The Financial Services Authority (OJK), in cooperation with the International Finance Corporation (IFC), launched on Tuesday the good corporate governance (GCG) roadmap and manual, which it claims will help companies improve standards and business efficiency.

According to the roadmap, there are five core components that need to be addressed by firms namely, corporate governance framework, shareholders'€™ protection, stakeholders'€™ roles, transparency of information as well as the roles and responsibilities of the board of commissioners (BoC) and board of directors (BoD).

OJK chairman Muliaman D. Hadad said in his remarks that the superbody had come up with a total of 33 points of proposed requirements for the improvements.

'€œAs many as 11 points will be implemented this year and another 19 will be applied in 2015. The remaining three points will be implemented continuously over the following years,'€ he said.

In terms of a corporate governance framework, some of the points require companies to have their own codes of conduct, while with regards to shareholders'€™ protection, companies are required to send invitations for their annual general shareholders'€™ meeting at least 21 days before the meeting takes place.

Meanwhile, with regards to stakeholders'€™ roles, firms must develop anticorruption policies and disclose them in their annual reports, and provide long-term incentives for employees in the form of an employee stock ownership program (ESOP). Each appointed corporate secretary must attend basic training as well, particularly in law.

The roadmap also says that, in terms of transparency of information, companies must clearly disclose their share ownership and provide sufficient corporate information both in Indonesian and English on their websites.

Nurhaida, OJK commissioner for capital market supervision, said that many companies had not fully disclosed their shareholders, even though the information was crucial for investors'€™ decision-making process.

'€œIndonesian companies often have multi-layered shareholder compositions, which are difficult to comprehend by investors. We need to know what shareholders are actually affiliated with the companies. We will then be able to have a clear view of existing conglomerations,'€ Nurhaida told reporters on the sidelines of the launch.

In the last core component, which contains the responsibilities of the BoC and BoD, companies are required to provide an orientation program for the new boards'€™ members and to hold at least six meetings a year for the boards.

Meanwhile, Nelson Tampubolon, OJK commissioner for banking supervision, said that the GCG implementation would be largely connected to Bank Indonesia'€™s previous banking ownership regulation.

The regulation sets a 40 percent maximum ownership for a financial institution, 30 percent for a non-financial institution and 20 percent for an individual. If banks obtain a level 1 or 2 rating in the GCG and soundness level assessment, their shareholders are allowed to maintain their existing stake even if it exceeds the limit.

On the other hand, shareholders within banks that obtain the 3, 4, 5 scores will be forced to adjust their ownership, including by holding a merger.

An OJK official, who refused to be named, said that shareholders within 10 banks would most likely be forced to adjust as the lenders scored poorly. '€œThey get five years to carry out the adjustments,'€ he said.

Commenting on the roadmap, OBCB NISP president director Parwati Surjaudaja said that the proposed requirements were not new for the lender, whose majority shareholder is Singapore'€™s OCBC Overseas Investments Pte. Ltd.

'€œBanking industry is already heavily regulated and monitored. I don'€™t think we will have problems in implementing the roadmap,'€ she said.

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