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cash flows, working capital requirements and capital expenditures. The Companys Board of Directors may not recommend and its shareholders may not approve the payment of dividends.
The Company may incur expenses or liabilities that would reduce or eliminate the cash available for distribution of dividends. If the Company does not pay cash dividends on the Shares, its shareholders may not receive any return on
investment in the Shares unless they sell the Shares at a price higher than the price at the time of purchase. Under the Company Law, the Company may distribute a final dividend to shareholders only if the Company has booked
a positive profit balance after deduction for setting aside part of its positive profit balance for its mandatory reserves at the close of its financial year i.e. all net profit booked at the close of its financial year covers all accumulated losses from
previous financial years. A part of net profits will have to be set aside for the Companys mandatory reserves until the reserve reaches at least 20 of the Companys paid-up and issued capital. As at June 30, 2015, the amount of the
Companys prescribed mandatory reserves was 20.5 of the Companys total issued and paid up capital.
3. The he rights of minority shareholders may be more limited than in other jurisdictions.
The obligations under Indonesian law of majority shareholders, commissioners and directors with respect to minority shareholders may be more limited than those in the United States and certain other countries. Consequently, minority
shareholders may not be able to protect their interests under current Indonesian law to the same extent as in certain other countries. Principles of corporate law relating to such matters as the validity of corporate procedures, the fiduciary
duties of the Companys management, Directors, Commissioners and the controlling shareholder and the rights of the Companys minority shareholders are governed by the Company Law, the Indonesian capital market law, OJK
regulations, IDX regulations and the Companys articles of association. Such principles of law differ from those that would apply if the Company were incorporated in a jurisdiction in the United States or in other jurisdictions. In particular,
concepts relating to the fiduciary duties of management are untested in Indonesian courts. Accordingly, the legal rights or remedies of minority shareholders may not be the same, or as extensive, as those available in other jurisdictions or
sufficient to protect the interests of minority shareholders.
4. Indonesian law may operate differently from the laws of other jurisdictions with regard to the convening of, and the right of shareholders to attend and vote at, general meetings of shareholders of the Company.
The Company is subject to Indonesian law and the applicable listing requirements of the IDX. In particular, the convening and conduct of general meetings of the Companys shareholders will continue to be governed by Indonesian law. The
procedure and notice periods in relation to the convening of general meetings of shareholders of the Company, as well as the ability of shareholders to attend and vote at such general meetings, may be different from those of jurisdictions
outside Indonesia. For instance, the shareholders of the Company who would be entitled to attend and vote at general meetings of shareholders of the Company are, by operation of Indonesian law, those shareholders appearing in the
Companys register of shareholders on the business day immediately preceding the day on which the notice of general meeting is issued, regardless of whether such shareholders may have disposed of their shares following the applicable
record date. In addition, investors who may have acquired their shares after the applicable record date and before the day of the general meeting would not be entitled to attend and vote at the general meeting. For further details on the
procedure for the convening and conduct of general meetings of the Companys shareholders under Indonesian law. Accordingly, potential investors should note that they may be subject to procedures and rights with regards to general
meetings of shareholders of the Company that are different from those to which they may be accustomed in other jurisdictions.
5. The Company operates in a legal system in which the application of various laws and regulations may be
uncertain, and through the purchase of the Shares, holders of the Shares are exposed to such legal system and may find it difficult or impossible to pursue claims relating to the Shares.
As Indonesia is a developing market, its legal and regulatory regime may be less certain than in more developed markets and may be subject to unforeseen changes. At times, the interpretation or application of laws and regulations may be
unclear and the content of applicable laws and regulations may not be immediately available to the public. Under such circumstances, consultation with the relevant authority in Indonesia may be necessary to obtain a better understanding
or clarification of applicable laws and regulations. Indonesias legal system is a civil law system based on written statutes, although there remains an area for the
application of customary law. Judicial and administrative decisions do not constitute binding precedent and are not systematically published. Indonesias commercial and civil laws as well as rules on judicial process were historically
based on Dutch law as in effect prior to Indonesias independence in 1945, and some of these laws have not been revised to reflect the complexities of modern financial transactions and instruments. Indonesian courts are often
unfamiliar with sophisticated commercial or financial transactions, leading in practice to uncertainty in the interpretation and application of Indonesian legal principles. The application of many Indonesian laws depends, in a large part, upon
subjective criteria such as the good faith of the parties to the transaction and principles of public policy, the practical effect of which, absent a binding precedent system, is difficult or impossible to predict.
