April 7, 2026

New IDX Listing Rule: Enhancing free float and governance, but free from challenge?

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[co-authors: Deborah Victoria, Adhityo Adyahardiyanto*]

On March 31, 2026, through Decree No. Kep-00045/BEI/03-2026, the IDX issued its revised rules for listing on the main board and development board (the IDX Listing Rule). The new IDX Listing Rule amends various provisions of its 2021 predecessor and takes immediate effect, subject to transitional periods for certain provisions.

Key changes include: (i) a revised definition of "Free Float Shares" incorporating a new criterion of "shares that should be restricted to be transferred"; (ii) an increase in the minimum free float for continued listing from 7.5% to 15%, to be implemented gradually over two to three years based on market capitalisation 1 as at March 31, 2026; (iii) higher free float thresholds for initial listing based on market capitalization rather than equity, ranging from 15% to 25%; and (iv) new corporate governance requirements.

Background

The potential Indonesia’s downgrade from emerging to frontier market status, driven by concerns over low free-float shares and insufficient ownership transparency, prompted the establishment of the "8 Action Plans for the Acceleration of Capital Market Reform", with the revision of listing rules forming a central pillar aimed at bolstering transparency and market liquidity.

This alert highlights the key features and practical implications of the new IDX Listing Rule.

Practical implication

The raison d’être of the new rule is understandable: to elevate listing quality, strengthen corporate governance, and enhance investor protection. Whether it can be smoothly implemented, however, remains to be seen. As the rule is already in effect:

• all listed companies and their controllers may need to reassess their free float and plan for potential actions to satisfy the new free float requirements and governance enhancements
• prospective listed companies may wish to reconsider their capital structure, valuation, anticipated IPO size, and governance arrangements
• pipeline listing applicant will continue to be assessed under the requirements and procedures of the previous rule.

Definition of Free Float Shares

“Free Float Shares” are now defined as scripless shares listed on the IDX that:

(a) are held by shareholders owning less than 5% of total listed shares of the listed company

(b) are not held by the controller and/or affiliates of the controller of the listed company

(c) are not held by commissioners or directors of the listed company

(d) are not treasury shares of the listed company

(e) are not subject to transfer restriction.

While limbs (a) to (d) are already well understood by market participants. Limb (e), however, introduces a noteworthy criterion. To clarify several criteria, the IDX issued Circular Letter No. SE-00004/BEI/03-2026 dated March 31, 2026 (IDX Circular 4/2026). This circular explains that "shares that are subject to transfer restriction " among other things, include:

(a) shares that are subject to lock-up restrictions, whether arising from statutory provisions or in connection with a corporate action by the listed company

(b) portfolio shares held by venture capital companies (VC) or private equity (PE)

(c) shares that are subject to asset seizure by a government authority.

The phrase "among other things, include" above suggests that the IDX retains a residual discretion to identify additional categories and that the list set out above is illustrative rather than exhaustive. Notably, the criterion suggests that the IDX intends only freely transferable shares to be counted towards the free float. This is broadly similar with the guidance issued by, among other things, the Hong Kong Stock Exchange, which provides that the relevant portion of shares for which listing is sought must be held by the public and should not be subject to any disposal restrictions. 2

However, limb (b) above may give rise to a practical challenge. Whilst shares held by VC or PE as portfolio investments are ostensibly addressed, the provision neither explicitly defines what constitutes a portfolio investment 3 nor clarifies what qualifies as a VC or PE for these purposes, leaving the IDX to assess each case individually.

Free float reclassification

Under the previous regime (Clause V.2 of the previous listing rule), the IDX permitted a listed company to apply for its shareholder to be reclassified as a free float, provided that “shareholding constitutes a portfolio investment whose beneficiaries are public investors.”

Under the new IDX Listing Rules, the phrase "portfolio investment" has been removed, so that the test now refers simply to a “shareholding whose beneficiaries are public investors,” a phrase further clarified by the IDX Circular 4/2026. 4 This narrows the inquiry from two-limbed test (nature of investment plus identity of beneficiaries) to a single-limbed test (identity of beneficiaries only), thereby widening the gateway for shareholdings to qualify as free float. IDX Circular 4/2026 supplements this by limiting the provision to shareholders holding less than 10% 5 of shares in a listed company and prescribing the applicable procedure to obtain an IDX’s free float reclassification approval.

One may argue the removal of the "portfolio investment" requirement from Clause V.2 may benefit listed companies with multi-layered ownership structures or special purpose vehicles by eliminating the burden of demonstrating that holdings are purely passive. It might also mean that holdings whose ultimate beneficiaries are public investors (e.g. unit holders, pension beneficiaries, or policyholders) can qualify as free float even where the holding vehicle possesses strategic features. Sovereign wealth funds, insurers, and pension funds holding shares on a long-term basis could accordingly be included in free float, as the test now turns solely on the identity and nature of the ultimate beneficiaries.

That said, in the absence of further guidance, the scope of the rule remains unclear. We anticipate further developments in its interpretation and implementation. Listed companies interested in exploring this option should consider early engagement with the IDX, as its approval is required.

