“Financial Service Authority has stipulated Regulation No. 22/POJK.04/2021 (“POJK 22/2021”) about Multiple Voting Shares, which give more than 1 (one) Voting Rights to shareholders. The Issuers which can issue Multiple Voting Shares is the Company that uses technology to create products that increase productivity and economic growth and have a substantial social impact.”
On 11 April 2022, PT GoTo Gojek Tokopedia Tbk officially listed its Initial Shares or Initial Public Offering (“IPO”) in Indonesia Stock Exchange. GoTo is the first Issuer to go public (IPO) by implement Multiple Voting Shares (“MVS”) in Indonesia.
A. Definition and Difference of Shares in UU PT and MVS in POJK 22/2021
Based on Article 1 of 1 Law No. 40 of 2007 or UU PT (“Law No. 40/2007”) Limited Liability Company (hereinafter called a “Company”) means a legal entity which constitutes an alliance of capital established pursuant to a contract in order to carry on business activities with an authorized capital all of which is divided into Shares and which fulfils the requirements stipulated in this Act and its implementing regulations. From that Article, it can conclude that Shares are proof of the payment of capital to the Company. Law No. 40/2007 apply the principle of one Share one Vote, which means one Share issued only has one Vote.
Meanwhile, in Regulation of Financial Service Authority No. 22/POJK.04/2021 (“POJK 22/2021”) apply the principle of one Share for multiple votes. Article 1 of 1 POJK 22/2021 mentioned that Shares with Multiple Voting Rights are a classification Shares where 1 (one) Share gives more than 1 (one) Voting Rights to shareholders who fulfill the requirements.
B. Characteristic MVS
In accordance with POJK 22/2021, characteristic of MVS is can only be issued by Issuers with the following criteria:
a. Use technology to create innovation products that increase productivity and economic growth and have a substantial social impact;
b. Have shareholders who have significant contribution to technology utilization;
c. Fulfil:
- The minimum total company assets are IDR 2 trillion rupiah;
- Has carried out operational activities at least for 3 (three) years before submitting Registration Statement;
- Compound annual growth rate of total assets for the last 3 (three) years for a minimum of 20% (twenty percent); and
- Annual compound growth rate of income for the last 3 (three) years at least 30% (thirty percent).
d. Is an Issuer that has never done Public Offering of Equity Securities.
C. Ownership Period of MVS
As mentioned in Article 5 POJK No. 22/2021, ownership period of Shares with Multiple Voting Rights is for a maximum period of 10 (ten) years from the effective date of the Registration Statement in the context of a Public Offering. This period can be extended 1 (one) time with a maximum extension period of 10 (ten) years and must obtain the approval of Independent Shareholders at the General Meeting of Shareholders.
D. Eligible Party as MVS Owners
In accordance with Article 12 POJK No. 22/2021, Party who is eligible to become a MVS Owners is:
a. Shareholders with Multiple Voting Rights for the first time must be a Party that has been designated as a shareholder with Multiple Voting Rights at the General Meeting of Shareholders and included in the prospectus and must have rights of more than 50% of all voting rights, either individually or jointly.
b. Parties who eligible to become shareholders with Multiple Voting Rights after the Public Offering are:
- A Party that has been disclosed in the prospectus in the context of a Public Offering as a Party who can own Shares with Multiple Voting Rights; and/or
- A member of the Board of Directors who has a significant contribution to business growth or the Issuer’s business that applies Shares with Multiple Voting Rights and obtains the approval of independent shareholders at the General Meeting of Shareholders.
c. In the event that the Party being the shareholder with Multiple Voting Rights is a legal entity, the party must:
- Owned directly by at least 99% by shareholders with Multiple Voting Rights and/or parties designated at the General Meeting of Shareholders as shareholder with Multiple Voting Rights but are no longer shareholders with Multiple Voting Rights;
- Have directors who have expertise in line with Issuer’s business activities; and
- Is a company whose business activities are in the field of management consulting activities, if it is an Indonesian legal entity.
d. In the event that a legal entity is only established to raise funds for Issuers, the legal entity must be directly controlled by:
- A shareholder who has been designated as a shareholder with Multiple Voting Rights at the General Meeting of Shareholders but is no longer a shareholder, with Multiple Voting Rights; and/or
- Shareholders with Multiple Voting Rights in accordance with the criteria of parties who can become shareholders with Multiple Voting Rights after the Public Offering.
E. IPO with MVS
In accordance with POJK No. 22/2021, the general procedure IPO with MVS as listed below:
1. Public Offering with MVS use an electronic Public Offering system. In the event that the Public Offering does not use an electronic Public Offering system, the Issuer is still required to comply with the provisions regarding the allocation of securities and adjustment of the allocation of securities.
2. Submit Registration Statement documents in the form of:
a. Cover Letter for Registration Statement in accordance with the format of Cover Letter for Registration Statement in the Appendix of Regulation of Financial Service Authority No. 7/POJK.04/2017;
b. Prospectus;
c. Brief Prospectus;
d. Initial Prospectus (if any);
e. Statement letter from 1 (one) or more shareholders with Multiple Voting Rights for their contribution to the Issuer;
f. Proof of contributions from shareholders with Multiple Voting Rights to the Issuer;
g. Photocopy of the agreement between shareholders with Multiple Voting Rights that contains the commitment in carrying out the vision and mission; and
h. Other documents that must be submitted as part of the Registration Statement.
3. Besides conceding with the Regulation of Financial Service Authority No.8/POJK.4/2017, the prospectus by an Issuer who applies Shares with Multiple Voting Rights must disclose in separate section information regarding the Issuer’s application of Shares with Multiple Voting Rights as follows:
a. Information in table form regarding the capital structure and shareholders of the Issuer including details of the distribution of voting rights;
b. Disclosure of the company’s vision and mission;
c. Disclosure of information regarding commitment of shareholders with Multiple Voting Rights to carry out its vision and mission towards the Issuer and plans related to the Shares it owns, either plan to keep or let go its Share ownership;
d. Background and reasons for implementing Shares with Multiple Voting Rights;
e. Conditions in the event that the Shares with Multiple Voting Rights before the expiration date are changed to Ordinary Shares, as well as the impact of changing the Shares with Multiple Voting Rights into Ordinary Shares;
f. The impact of implementing the Shares with Multiple Voting Rights for ordinary shareholders, including the impact of changing the Shares with Multiple Voting Rights into Ordinary Shares which may result in a change of controller;
g. Information about the shareholders with Multiple Voting Rights;
h. Information regarding Shareholders with Multiple Voting Rights in the event that the shareholders are natural persons;
i. Information regarding shareholders with Multiple Voting Rights in the event that the shareholders are legal entities;
j. Disclosure of information regarding:
i. Key performance indicators of the Issuer that describes the total transactions facilitated by the Issuer;
ii. The potential for dilution of public shareholders.
k. Disclosure of information regarding investor criteria suitable for investing in the Issuer’s Shares.
4. Information on the outer skin of the prospectus contains a short statement in capital letters that can immediately draw the reader’s attention to the most important risks for investors in Shares with Multiple Voting Rights, must contain at least:
i. Investment risk in the related Issuer’s Shares with the condition of the Issuer and its business activities executed or developed by the Issuer; and
ii. Risk of implementing Shares with Multiple Voting Rights.
5. In the important provisions of the articles of association, must add disclosure of information regarding the application of Shares with Multiple Voting Rights.
Author: Vania Aqilla Cahyaningrum
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas includes capital market and financial services.
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