Jakarta, CNBC Indonesia – The Indonesia Stock Exchange (IDX) provided an explanation of the criticism expressed by the former President Director of the IDX, Hasan Zein Mahmud regarding the issuance of new shares through the Capital Increase without Pre-emptive Rights (PMTHMETD) scheme which is detrimental to public investors because the capital injection is below the market price.
IDX Director of Company Assessment, I Gede Nyoman Yetna said, one of the priveles of a public company is being able to raise funds through PMTHMETD to develop business and improve company finances.
According to Nyoman, in practice, additional capital through this scheme can be through private placement, employee share ownership program (MESOP) and debt conversion into shares.
The Stock Exchange, said Nyoman, has set provisions regarding the PMTHMETD implementation price of 90%, or a discount of 10% from the average closing price of shares of listed companies for 25 days prior to the listing request. This provision is stipulated in attachment II to the Decree of the Exchange Directors No. Kep-00183 / BEI / 12-2018 concerning Amendment to Regulation Number IA, which has been in effect since 2018.
“This is to provide incentives for strategic investors in implementing private placements, as well as employees of listed companies who participate in employee share ownership programs,” said Nyoman to the media crew, Tuesday (6/4/2021).
In addition, continued Nyoman, PMTHMETD price regulation has also referred to best practices in global exchanges, where the minimum implementation price is given a discount from the market price. Regulators in the UK, Hong Kong, Singapore and Malaysia also arrange discounts that range from 5% to 20%.
“In drafting regulations, the Exchange not only considers the interests of listed companies, but also considers the protection of investors,” he explained.
Previously, the former President Director of the Indonesia Stock Exchange, Hasan Zein Mahmud, was furious with the practice of private placement, which deposits new capital to issuers at below market prices. Although, he did not specifically mention any specific issuers.
“This one really makes me sad, angry and furious. Private placement (PMTHMETD) by depositing an amount below the market price. Once again new capital deposits by certain parties, in a public company, are below the market price!” write a short message from Hasan Zein which was received by CNBC Indonesia, Tuesday (6/5/2021).
“I don’t care if the building is then used as an altar for the massacre of public retail investors in the open to be eaten by the controllers and their cronies.”
According to Hasan Zein, this kind of practice shows that there is no fairness aspect in the Indonesian capital market. The slogan regarding the level of playing field, fighting ethics, good corporate governance and the rule of conduct seems utter nonsense.
“The neglect of such practices, in my eyes, makes the authorities and the SRO appear to be nothing more than mute guards and puppet referees,” said Hasan.
(hps / hps)