On 26 December 2018, the Indonesia Stock Exchange (“IDX“) issued a new IDX listing regulation under the Decree of the Board of Directors of PT Bursa Efek Indonesia No. Kep-00183/BEI/12-2018 (the “New Listing Regulation“), which replaced the previous Decree of the Board of Directors of PT Bursa Efek Indonesia No. Kep-00001/BEI/01-2014 regarding Securities Listing Regulation No. I-A on General Provisions for the Listing of Equity Securities at IDX.
The New Listing Regulation, which became effective on 27 December 2018, adjusted and amended certain listing provisions to be in line with the regulations of the Financial Services Authority (Otoritas Jasa Keuangan or “OJK”). Furthermore, through the New Listing Regulation, the Indonesian government also hoped to encourage more companies to list its shares on the IDX.
Below are the key changes under the New Listing Regulation:
In general, listing requirements for the main board remain the same. However, IDX added a new requirement that the prospective listed company shall have a recorded operating income for the last three years, in addition to the operating profit for the last one financial year.
Development Board: flexibility of listing requirements
For listing at the development board, the New Listing Regulation provides a new option where the commercial operational activities can be conducted by the subsidiaries of the prospective listed company instead by the prospective listed company itself. However, IDX also added a requirement that such commercial operational activities shall be evidenced by having recorded operating income for the last one year. While the New Listing Regulation requires the prospective listed company to have net tangible assets of at least IDR 5,000,000,000 (five billion Rupiah), IDX also provides other options that can be fulfilled by such prospective listed company if it could not fulfil the net tangible assets requirement above. These options are as follows:
Moreover, under the New Listing Regulation, IDX also applies a much simpler procedure for the listing of additional shares, as follows:
With regards to the capital increase without pre-emptive rights, the price for the additional shares shall be at least 90% (ninety per cent) of the average closing price for a period of 25 consecutive Exchange Days in the Regular Market before the date of the listing application for such additional shares. However, this pricing requirement does not apply to capital increase without pre-emptive rights in order to improve a company’s financial position where the price will be determined on an arm’s length basis as agreed by the company and its creditor in the case of debt to equity conversion.
With regards to warrants, the exercise price shall be at least 90% (ninety per cent) of the average closing price for a period of 25 consecutive Exchange Days in the Regular Market before the date of submission of the registration statement to OJK.
In addition to the above, IDX has also set a minimum price for all additional shares, which shall be at least equal to the lowest price limit for shares traded in the Regular Market and Cash Market, i.e., IDR 50 (fifty Rupiah).
In conclusion, besides conforming to the OJK regulations, the New Listing Regulation also aimed to encourage companies to list its shares on the IDX. The IDX hopes that the New Listing Regulation will not only broaden access to funding from the capital market, but also gives certainty to market players and investors.
AHP Client Alert is a publication of Assegaf Hamzah & Partners. It brings an overview of selected Indonesian laws and regulations to the attention of clients but is not intended to be viewed or relied upon as legal advice. Clients should seek advice of qualified Indonesian legal practitioners with respect to the precise effect of the laws and regulations referred to in AHP Client Alert. Whilst care has been taken in the preparation of AHP Client Alert, no warranty is given as to the accuracy of the information it contains and no liability is accepted for any statement, opinion, error or omission.