Indonesia plans exit policy for firms that can't meet 15% float

Indonesia plans exit policy for firms that can't meet 15% float

Indonesia Plans Exit Policy for Firms That Can’t Meet 15% Free Float Requirement

Indonesia’s financial regulators are implementing a stringent exit policy for listed companies unable to meet a new 15% minimum free float requirement, part of broader reforms to address global market transparency concerns. The Financial Services Authority (OJK) and Indonesia Stock Exchange (IDX) announced the policy in response to criticism from MSCI, which warned of a potential downgrade of Indonesia’s market status due to opacity and liquidity risks.

Under the revised rules, companies must increase public ownership from 7.5% to 15%, requiring an estimated $11 billion in additional shares to be absorbed by the market. As of December 2025, 267 listed firms—nearly one-third of the IDX’s listings—had yet to meet the threshold, with non-compliant companies facing trading suspensions or delisting. For example, IDX suspended 38 firms in January 2026, including Alumindo Light Metal Industry (ALMI) and Saraswati Griya Lestari (HOTL), for failing to submit compliance reports or meet shareholder criteria.

The transition period for compliance is expected to span 2–3 years, with regulators emphasizing gradual adjustments to avoid destabilizing market liquidity. Companies may achieve compliance through share sales, buybacks, or delisting. However, analysts caution that abrupt increases in share supply could pressure valuations, particularly for large firms like Barito Renewables Energy (BREN.JK), which faces a $1.8 billion share release to meet the threshold.

To offset potential volatility, authorities plan to expand equity investment caps for pension funds and insurance firms to 20%, while state-backed entities like Danantara and BPJS Ketenagakerjaan aim to absorb shares using $67 billion in combined assets. Retail investors, who account for half of daily trading volume, may also play a role in absorbing the increased supply.

Regulators stress that the reforms are critical for restoring investor confidence and aligning with global standards. OJK’s Mahendra Siregar noted that dialogue with MSCI has been “positive,” with hopes of resolving concerns by March 2026. However, challenges remain, including concentrated ownership in some firms and the need for stronger market oversight to prevent practices like “stock frying”.

The success of this policy will test Indonesia’s commitment to market transparency and its ability to balance regulatory rigor with investor stability.