money Laundering Program, What Must be Done and How?

On 14 June 2023, the Financial Services Authority ("OJK") issued OJK Regulation No. 8 of 2023 on the Implementation of Anti-Money Laundering (“AML”) Programs, Prevention of Terrorism Financing, and Prevention of Financing for the Proliferation of Weapons of Mass Destruction (“WMD”) in the Financial Services Sector ("POJK 8"). POJK 8 repeals the previous regulation on the same subject, namely OJK Regulation No. 12/POJK.01/2017, as amended by OJK Regulation No. 23/POJK.01/2019.

In POJK 8, OJK widens its net so that it does not cover just banks and financial institutions. Indeed, with the enactment of POJK 8, more and more businesses are expected to comply with AML regulations to protect themselves and their customers. Moreover, POJK 8 covers not just AML programs, but also proliferation of WMD.

Analysing Indonesia’s New Tax Regime for Benefit-in-Kind

The government, via the Ministry of Finance, recently issued Ministry of Finance Regulation No. 66 of 2023 ("Regulation"). The Regulation governs the income tax treatment of reimbursement or compensation in connection with employment or services that are given in-kind and/or in the form of enjoyment (typically referred to as “in-kind”) ("benefits-in-kind").  

The Regulation is an implementing regulation on the tax treatment of benefits-in-kind as mandated by the Income Tax Law and Government Regulation 55 of 2022. It details the types of benefits-in-kind, situations when employers can consider benefit-in-kind as deductible expenses, situations when employees can exempt benefit-in-kind from taxable income, and how benefits-in-kind are valued and taxed. 

Refresher on Government Regulation for IP-Based Financing Scheme

As highlighted back in 2022 (click here to read our previous client alert on the same topic), the government had enacted Government Regulation No. 24 of 2022 on the Implementing Regulation of Law No. 24 of 2019 on Creative Economy ("Regulation"). The Regulation confirmed that intellectual property ("IP") assets can be pledged as a security to obtain financing from banks and non-bank financial institutions. While the concept of taking security over IP is not new, the Regulation is a significant step in Indonesia’s IP regime, besides also stimulating the creative economy ecosystem in Indonesia.

From a regulatory standpoint, Law No. 42 of 1999 on Fiducia Security ("Fiducia Law") stipulates that fiducia can be established on any movable intangible object that can be owned and transferred, regardless of whether it is registered or unregistered. Furthermore, Law No. 28 of 2014 on Copyright ("Copyright Law") and Law No. 13 of 2016 on Patent ("Patent Law") explicitly stipulate that copyrights and patents can serve as objects of fiducia security. In practice, we have seen IP assets, mostly trademarks, being used as security objects to secure a loan or financing transaction. Although theoretically, IP assets can be encumbered through a pledge, as mentioned above, we have only seen these IP assets being encumbered by way of a fiducia security and subsequently registered at the Fiducia Office.

In light of the Regulation finally coming into effect on 12 July 2023, below is a highlight of some of the key steps that need to be taken by all the parties involved.