Towards the end of 2018, the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued OJK Regulation No. 37/POJK.04/2018 on Equity Crowdfunding (“OJKR 37/2018”) providing companies (particularly start-up companies) with an alternative for fundraising by way of offering equity securities directly to investors via an online platform operated by an equity crowdfunding operator (“Equity Crowdfunding”).

There are three main parties in Equity Crowdfunding: the Issuer, the Investor and the Operator. The notable key points of each party are as described below.

  1. Issuer

To become an issuer, a limited liability company (PT) must fulfil the following criteria:

  • The issuer is not controlled, whether directly or indirectly, by a business group or conglomerates;
  • The issuer is not a public limited company or a subsidiary of a public limited company; and
  • The issuer’s total assets do not exceed IDR 10 billion (excluding land and property).

In making an offering, the Issuer may only offer its equity securities through a single non-affiliated equity crowdfunding operator. The offering made through an equity crowdfunding platform will not be considered as a public offering only if:

  • conducted through a licensed equity crowdfunding operator;
  • conducted within a maximum period of 12 months; and
  • the total amount of funds raised does not exceed IDR 10 billion.

The Issuer may conduct multiple offerings within not more than 12 months, provided that each offering must be completed within 60 days.

In addition, the Issuer is subject to certain disclosure requirements set under OJKR 37/2018, including the disclosure of its annual report (which contains information on the utilization of the raised funds) to the OJK and the public through the Operator’s website and/or the Issuer’s website no later than 6 months after the end of the Issuer’s financial year, subject to certain limited exceptions. 

  1. Investor

There is no specific requirement to become an Investor under OJKR 37/2018. However, OJKR 37/2018 stipulates that an Investor must have the financial ability to purchase the securities and must assess the investment risks and limit the investment value in the following manner:

  • investors with an annual income of ≤ IDR 500 million: not more than 5% of total annual income;
  • investors with an annual income of >IDR 500 million: not more than 10% of total annual income.

However, the above limitations do not apply to investors (i) in the form of a legal entity, and (ii) having experience in the capital markets (evidenced by ownership of securities accounts for at least 2 years prior to the equity crowdfunding offering).

  1. Equity Crowdfunding Operator

The equity crowdfunding operator can be in the form of either (a) limited liability company (including securities companies possessing the required permit from OJK) or (b) service cooperative (koperasi jasa).

Unlike the 2-tier licensing mechanism applicable to peer-to-peer operators, the equity crowdfunding operator only needs to obtain a single business license from the OJK. OJKR 37/2018 requires the Operator to have at least IDR 2.5 billion in issued and paid-up capital and to be registered as an electronic system provider at the Ministry of Communications and Informatics.

Aside from providing a platform to connect the Issuer with the Investors, the Operator may also provide an internal trading system allowing Investors registered with the same Operator to trade their shares which have been purchased through the relevant Operator’s platform.

OJKR 37/2018 lays down certain requirements for the Operator, namely:

  • submit periodical and incidental reports to the OJK;
  • provide an online communication facility between the Investors and the Issuers;
  • establish its data centre and disaster recovery centre in Indonesia;
  • comply with personal data privacy requirements, know-your-customer principle, anti-money laundering and counter-terrorism funding in financial services sector, and consumer protection regulations.

For further information on the above, please contact W&P Team:

Wisnu Renansyah Jenie at [email protected], and Hafez Aditya Komar at [email protected]