logo-ahplogo-ahplogo-ahplogo-ahp
  • Home
  • Firm
    • About Us
    • Careers
  • Solutions
      • Banking & Finance
      • Capital Markets
      • Competition Law
      • Debt & Corporate Restructuring
      • Dispute Resolution
      • Energy, Oil & Gas
      • Foreign Direct Investment
      • Fraud & Forensics Investigation
      • Intellectual Property
      • Islamic Finance
      • Labor Law
      • Mergers & Acquisitions
      • Projects & Natural Resources
      • Real Estate & Property
      • Shipping & Aviation
      • Tax & Customs Services
      • Telecommunications & Media
  • Members
  • Events
    • News & Insights
  • Rajah Tann Asia
✕
            No results See all results

            IDX Enacts Regulation on Free Float for Companies with Multi-Voting Shares

            Late last year, both the OJK (Indonesia’s Financial Services Authority) and the Board of Directors of the IDX (Indonesia Stock Exchange) issued regulations in anticipation of the major tech IPOs that were slated to occur in 2022. These two regulations were OJK Regulation No. 22/POJK.04/2021 (“OJK Regulation 22/2021”) on multiple voting rights shares of issuers with innovation and high growth rate (click here to read our previous client alert) and Decree of the Board of Directors of the IDX No. Kep-00101/BEI/12-2021 on Regulation No. I-A on the requirements to list shares in the IDX (“New Listing Regulation”).

            Now, as a follow-up and to complement the foregoing regulations, the IDX has issued another decree, namely Decree of the Board of Directors of IDX No. Kep-00014/BEI/03-2022 (“Decree”). We take a closer look at the Decree below.

            Background

            In practice, the Decree complements the implementation of multiple voting rights shares under OJK Regulation 22/2021, which subject the shareholders holding common shares or non-multiple voting rights shares of a company to a lock-up of eight months after the OJK issues the effective statement for the initial public offering (“IPO”) if the book value of the shares based on the company’s latest financial statements is lower than the IPO price (“Lock Up Shares”). Further, OJK Regulation 22/2021 also requires the shares of a public company to either be:

            1. Converted into scripless shares and be deposited into an escrow account at the depository and settlement institution (in this case, KSEI) (“Escrow Account”); or
            2. If the Escrow Account is not ready, the shares can be kept in scrip form, and the share registrar or the company must administer the shares by themselves.

            According to the Decree, shares can be calculated as part of the free float shares if they fulfil the following:

            1. Such shares are owned by a shareholder holding less than 5% of the total listed shares of the company;
            2. Such shareholder is not a controller or affiliate of the company;
            3. Such shareholder is not a director or commissioner of the company; and
            4. Such shares are not the result of a share buyback by the company (treasury shares).

            Although the Decree leaves room for multiple interpretations on whether the form of free float shares must be scripless or not, in several discussions, IDX confirmed its position that the free float shares must be in scripless form. The IDX’s view creates a gap between OJK Regulation 22/2021 and the New Listing Regulation as the former allows Lock Up Shares to be in scrip form. Consequently, before the issuance of the Decree, Lock Up Shares in scrip form cannot be categorised as free float shares.

            Where Does the Decree Fit In?

            Under the Decree, the IDX provides an exemption for the public company that implements multiple voting rights shares whereby the scrip shares can be counted as part of the free float shares as long as the Escrow Account is not yet available and the shares in scrip form fulfil the four criteria mentioned above.

            However, please note that the above criteria will only apply until the end of the lock-up period as mentioned in OJK Regulation 22/2021, namely eight months after the OJK issues the effective statement for the IPO registration statement. After the expiry of the lock-up period, the free float shares must fulfil the following requirements under the New Listing Regulation:

            1. Such shares must consist of at least 50 million shares and amount to a minimum of 7.5% of the company’s listed shares;
            2. Such shares must be owned by 300 shareholders, each of whom holds a Single Investor Identification (SID); and
            3. If applicable, such shares must be converted into scripless form.

            Conclusion

            The first company that implemented the requirements under these three regulations was Indonesia’s largest tech company, PT GoTo Gojek Tokopedia Tbk (“GoTo“), in their widely anticipated IPO. While we have yet to see other companies implementing the multiple voting rights shares and free float requirements in their IPOs, it is likely that GoTo’s IPO will set the precedent for future IPOs in Indonesia, especially for tech companies.

            Download PDF

            Bintang Setiadi Pratama also contributed to this alert.


             

            Have any Question please contact

            Putu Suryastuti-073

            Putu Suryastuti

            Partner


            Intan Paramita-048

            Intan Paramita

            Partner


            IDX Enacts Regulation on Free Float for Companies with Multi-Voting Shares

            Inda Nur Arifiani Ranadireksa

            Senior Associate


            More Articles

            • PPSK Law and The Changing Landscape of Indonesia’s Capital Market Sector
              March 21, 2023
            • Does the New Regulation on Pre-Investigation Tax Audit Improve Certainty for Taxpayers?
              March 20, 2023
            • OJK Announced Guidelines to Implement Offerings Classified as Non-Public Offerings
              February 7, 2023
            • Regional Trade Highlights 2022
              January 30, 2023
            • Indonesia Expands Its Anti-Tax-Avoidance Measures: A Development to be Aware of in Tax Planning and Compliance
              January 27, 2023
            • Dissecting the Amendment to the Omnibus Law: Which Sectors are Affected and How?
              January 20, 2023
            • A New Rule Requires Importers of Software or Other Digital Products via Electronic Transmission to Fulfil Customs Obligations
              January 16, 2023
            • Rajah & Tann Asia Member Firms, Members of Lifesciences Asia-Pacific Network (LAN), Contribute to the Singapore and Indonesia Chapters of Comparative Study: Patent Linkage Systems in APAC
              January 13, 2023
            • Indonesia’s New Criminal Code Introduces Corporate Crime
              January 4, 2023
            • A Practical Guide to Getting Your Organisation PDP Law-Ready
              December 1, 2022
            By Practice Area
            • Projects & Energy
            • Technology Media & Telecommunications
            • Intellectual Property
            • Real Property
            • Banking & Finance
            • Capital Markets
            • Competition
            • Mergers & Acquisitions
            • Dispute Resolution
            • Tax and Customs

            Jakarta Office

            Capital Place, Level 36 & 37
            Jalan Jenderal Gatot Subroto Kav. 18
            Jakarta 12710,
            Indonesia

            Phone: +62 21 2555 7800
            Fax: +62 21 2555 7899
            Email: info@ahp.id


            Subcribe

            Surabaya Office

            Pakuwon Center, Superblok Tunjungan City
            Lantai 11, Unit 08
            Jalan Embong Malang No. 1, 3, 5,
            Surabaya 60261
            Indonesia

            Phone: +62 31 5116 4550
            Fax: +62 31 5116 4560

            Assegaf Hamzah & Partners


            © 2001 - 2022 Assegaf Hamzah & Partners. All rights reserved.

            Rajah & Tann Asia is a network of legal practices based in Asia.

            Member firms are independently constituted and regulated in accordance with relevant local legal requirements. Services provided by a member firm are governed by the terms of engagement between the member firm and the client.

            This website is solely intended to provide general information and does not provide any advice or create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on this website.