Share buybacks - The second OJK Regulation

Following its first regulation on Consumer Protection, the OJK issued its second regulation, Regulation of the Head of OJK Number 2/POJK.04/2013. This regulation mainly regulates share buybacks by public companies which are allowed in certain circumstances. From the elucidation of the regulation, it aims to reduce the impact of a significantly fluctuating market which creates pressure on stocks and therefore, issuers or public companies need to be able to repurchase stocks without violating any law while still maintaining an orderly, fair, and efficient trading of securities. Buybacks are only allowed in 'significantly fluctuating market conditions' defined as (i) when the Jakarta Composite Index (JCI) falls by 15% cumulatively over 3 Exchange days, or (ii) other conditions determined by the OJK. Under the regulation, such buybacks are limited to 20% of the company's capital and require GMS approval.