Legal Certainty and Investor Confidence: an Analysis of Indonesia's Capital Market Regulations
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This study aims to assess the effectiveness of Indonesian legal tools in protecting investors within the capital market context and to examine the legal implications of issuer bankruptcy on investor rights. Legal issues have arisen as a result of the recent growth in alternative capital market funding methods, such as safeguarding investors in the event of issuer firm bankruptcy. The degree of investor and systemic risk is increased by legal flaws or gaps and improperly aligned regulatory system flaws. This study employs literature-based analysis and normative legal research approaches. It examines relevant legislation, legal doctrines, and regulatory procedures in place in Indonesia, particularly in relation to investor protection and capital market governance, including the bankruptcy of public companies. The analysis reveals that, although the Indonesian capital market regulation, specifically Chapter II, Article I of Regulation No. 8 of 1995, provides investors with some protection, there is a glaring lack of enforcement of this legislation. Delisting, asset bankruptcy, and asset lockup following the issuer company's bankruptcy declaration cause investors to suffer significant losses. The litigation-based legal supervision offered by the Otoritas Jasa Keuangan (OJK and Badan Pengawas Pasar Modal dan Lembaga Keuangan (Bapepam-LK) is insufficient to ensure long-term and efficient compensation for impacted shareholders. According to the research, investors can take steps to efficiently resolve investor claims, such as requiring faster legal case hearings, expanded legal disclosure timelines, and preventative actions
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