The transformation of a private company (PT) into a public company (PT Tbk) is a major achievement for a company. To give more context, by going public, a company has the "privilege" of being able to access large capital sources originating from public investment. This, certainly, can support the accelerated growth and expansion of the company's business.

However, holding the status of a public company certainly creates hefty legal consequences. This condition has a purpose of ensuring an increase in the company performance and an increase in the credibility of stakeholder, especially investors/shareholders. The big responsibility in question is, of course, related to the complexity and numbers of compliance activities which must be complied with.

In general, there are two factors which make the compliance activities of public companies more complex. First, there is more than one government agency which has authority to enforce the law against unlawful activities in the capital market sector. Among other things, the Financial Services Authority (OJK) which has the authority to regulate and supervise, and other authorities known as self-regulatory organization (SRO). Furthermore, other authorities in question consist of the Indonesia Stock Exchange (IDX); Guarantee and Settlement Institution whose functions are performed by the Indonesia Central Securities Depository (KSEI); and the Indonesia Securities Clearing and Guarantee Institution which is performed by PT Kliring Penjaminan Efek Indonesia (KPEI).

Another factor is many regulations in the capital market sector which create legal obligations for public companies. Based on regulatory mapping data conducted by Hukumonline Team, it was found that at least more than 100 (one hundred) regulations governing the obligation of public companies after conducting an initial public offering (IPO). This condition is undoubtedly a logical consequence of the first factor as described above.

To show the claim that the compliance activities of public companies in Indonesia are numerous and complex, we can look at one aspect of public company compliance, namely reports which need to be submitted by public companies.

Referring to Article 2 of Regulation of the Financial Services Authority Number 14/POJK.04/2022 of 2022 regarding the Submission of Periodic Financial Statements by Issuers or Public Companies (“POJK 14/2022”), it is explained that the issuers or public companies whose registration statements have become effective must submit periodic financial statements to the Financial Services Authority.

The periodic financial statements include annual financial statements and semi-annual financial statements. On the other hand, the Indonesia Stock Exchange (IDX) as the authority in the capital market sector stipulates nearly identical obligations. Based on Regulation I-E - Decree of the Board of Directors of PT Bursa Efek Indonesia Number KEP-00066/BEI/09-2022 of 2022 regarding the Amendment to Regulation I-E on Information Disclosure Obligations (“IDX Regulation I-E”), it is regulated that listed companies, in this case are the issuers or public companies whose securities are listed on the stock exchange, must submit periodic financial statements to the IDX.

Furthermore, not only periodic financial statements, based on IDX Regulation I-E, it is also explained that the obligations of the listed companies to submit various incidental reports to the IDX, which, when viewed quantitatively, are not less than 17 (seventeen) types of report.

The complexity of the compliance aspect of this public company certainly needs to be monitored carefully. This is due to the fact that the authorities in the capital market sector have imposed  threat of sanctions for non-compliance by public companies.

In POJK 14/2022 which regulates the obligation to submit periodic financial statements, for examples, a number of threats of severe administrative sanctions are explained, starting from warning notices, fines, business suspensions, to revocation of the effectiveness of Registration Statement by the OJK.

Likewise with the IDX as stated in the provisions of Regulation I-H - Decree of the Board of Directors of PT BEJ Number KEP-307/BEJ/07-2004 of 2004 regarding Sanctions, which provides for threat of severe administrative sanctions for public companies' non-compliance with the obligations stipulated by the stock exchange, starting from warning notices, fines, and suspensions on the IDX. Thus, it is not surprising that, in practice, many public companies are subject to sanctions by the relevant authorities, as can be seen through various news sources. 

Responding to the complex problem of the public companies' compliance activities above, Hukumonline presents Regulatory Compliance System ("RCS"). The Regulatory Compliance System is a platform launched by Hukumonline to monitor company regulatory compliance supported by Artificial Intelligence (AI).

Through RCS, public companies could monitor all regulations from various regulators in the capital market sector. Furthermore, RCS can systematically classify various obligations arising from these regulations, making it very easy for public companies to carry out compliance aspects.

Complexity of Capital Market Legal Obligations (Post-IPO) which Must Be Complied with

Based on the figure, it can be seen that there are 558 legal obligations in the capital market sector. This number indicates the complex of compliance activities for a company right after conducting an IPO.

And most urgently, RCS will optimally help mitigate the risk of public company non-compliance, so that the public companies are free from the "shadow" of sanctions which can disrupt the continuity of the company's business activities.

The Regulatory Compliance System is supported by curated content and results from the Hukumonline team with undergraduate and postgraduate legal backgrounds from well-known universities in the country and abroad. Therefore, RCS can package legal obligations accurately and can be easily understood by all users.

A number of leading companies have trusted RCS as their flagship legal compliance monitoring platform. Find out more about how RCS can help the companies by contacting [email protected] or clicking here.