Risk of equity securities
chapter regarding the plan of use of funds. The management needs to make a separate consideration to determine the exact
amount and timing of utilization of the net proceeds of this Public Offering. The Company may use the proceeds of this
Public Offering in a different way from that stated in this Prospectus, which may not correspond with the wishes of the
shareholders such as using the proceeds from this Public Offering in a way that may not result in an increase of the
Company’s operations or value of the shares. Failure to use the proceeds of this Public Offering effectively might results
in financial loss that could cause a decrease shares’ price and delay in the development of various business activities of
the Company.
9. Risk that the buyer may be subject to restrictions on the rights of minority shareholders
Under the current Indonesia Law, minority shareholders cannot protect their interests within certain same limits as in other
countries. Under the Indonesia law, the obligations of the majority shareholder, the board of commissioners and directors
with respect to minority shareholders, are more limited than those in other countries.
The principles of UUPT related to the validity of the corporate procedures and fiduciary duties of the Companys
management, board
of commissioners
and directors
and
controlling shareholders, and the rights of minor shareholders of the Company is governed by the UUPT, regulations of
Bapepam-LK and articles of association while for the Corporate established beyond jurisdiction of the Republic of Indonesia,
legal principles that apply will be different. Claims filed by the Company’s shareholders in connection
with the activities of board of commissioners and directors almost never filed on the Company’s name or had never filed in
Indonesia court and the rights of minority shareholders have never been used in practice, even though the regulation has
been established since 1995. If the above demands can be implemented
by the
Indonesia Law,
but the
absence of
jurisprudence reference of the court may make the process of claim filed in court to be difficult. Thus there is no
certainty that the rights of minority shareholders received under the Indonesia Laws will be the same or sufficient
compared with those received by minority shareholders under the laws in other countries.
10. Risk of buyers restricted rights to participate in the Company’s limited Public Offering
A listed company must offer pre-emptive rights to the Company’s shareholders whose names are recorded in the
Register of the Company’s shareholders 8 Eight working days after approval of the Shareholders General Meeting to be able
to buy and pay for a number of shares proportionally so that they can maintain their percentage of share ownership in the
event of issuance of new shares in accordance with regulation of Bapepam No.IX.D.1.
Each time the Company conducts a limited public offering or other offerings, the Company will evaluated the costs and
potential liabilities in connection with the offering and its ability to meet regulations beyond Indonesian jurisdiction and
other factors that are considered necessary by the Company. Nevertheless the Company may choose not to comply the capital
market regulations in several jurisdictions and when the Company does not obtain exceptions to the regulations and
registration requirements
in certain
jurisdictions, the
shareholders in such jurisdiction cannot participate in the public
offering and
may experience
dilution in
stock ownership. Accordingly, the Company cannot guarantee that the
buyers of shares offered can maintain the percentage of share ownership proportionally at any time. Since limited public
offerings in Indonesia allow buyers to buy shares at a substantial discounted current share price, the inability to
participate in limited public offering can cause material economic loss for the shareholders.