Legal aspect of capital market financing (through initial public offering) for micro, small, and middle scale business in Indonesia

Abstract

One of the major power of a national economic activity is business activity. Any kind of business needs strong entrepreneur. In order to enlarge or expand its strong business, an entrepreneur shall be supported by a health financial asset. The financial necessity of a business can be provided from several sources, namely, conventional financing (banking or credit) and other sources including capital market financing. The capital market financing recently can be accessed only by big scale entrepreneur, i.e. through initial public offering. Prevailing legal and financial requirements (through Initial Public Offering) has made the access to obtain capital market financing is restricted for micro, small and middle scale entrepreneur in Indonesia. Accordingly, Otoritas Jasa Keuangan (Financial Services Authority) has created some programs to encourage such micro, small, and middle scale business to access the capital market financing. This article based on the research which used normative juridical approach that focuses on secondary data, such as regulations and literature. The purpose of this article is to describe the major legal issues of Initial Public Offering for micro, small, and middle scale business in Indonesia. Further, it will also describe the current legal barrier for such entrepreneur to conduct the Initial Public Offering.