Indonesia Raises the Minimum Free Float to 15%. Who Needs to Act?

The Indonesia Stock Exchange raised the minimum free-float requirement for listed companies from 7.5% to 15%. The amended IDX Regulation No. I-A took effect on March 31, 2026, with transition periods ending between 2027 and 2029.

Free float represents the portion of a company's listed shares that may be held and traded by the public while meeting specific eligibility criteria. Shares held by controllers, controller affiliates, directors, commissioners, holders owning at least 5%, the company itself as treasury stock, and holders subject to transfer restrictions are generally excluded.

The higher threshold does not mean every company below 15% immediately breached the rules. IDX assigned different deadlines based on a company's share capitalization and free-float position as of March 31, 2026. These deadlines determine how quickly a controller must sell shares or the company must complete a corporate action.

A report citing IDX data said that 358 of 918 listed companies remained below the 15% target as of September 30, 2026. The figure represents companies that had not reached the final target. It does not mean that 358 companies had already missed their applicable deadlines or faced automatic penalties.

What Counts as Free-Float Shares?

Free float does not include every share held outside the founder's name. The amended IDX Regulation No. I-A clarified the criteria that shares must meet before they are included.

Free-float shares are scripless shares listed on IDX and available to eligible public investors. The calculation generally excludes:

• Shares held by controllers and their affiliates.

• Shares held by directors or commissioners.

• Shares held by owners with at least a 5% interest.

• Treasury shares repurchased by the company.

• Shares that remain subject to transfer restrictions.

The rules also retain a minimum of 50 million free-float shares and at least 300 shareholders with Single Investor Identification numbers. The 15% ratio is therefore not the only listing requirement.

A company may have a large number of shareholders while still failing the percentage test if ownership remains concentrated around its controller. A high free-float ratio also does not guarantee active daily trading when public investors choose to hold their shares.

IDX raised the minimum free-float requirement to 15% through an amendment to IDX Regulation No. I-A effective March 31, 2026. Source: Joint OJK, IDX, and KSEI press release, April 2, 2026. 

Three Deadlines for Existing Listed Companies

IDX uses each company's share capitalization and free-float percentage as of March 31, 2026 to determine its transition period. Companies should refer to their formal IDX notification because the deadline is not identical for every issuer.

A. Capitalization of at Least Rp5 Trillion and Free Float Below 12.5%

Companies in this category must reach a free float of at least 12.5% by March 31, 2027. The target then rises to 15% by March 31, 2028.

The intermediate threshold gives large companies time to expand public ownership without forcing the entire placement into one transaction. The amount needed depends on the number of listed shares and the portion already meeting the free-float definition.

B. Capitalization of at Least Rp5 Trillion and Free Float Between 12.5% and Below 15%

Companies already within this range must reach 15% by March 31, 2027. This group has the nearest deadline for reaching the final target.

The percentage gap may appear small, but the value that investors must absorb can be substantial when a company's capitalization reaches tens or hundreds of trillions of rupiah.

C. Capitalization Below Rp5 Trillion and Free Float Below 15%

Smaller companies have until March 31, 2029. The longer transition period takes account of investor demand, liquidity, and each company's capacity to complete a corporate action.

IDX may set a different transition period after considering market conditions and obtaining approval or an instruction from OJK. Investors and companies should therefore check the latest official exchange announcements.

Why Was the Threshold Raised?

The higher free-float requirement forms part of Indonesia's capital-market transparency reforms. OJK, IDX, and KSEI combined it with public disclosure of shareholdings above 1%, High Shareholding Concentration announcements, and more detailed KSEI investor classifications.

The government has also linked the reforms to feedback from global index providers. An October 27, 2026 statement from the Coordinating Ministry for Economic Affairs listed the 15% free float, beneficial-ownership transparency, and a Joint Task Force as parts of the governance program.

MSCI's consultation on Indonesia's possible market reclassification remains an evaluation process rather than a final decision. Meeting the free-float threshold is only one consideration because index providers can also assess ownership concentration, investor access, data reliability, liquidity, and transaction accessibility.

The Indonesian government included a 15% minimum free float in its capital-market governance reforms ahead of MSCI's April 30, 2027 feedback deadline. Source: Coordinating Ministry for Economic Affairs, October 27, 2026. MSCI's process remains a consultation and is not a final classification decision.

