“Currently, the Securities Crowdfunding service has 2 (two) types of securities that can be offered, which are equity and debt or Sukuk.”
Indonesian Financial Services Authority (“Otoritas Jasa Keuangan” or “OJK”), through its OJK Regulation No. 57/POJK.04/2020 on Securities Offering through Technology and Information basis of Crowdfunding (“POJK 57/2020”), has introduced the development of crowdfunding scheme which previously only can be applied to the securities instrument with the type of equity (shares).
The issuance of POJK 57/2020 is conducted to accommodate Small and Medium Business needs that utilize crowdfunding to obtain alternative business funding in the capital market.
In line with POJK 57/2020, Securities Crowdfunding services has 2 (two) types of securities that can be offered, which are equity and debt or Sukuk (“Efek bersifat Utang dan/atau Sukuk or “EBUS”).
Definition of Securities Crowdfunding
According to POJK 57/2020, Securities Crowdfunding is an activity in the capital market area that provided securities offering services issued by Issuer and offered directly to the investor through a technology information system.
The said technology information system is provided by Crowdfunding Operator registered in OJK. The Crowdfunding Operator’s system can be accessed by the public via mobile phone or website; thus it provides many opportunities for people to become Investor.
In general, below diagram of the mechanism of the Securities Crowdfunding service:
Based on the above diagram, the Crowdfunding Operator act as an intermediary party between the Issuer and the Investor. Therefore, the Issuer and Crowdfunding Operator will sign the agreement, which presents their respective rights and obligations upon the crowdfunding process. Furthermore, and based on POJK 57/2020, the Crowdfunding Operator will conduct an assessment upon the Issuer at least including legality aspect, financial aspect, capital aspect, and Issuer’s project that being based on the issuance of EBUS.
The aspects required by Issuer are as follow:
- Prohibited as a legal entity that directly or indirectly controls by a business group or conglomerate;
- not categorized as publicly-company or being subsidiary of publicly-company;
- net capital value (exclude land and building) less than IDR10 billion;
- cooperate with Indonesian Central Securities Depository on Securities Registration; and
- provide all the required information and documents based on the types of securities that will be offered.
Moreover and from the Investor side, POJK 57/2020 also obliged Crowdfunding Operator to have an agreement with the Investor (terms and conditions). Specifically, if Investor is intended to buy the EBUS, the Crowdfunding Operator must act as act on behalf of Investor to monitor the development of Issuer’s project management.
As same as the Issuer, the Crowdfunding Operator must ensure the Investor is eligible with the following criteria:
- Have securities account in Custody Bank and Indonesian Central Securities Depository;
- Fulfill the following limitation:
- An investor with an annual income of IDR 500 million or less can buy securities through Securities Crowdfunding service at the last 5% (five per cent) from the annual income; and
- An investor with an annual income of more than IDR 500 million can buy securities through the Securities Crowdfunding service at the last 10% (five per cent) from the annual income.
This limitation is not applied for legal entities, and parties that have experience investing in the capital market which proved by the ownership of securities account at least 2 (two) years before the date of securities offering.
Types of Offered Securities
According to POJK 57/2020, the offered securities in the Securities Crowdfunding service are consist of:
- Equity securities; which are shares, other equity that can be converted into shares, and sharia securities.
- EBUS, which must fulfill the following criteria:
- Issued in rupiah currency;
- based on the project;
- cannot be trading;
- have maturity date no more than 2 (two) years;
- can be repaid earlier, as long it is approved by the majority holders of EBUS that attend the general meeting of EBUS holders;
- the payment of the principal debt, interest, profit sharing/nisbah, margin can be conducted periodically or in the maturity date; and
- sharia conformity statement (for sukuk).
Securities Offering Provisions
As regulated in POJK 57/2020, the provisions on securities offering in Securities Crowdfunding are as follow:
- An issuer with equity securities cannot use more than 1 (one) Securities Crowdfunding operator;
- Crowdfunding limitation for Issuer at last IDR 10 billion within 12 (twelve) months. The crowdfunding activity can be conducted through 1 (one) time offering or more.
- If minimum funds cannot be reached during the offering period, the securities offering is null and void.
- The duration of the offering period is 45 (forty-five) days.
- Securities Crowdfunding Operator must use escrow account to receive the funds from the Investor.
- An issuer must deposit and/or register the securities to Indonesian Central Securities Depository, based on the result of offering activity at last 2 (two) days after the offering has been ended.
- Offering activity can be conducted gradually and is stated in the offering plan or agreement between the Issuer and the Securities Crowdfunding operator.
Author: Kristalia Andiani Puteri
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