Free float for continued listing

Under the previous regime, listed companies were required to maintain a minimum free float of 7.5% of total listed shares, though many struggled to comply due to insufficient retail investor demand. The new IDX Listing Rule doubles the requirement to 15% of total listed shares, to be implemented on a phased basis as follows:

| Existing listed company and its market capitalisation as of March 31, 2026 | | Free Float compliance deadline |
| --- | --- | |
| at least IDR5 trillion with free float below 12.5% | | at least 12.5% by March 31, 2027

at least 15% by March 31, 2028 |
| at least IDR5tn with free float of 12.5% or above but below 15% | | at least 15% by March 31, 2027 |
| below IDR5tn | | at least 15% by March 31, 2029 |
The IDX will issue letters to each listed company confirming its market capitalization as of March 31, 2026, which will determine the applicable transitional category. 6 The IDX may, with OJK approval, adjust transitional timelines in light of prevailing market conditions. Non-compliance with the free float requirement may attract sanctions including supervision board listing (watch list), trading suspension, and ultimately delisting.

These requirements are expected to drive increased equity capital markets activity, whether through rights issues, non-pre-emptive issuances, buyback, stock program or secondary placements, as listed companies seek to meet the requisite free float levels during the 2026 to 2029 transitional period. It is reasonable to assume, however, the success of which will depend, in large part, on investor confidence in Indonesia's political stability and legal certainty.

Free float for initial listing

Naturally, every listing venue seeks to attract sizeable companies with a sufficient volume of liquid free-float shares to draw investors. The new IDX Listing Rules set higher thresholds based on the market capitalization instead of equity of the listing candidate. On their face, these thresholds fall within the range of free-float requirements imposed by stock exchanges in the Asia-Pacific (APAC) region, including Hong Kong, Singapore, Malaysia, and Thailand. The free-float requirements for initial listing are now as follows:

| Board | Market capitalisation prior to the listing date | Free Float (at least) |
| --- | --- | --- |
| Main Board and Development Board | < IDR5tn | 25% |
| Main Board and Development Board | at least IDR5 trillion to IDR50tn | 20% |
| Main Board and Development Board | > IDR50tn | 15% |
| Main Board and Development Board | at least IDR30tn | IDX discretion 8 |
A full list of listing requirements can be found in our accompanying publication, accessible here.

The new IDX Listing Rule requires listed companies to maintain the above free float amount within a year after the initial listing, after which the increased minimum free float requirements for continued listing will apply.

Pre-IPO shareholders will no longer be recognized as free float shareholders, regardless of whether they would otherwise qualify. This is a departure from the previous regime, which, albeit based on an unwritten IDX policy, permitted such recognition. These shareholders may, however, still count towards the ongoing free float obligation from the listing date onwards.

Other new requirements worth noting

12 months controller statutory lock up

Under the new IDX Rules, a listing candidate's controller must maintain its control and is prohibited from transferring all or part of its shareholding for a minimum of 12 months from the listing date, or another period as the IDX may determine. Prior to the formalization of this requirement, controlling shareholders were required to provide a lock-up commitment, typically of one to three years, as part of the listing process. However, under IDX Circular 4/2026, this prohibition applies only where the controlling shareholder(s) hold 50% or less of total shares at listing. Where they hold more than 50%, disposals are permissible provided the controlling shareholder(s) retains more than 50% following the transaction.

Governance requirements

Certified financial statement bookkeepers. Listing candidates and listed companies must each have at least one director or employee holding an accounting competency certificate (CA and/or CPA) issued by a recognized Indonesian or equivalent international professional body or must appoint a practicing accountant/public accountant to prepare their financial statements. For existing listed companies, this requirement takes effect from March 31, 2027.

Continuing education. The board of directors, board of commissioners, and audit committee members of listing candidates and existing listed companies must complete continuing education programs on capital markets and corporate governance. This requirement takes effect upon issuance of the relevant IDX circular letter, which has not yet been issued and may continue to monitor the issuance of the circular letter on this matter.

Footnotes

1. Market capitalization means (i) for a prospective listed company, the total amount of listed shares multiplied with the IPO price or (ii) for a listed company, the total amount of listed shares multiplied with its market price.

2. See 8.08A | Rulebook of the Hong Kong Stock Exchange.

3. As a note, generally, "portfolio investment" refers to a passive, financial-return-oriented holding, as distinguished from a strategic or controlling investment. The OECD Benchmark Definition of Foreign Direct Investment (see OECD Benchmark Definition of Foreign Direct Investment (Fifth Edition) (EN), for instance, treats a cross-border equity holding of 10% or more of voting power as direct investment, whilst classifying holdings below that threshold as portfolio investment. However, neither the new IDX Listing Rule nor IDX Circular 4/2024 defines or elaborates upon the term "portfolio investment."

4. IDX Circular 4/2026 clarifies "shareholding whose beneficiaries are public investors" are insurance and reinsurance, brokers, pension funds, social security institutions, sovereign wealth funds established by foreign governments, mutual funds, and other companies or portfolio investments whose beneficial owners can be demonstrated to be public investors.

5. We suspect the IDX uses the OECD benchmark as one of the IDX’s references in setting the 10% thresholds related to portfolio investment.

6. IDX’s press release March 31, 2026: See “ Perkuat Reformasi Pasar Modal dan Pelindungan Investor, BEI Perbarui Peraturan I-A ”

7. To note, the new IDX Listing Rule does not alter the requirements regarding the minimum number of shareholders holding a Single Investor Identification (SID) for initial listing on the Main Board or Development Board.

8. This discretion is particularly significant for large offerings on the Indonesian market given that currently retail liquidity in Indonesia has yet to reach the levels seen in other emerging markets at such as India.

• Associate

**Trainee Associate

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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