News & Announcements

W&P Newsletter – Insurance Company Alert – Government Ascertains Anti-Dilution for Existing Foreign Shareholders of Insurance Companies

The government kicked off the year of 2020 by demonstrating its support towards foreign investment through the issuance of Government Regulation No. 3 of 2020 (“GR 3/2020”), amending Government Regulation No. 14 of 2018 on Foreign Ownership in Insurance Companies (“GR 14/2018”). Many believe GR 3/2020 shows a friendlier face to foreign investors.

Previously under GR 14/2018, if a private insurance company wishes to increase its issued and paid-up capital, it must ensure that at least 20% of the additional capital will be subscribed for by Indonesian shareholders or otherwise offered for sale on the stock exchange – thereby forcing existing foreign shareholders with more than 80% stake (“Grandfathered Foreign Shareholders”) to be automatically diluted.  GR 14/2018 exempts the foreign ownership limitation from public insurance companies.

Through GR 3/2020, the government has lifted the above requirement and established a new anti-dilution provision, allowing Grandfathered Foreign Shareholders to subscribe for additional shares in the event of the company’s decision to raise its capital, provided that their existing  shareholding percentage remains the same or is not increased. GR 3/2020 mandates insurance companies to either cancel the shares issuance or obtain the additional capital through an initial public offering (IPO) if no existing Indonesian shareholder wishes to subscribe for the newly issued shares.

GR 3/2020 was issued on 16 January 2020 and is effective upon its promulgation by the Minister of Law and Human Rights on 20 January 2020.

If you have further inquiries about this newsletter, please reach out to us at or any of our lawyers.