FULL DISCLOSURE AND MATERIAL INFORMATION PRINCIPLE FOR BACK DOOR LISTING COMPANIES

Abstract

This paper provides an analysis of the private company transactions in Indonesia known as BDL that are not listed on the stock exchange. The focus of this paper is on the significance of disclosure and material information for companies engaging in "back door listings." The research methods employ normative legal research with a legal perspective. This research relies on main legal materials, namely Financial Services Authority Regulation 7/POJK.04/2017 on Registration Statement Documents. Meanwhile, secondary legal resources are legal materials that explain main legal materials. The findings proved that Investors should be wary of BDL stock transactions in Indonesia as they are often not overly regulated by comprehensive listing laws and are vulnerable to signs of fraud. Hence, investors are advised to avoid investing in BDL companies. In terms of implementing BDL in Indonesia, corporate action by way of acquisition must have the same standard of Principles of Openness (Full Disclosure) and material information that applies to IPO’s by revising Investment Law and Limited Liability Company Law as well as Financial Services Authority Regulation Number 7/POJK.04/2017 concerning Documents Registration Statement for Public Offering of Equity Securities, Debt Securities, and/or Sukuk by authorizing OJK to conduct a SWOT analysis (strengths, weaknesses, opportunities, and threats).