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ID 
Shares Buyback Carried Out by Public Company according to Limited Liability Companies Law and Regulation of Financial Services Authority
Regulations concerning Shares Buyback by limited liability company are generally regulated in Law Number 40 of 2007 concerning Limited Liability Companies (“UU PT“) and are specifically regulated in the Law Number 8 of 1995 concerning Capital Market (“UU Pasmod”) and Regulation of Financial Services Authority Number 30/POJK.04/2017 concerning Buyback of Shares Issued by Public Company (“POJK 30/2017”). if it is carried out in Public Companies. These laws and regulations regulate Share Buybacks with certain terms and conditions.
Shares Buyback is divided into 2 (two) conditions which are differentiated based on the party who requests the Buyback of Shares in the Company at the General Meeting of Shareholders (“GMS“), namely:
- At the request of the Company; or
- At the request of Shareholders.
Shares Buyback at The Request of the Company:
For Shares Buyback which is requested by Shareholders, we can rely refer to the rules in Article 37 Paragraph (1) of the UU PT jo. Article 2 Paragraph (1) POJK 30/2017. In connection to that, regulation in Article 37 Paragraph (1) UU PT regulates that Company can buy its issued shares with these following terms and conditions:
- does not cause the Company’s Net Worth to be less than the issued capital plus the Mandatory Reserves that have been set aside; And
- The total nominal value of all shares repurchased by the Company and share pledges or fiduciary guarantees for shares held by the Company itself and/or other Companies whose shares are directly or indirectly owned by the Company, does not exceed 10% (ten percent) of the total capital placed in the Company, unless otherwise regulated in the laws and regulations in the capital markets sector.
Related to the regulation in Article 37 Paragraph (1) letter a UU PT as mentioned above, what is meant by Net Worth is all of the Company’s assets minus all of the Company’s liabilities in accordance with the latest financial report approved by the GMS within the last 6 (six) months (vide Explanation of Article 37 Paragraph (1) letter a UU PT). Still in relation to the provisions in Article 37 Paragraph (1) letter a of the PT Law, Mandatory Reserves are at least 20% (twenty percent) of the total Issued and Paid-up Capital. Therefore, it is known that the Shares Buyback mIGHT not cause the Company’s net assets become smaller than 120% (one hundred and twenty percent) of the Company’s Issued and Paid-up Capital.
Shares Buyback at the request of Shareholders:
- Amendment on the Articles of Asssociation;
- transfer or guarantee of the Company’s assets which have a value of more than 50% (fifty percent) of the Company’s Net Worth; And
- merger, consolidation, takeover or separation.
The Shareholders’ right to request the Company to buy its shares back is given to each Shareholder regardless of the number of shares owned by the Shareholder, thus each Shareholder may exercise this right according to their circumstances and needs (Vide M. Yahya Harahap, Hukum Perseroan Terbatas. Jakarta: Sinar Grafika, 2021, P. 277). However, Shares Buyback at the request of Shareholders must still take into account the provisions in Article 37 Paragraph (1) letter b of the UU PT which regulates as follows: “The company can buy back shares that have been issued with the following conditions: The total nominal value of all shares repurchased by the Company and share pledges or fiduciary guarantees for shares held by the Company itself and/or other Companies whose shares are directly or indirectly owned by the Company, does not exceed 10% (ten percent) of the total capital placed in the Company, unless otherwise regulated in the laws and regulations in the capital markets sector.”
Shares Buyback must be carried out through the GMS:
Worth to note that, although Shares Buyback is based on request of the Company itself or Shareholders, Share Buyback is only permitted or in other words required to be carried out based on the approval of the GMS, unless otherwise regulated in the laws and regulations in the capital markets sector (vide Article 38 Paragraph (1) UU PT jo. Article 2 Paragraph (3) POJK 30/2017). In carrying out the GMS for shares Buyback at the request of the Company or of the Shareholders, must comply with the provisions regarding meeting summons, quorum, and approval of the number of votes for amendment to the articles of association regulated in Article 79 Paragraph (5) to Paragraph (10), Article 82, Article 83, Article 86, and Article 87 UU PT .
There is a difference between a GMS with an agenda for Buying Back Shares at the Company’s Request and a GMS with an agenda for Buying Back Shares at the Shareholders’ request. A GMS for Share Buyback at the request of the Company can be held at the request of 1 (one) or more Shareholders who together represent 1/10 (one tenth) of all shares with voting rights or the Company’s Board of Commissioners, whilst a GMS for Shares Buyback at the request of Shareholders can only be proposed at the request of 1 (one) or more shareholders who together represent 1/10 (one tenth) of all shares with voting rights (vide Article 79 Paragraph (2) UU PT jo. Article 3 Paragraph (1) Regulation of Financial Services Authority Number 17/POJK.04/2020 concerning Material Transactions and Changes in Business Activities).