Harmonization of Equity Crowdfunding Regulations on the Santara Application (Acten Journal Law Review)

Summary

• Equity crowdfunding in Indonesia is regulated under Financial Services Authority Regulation Number 57 of 2020, and Law No. 4 of 2023 changed the legal basis.p.1
• Between 2015 and 2019, around 22% of MSMEs faced capital-related problems.p.3
• In 2022 OJK imposed an administrative sanction freezing Santara's crowdfunding services for failing to register issuers' securities with KSEI.p.5
• At least 17 laws were amended by the P2SK Law, including the Capital Market Law.p.9
• Operating without an OJK licence can bring imprisonment of 4-12 years and fines of Rp. 10 billion to Rp. 400 billion.p.10
• Santara has been an OJK-licensed equity crowdfunding platform since early September 2019.p.12
• The share offering period is a maximum of 60 calendar days, with funds sent to the issuer within 21 working days after the offering ends.p.14

Key insights

1. The Capital Market Law did not regulate digital securities offerings through platforms such as ECF, creating a legal gap and uncertainty.p.4
2. Safeguards were weakened because failing to register securities at KSEI can cost investors dividends and liquidity.p.5
3. OJK Regulation 57 classifies ECF as a capital market activity although the Capital Market Law gave no clear basis.p.8
4. The P2SK Law broadened the definition of securities to cover digital and conventional instruments.p.9
5. OJK gained clearer and broader authority to supervise securities offerings through digital platforms, including ECF.p.10
6. ECF share offerings are not classed as public offerings and shares can be traded only within the same portal.p.11
7. Santara listing standards stress that issuers should be profitable, accountable and sustainable.p.15
8. OJK should align its regulation with the Capital Market Law and the P2SK Law and set standard contract clauses to protect investors.p.16