Indonesia's stock market watchdog has issued a ruling allowing mainly listed firms to make substantial transactions without shareholder approval as part of efforts to revive the indebted corporate sector.
"The main reason is to support companies' restructuring programmes and national economic recovery as well as supporting the effectiveness of court rulings," the Capital Market Supervisory Agency (Bapepam) said in a statement.
Analysts said such a move would help the Bank Restructuring Agency (Ibra) speed the sale of billions of dollars in assets handed over by indebted bank owners as part of debt settlements with Jakarta during the Asian financial crisis of the late 1990s.
Bapepam said the ruling applied to so-called material transactions – those worth 10 per cent or more of a listed or delisted company's annual sales or 20 per cent or more of capital.
Under the rules, such transactions would be allowed without shareholder approval for an asset sale of a listed or delisted company by Ibra or for a divestment or an acquisition as a result of a court ruling.
"The rules will be positive for the restructuring process and for debt holders," said Vickers Ballas chief analyst in Jakarta, Ferry Yosiahartoyo.
Director of institutional sales at Trimegah Securities, Octavianus Tedjojuwono, agreed the rule would be positive.
"This way Bapepam helps Ibra, just like it did with BII," he said. Last month, leading retail bank Bank Internasional Indonesia (BII) escaped being delisted after Bapepam supported a move by the stock exchange to temporarily freeze application of several delisting rules.
Under the criteria, BII could have been delisted because its average closing price was below 50 rupiah for three straight months. BII is majority owned by Ibra following government recapitalisation of the bank in 1999.
Bapepam said the new rules would simplify procedures for companies interested in participating in Ibra asset sales as long as the target entity was relevant to their core business.
But to protect investors, Bapepam said those companies seeking to buy Ibra assets under the ruling had to obtain shareholder approval first.