New Bapepam - LK Rule On Shares with Differing Nominal Values

On 1 October 2010, the Chairman of the Capital Market and Financial Institution Supervisory Agency (Bapepam - LK) issued Rule IX.D.6 concerning the issuance of shares with differing nominal values (or otherwise known as par value). This rule removes a common impediment to capital raising for issuers whose shares have fallen below their current nominal value, and opens up new restructuring possibilities for debt to equity conversion in distressed issuers.

Rule IX.D.6 adds welcomed flexibility in Indonesia's capital market regime. Indonesian company law does not permit shares to be issued at less than nominal value, and the inability to issue different classes of shares with lower nominal value was previously a real obstacle for companies whose share price had fallen below its nominal value. The new rules will permit such companies to raise capital for rights issuances.