Underwriting arrangementsTypes of arrangement
What types of underwriting arrangements are commonly used?
Underwriting arrangements are not mandatory in a public offering. The issuer can conduct a public offering without any underwriting arrangement.
If the issuer opts to use underwriting arrangements for the public offering, the issuer can enter into an underwriting agreement with the underwriter. There are two types of underwriting agreement recognised in Indonesia: full commitment or best effort. Under the full commitment agreement, the underwriter is responsible for purchasing all unsold securities. Under the best effort agreement, the underwriter is not responsible for purchasing all unsold securities but must make its best effort to sell the shares offered.Typical provisions
What does the underwriting agreement typically provide with respect to indemnity, force majeure clauses, success fees and overallotment options?
The OJK does not provide specific guidelines for the drafting of underwriting agreement. It is purely a contractual agreement between the underwriter and the issuer.Other regulations
What additional regulations apply to underwriting arrangements?
The name and profile of the underwriter, and the underwriting agreement shall be included in the prospectus. If the underwriter is a securities company, the prospectus needs to disclose whether there is any affiliation or any other material relationship between the underwriter and the issuer.