Moch Indra Tri Junialdi

Faculty of Law, Universitas Indonesia

Free Float Requirements At Indonesian Stock Exchange

Indonesian Stock Exchange (IDX) issued IDX Decree No. KEP-00001/BEI/012014 of 2014 on Amendment to Regulation Number I-A on the Listing of Equity Shares
and Securities Excluding Shares Issued by Publicly Traded Companies (Regulation IA). One of key changes in Regulation I-A is a new free float requirement for new
listings on both the main board and the development board of IDX, and a new minimum
free float continuing requirement has been introduced for companies listed on the IDX.
The purpose of new minimum free float requirements is to boost liquidity amid
domestic stock markets which is consistent with the regulatory push in Southeast and
South Asia more broadly to increase equity holding by non-affiliated shareholders in the
public markets. Here is the summary of differentiation free float requirement between an
old Regulation I-A and new Regulation I-A:

Company
New

IPO

Old Regulation I-A

Company

Main board : for new IPO a. Total number of shares owned by

Company,

New Regulation I-A

the

total

non-controlling shareholder and

number of shares owned

non-substantial

by

non-controlling

following the IPO, must be at

shareholder after the IPO

least 300.000.000 shares (for the

must

main

board)

100.000.000 shares or at

shares

(for

least 35% of the paid up

board) and must be at least:

1) 20% of the paid up capital,

be

at

least

capital.
Development board- for

for

shareholder

or

150.000.000

the

development

issuers

whose

equity

IPO company, the

value before the IPO is less

total number of shares

than IDR500.000.000.000;
2) 15% of the paid up capital,

new
owned

by

non-

controlling shareholders
after the IPO must be at
least 50.000.000 shares or
at least 35% of the paid
up capital.

for

issuers

whose

equity

value before the IPO is

between
IDR500.000.000.000

to

IDR2.000.000.000.000; and
b. Total number of shareholders
must be at least 1.000 (for
companies listed on the main

board) or 500 (for companies

listed on the development board)
that has securities account with
brokers who are members of
IDX).
Prospective listed companies that
have already submitted a listing
application

to

IDX

before

30

January 2014 will not be subject to

the

new

minimum

free

float

requirements, provided there is no

change to the date of the financial
statements used by the prospective
listed companies for the listing.
Companies

There is no provision that

listed on IDX

applicable to existing listed

For existing listed companies to

maintain their listing:
1) The total number of shares

companies.

owned

by

shareholder

non-controlling
and

non-

substantial shareholder must

be at least 50.000.000 shares
and at least 7.5% of the total
paid up capital; and
2) The
total
number

of

shareholders must be at least

300

that

have

securities

account with brokers who are

members of IDX.
These requirements

must

be

fulfilled within 24 months from

January 30,2014.
Note that IDX retains its power
to

ask

any

existing

listed

company to maintain its free float

at a higher level determined by
IDX in its discretion.

However, the application of this requirement may raise certain issues such as:

1. How existing company that have minority shareholdings far below the above
thresholds satisfy the minimum shareholdings with a 24 month transition period
(especially the industry of existing company that public not interested);
2. How if a new controlling shareholder of an existing listed company that do a
Mandatory Tender Over (MTO) as a result holds more than 92.5% of the
issued and paid up shares of the existing listed company?
To answer both main issue of new free float requirement, list of regulation
consist of:
a. Law No. 8 of 1995 on Capital Market (Law No. 8/1995);
b. Bapepam-LK Rule No.IX.H.1 on Public Company Take Over ("Takeover
Rule");
c. IDX Decree No. KEP-00001/BEI/01-2014 of 2014 on Amendment to Regulation
Number I-A on the Listing of Equity Shares and Securities Excluding Shares
Issued by Publicly Traded Companies (Regulation I-A);