Indonesian judges operate in an inquisitorial legal system and have very broad fact-finding powers and a high level of discretion in relation to the manner in which those powers are exercised. As a result, the administration and enforcement
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of laws and regulations by Indonesian courts and Indonesian governmental agencies may be subject to considerable discretion, uncertainty and inconsistency. Furthermore, corruption in the court system in Indonesia has been widely
reported in publicly available sources. Indonesian legal principles relating to the rights of shareholders, or their practical implementation by Indonesian courts,
differ from those that would apply within the United States or the EU. Absent a binding precedent system, the rights of shareholders under Indonesian law might not be as clearly evident as in most United States and EU jurisdictions. In
addition, under Indonesian law, companies may have rights and defenses to actions filed by shareholders that these companies would not have in jurisdictions such as the United States and EU member states.
6. A shareholders right to participate in future rights offerings could be limited, which would cause dilution to their holdings.
To the extent that in the future the Company offers its shareholders rights to purchase or subscribe for shares or otherwise distribute shares to its shareholders, holders from other jurisdictions may be unable to exercise such rights for
the Shares unless a registration statement under the Securities Act or similar legislation in other countries is effective with respect to the new shares or an exemption from registration under the Securities Act or similar legislation in other
countries is available. Whenever the Company makes a rights or similar offering of the Shares, the Company will evaluate the costs and
potential liabilities associated with, and its ability to comply with, United States regulations and those of other countries, for any registration statement and any other factors the Company considers appropriate. However, the Company may
choose not to file any registration statement andor other relevant documents. If the Company does not file a registration statement and no exemption from registration under the Securities Act is available, then shareholders in other jurisdiction
would be unable to participate in rights or similar offerings and would suffer dilution of their shareholdings. Consequently, shareholders may not be able to maintain their proportional equity interests in the Company. Also, as rights issues in
Indonesia generally enable participants to purchase shares at a discount to the recent trading price, shareholders inability to participate in such rights offerings could cause material economic harm.
7. Shareholders may be subject to dilution on issues of new Shares or other equity securities by the Company.
The shareholders will experience dilution in their holdings upon issuance of additional Shares in the future. Where funds are raised through the issuance of new Shares or other equity or equity-linked securities of the Company other than on
a pro rata basis to existing shareholders, the percentage ownership of such shareholders in the Company may be diluted. Moreover, the newly issued securities may have rights, preferences or privileges superior to those of the Shares of the
existing shareholders. Future sales or the prospect of future sales of Shares, including by the controlling shareholder, could have a material
adverse effect on the market price of the Shares. Following the Offering, the controlling shareholder will continue to own approximately 92.5 of its outstanding Shares.
A sale of a significant number of the Shares in the public market after the Offering by the controlling shareholder, or the perception that such sales may occur, could have a material adverse effect on the market price of the Shares. These
factors could also affect its ability to raise equity capital in the future at a price favorable to the Company, or at all.
8. Exchange fluctuations may have a material adverse effect on the value of the Shares and any dividend distribution.
The Company’s Shares are denominated and are quoted in Rupiah on the IDX. Dividends if any with respect to the
Shares will be declared and paid in Rupiah and proceeds from on-market sales of the Shares will be received in Rupiah. If a shareholder wishes to receive such dividend or proceeds in a currency other than Rupiah it will be required to convert
the relevant Rupiah amunts into that foreign currency. Fluctuations in the exchange rates between the Rupiah and any particular foreign currency will affect the foreign currency value of the dividends received and of any sale proceeds.
Since the beginning of 2015, the value of the Rupiah compared to the U.S. dollar significantly, and such a depreciation will significantly decrease the U.S. dollar value of any dividend payments or sale proceeds. In addition, foreign exchange
rules may be imposed which prevent or restrict the conversion of Rupiah to any foreign currency. Dividends may also be subject to Indonesian withholding tax.
9. Indonesian law contains provisions that could discourage a takeover of the Company.
