IDX's Main Board Update: The Impact of Newly Effective Free Float Requirements on Listed Companies

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Enactment of Additional Requirements to Remain Listed on IDX's Main Board

On 21 December 2021, IDX issued the Decree of the Board of Directors of the IDX No. Kep-00101/BEI/12-2021 regarding the Amendment to Rule No. I-A on the Listing of Shares and Equity Securities Other than Shares Issued by Listed Company ("Listing Rule"). One of the key take-aways is the additional requirements for a listed company to remain listed on the Main Board, which kicked-in on 21 December 2023, as follows:

a) Having more than 750 shareholders with KSEI (the Indonesian central custodian)’s Single Investor Identification (SID - Nomor Tunggal Identitas Investor).

b) Compliance with the following additional share free float market capitalization: 

  • at least 10% or more, if the total share free float market capitalization of the company is above IDR200,000,000,000; or
  • at least 7.5% up to less than 10%, if the total share free float market capitalization of the company is above IDR1,000,000,000,000. 

c) Having its annual audited financial statements include an unqualified opinion for the last two consecutive financial years. 

(collectively, the "Additional Main Board Requirements").

Under the Listing Rule, failure to comply with the Additional Main Board Requirements will result in such listed company's shares to be taken out from the Main Board and moved to the Development Board of the IDX. Subsequently, further non-compliance will result in further consequences as elaborated below.

Failure to Comply with the Free Float Requirements to Remain Listed on IDX

Under the Listing Rule, in order to remain listed on the IDX, a listed company must, among others, maintain total free float of shares in the minimum amount of 50,000,000 shares and at least 7.5% of the total listed shares to remain listed on IDX ("Free Float Requirements to Remain Listed on IDX"). The Listing Rule provided for a two-year relaxation period to comply with this requirement, which has now taken effect as of 21 December 2023.

In conjunction with the above provision, pursuant to Decree of the Board of Directors of the IDX No. Kep-00315/BEI/11-2023 dated 1 December 2023 regarding Rule I-X on the Listing Placement of Equity Securities on the Watchlist Board ("Rule I-X"), effective as of 31 January 2024, failure to comply with the Free Float Requirements to Remain Listed on IDX will result in such listed company being placed on the Watchlist Board. 

Further, the Rule I-X stipulates that, if a listed company is put under the Watchlist Board for more than 1 consecutive year, such company's shares will be subject to suspension by the IDX. If the non-compliance continues to be unresolved, pursuant to the Decree of the Board of Directors of the Jakarta Stock Exchange No. Kep-308/BEJ/07-2004 dated 19 July 2004 regarding Rule No. I-I on Delisting and Relisting of Shares in the Stock Exchange, such company may thereafter be subject to a forced delisting by the IDX.

Free Float Definition

On 31 July 2023, IDX issued Circular Letter No. SE-00010/BEI/07/2023 regarding Explanation on the Provision pertaining the Listing of Shares and Equity Securities Other than Shares Issued by Listed Company. The Listing Rule defines free float shares as (i) shares owned by a shareholder that holds less than 5% of the total listed shares; (ii) shares not owned by a controller and an affiliate of the listed company; (iii) shares not owned by any member of board of commissioners or board of directors of the listed company; and (iv) shares not part of the treasury shares of the listed company.

This letter provides additional clarity on the term "affiliate" as referenced in the definition of free float under the Listing Rule, specifically as "affiliate of the controller". Technically, this implies that if there are parties identified as affiliates of the main shareholder(s), their ownership will not be aggregated with that of the main shareholder(s), as long as that parties’ ownership is less than 5% of the total listed shares. Consequently, such ownership will be considered as free float shares.

Girindra Henriyono (Associate, Jakarta, Witara Cakra Advocates) and Deborah Victoria (Associate, Jakarta, Witara Cakra Advocates) are also contributing authors to this publication.

White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.

This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.

© 2024 White & Case LLP

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