Four Ways Companies Can Increase Free Float

Listed companies and controllers have several possible routes. Each method produces a different effect on ownership, capital, share price, and existing investors.

A. A Controller Sells Existing Shares

The controller may conduct a secondary placement to public investors who meet the free-float criteria. The company's total number of shares does not change, so the transaction does not dilute the number of shares already outstanding.

The controller's ownership percentage declines. The placement price, transaction size, and available investor demand determine how the market absorbs the sale.

B. The Company Issues New Shares

A rights issue or private placement may increase the number of shares held by eligible public investors. The proceeds enter the company and may fund expansion, debt repayment, or working capital.

Existing investors can be diluted if they do not participate. New shares support free-float compliance only when their recipients qualify under IDX's public-shareholding criteria.

C. The Company Reorganizes Its Ownership Structure

An issuer must map its controllers, affiliates, directors, commissioners, treasury shares, and restricted shares. A change in status or the expiry of a transfer restriction may alter the number of shares that qualify as free float.

A company cannot achieve compliance through relabeling alone. It must demonstrate that the relevant shareholders meet the criteria and follow IDX procedures.

D. The Company Uses Eligible Ownership Programs

Employee or public ownership programs may broaden share distribution. Their contribution to free float depends on transfer restrictions, affiliation, and the structure of the program.

Locked shares or shares owned by excluded parties remain outside the free-float calculation even if they are no longer registered directly under the controller's name.

How Many Shares Must Be Added?

Assume a company has 10 billion listed shares. One billion shares qualify as free float, giving it a ratio of 10%.

If the controller sells existing shares to eligible public investors, the requirement is:

Target free float = 15% × 10 billion = 1.5 billion shares

Additional shares required = 1.5 billion - 1 billion = 500 million shares

The calculation changes if the company issues new shares because the total number of listed shares also increases. If all newly issued shares qualify as free float, the equation becomes:

(1 billion + new shares) ÷ (10 billion + new shares) = 15%

The result is approximately 588.24 million new shares. This is larger than the 500 million shares in the controller sell-down scenario because a primary issuance increases both the numerator and denominator.

The example excludes pre-emptive rights, unsubscribed shares, ownership reclassification, and other corporate actions. Each company must use current shareholder records and the IDX definition to calculate its actual requirement.

Effects on Share Prices and Investors

A higher free float can increase the number of shares available for trading. The outcome will differ across companies.

Liquidity may improve when additional shares are accompanied by a broader investor base and genuine trading activity. Spreads can narrow, and price discovery may improve because prices are no longer formed from transactions involving a very limited portion of the company.

Short-term pressure may appear when investors anticipate a large controller sale. This supply overhang can weigh on the price before the placement occurs, especially when buyers expect a discounted transaction.

A new share issuance also creates dilution risk. Company value does not automatically increase at the same rate as the number of shares. The effect on value per share depends on the issue price, use of proceeds, and the return generated from the new capital.

A stock's weight in a free-float-adjusted index may also change. A higher free float can increase index weight, although every index provider applies its own methodology and review timetable.

Who Needs to Act?

Listed companies and controlling shareholders carry the most direct responsibility. They need to calculate the shortfall, choose a mechanism, prepare disclosures, and manage the impact on existing investors.

IDX, OJK, and KSEI need to apply definitions, ownership data, deadlines, exemptions, and enforcement consistently. Transparency matters as much as the percentage because investors need to know the ultimate controller and how many shares are genuinely available to the public.

Investors should distinguish among:

• Companies below 15% that remain within their transition periods.

• Companies approaching their deadlines with a disclosed compliance plan.

• Companies that have not explained where the additional free float will come from or how the market will absorb it.

A low free float does not automatically make a stock unattractive, while a high free float does not guarantee strong fundamentals. The ratio should be assessed alongside trading volume, spreads, ownership concentration, governance, profitability, and valuation.

What Should Investors Monitor Next?

The nearest compliance deadline is March 31, 2027. Investors should monitor disclosures concerning secondary placements, rights issues, private placements, shareholder changes, and IDX notices.

MSCI's evaluation should also be separated from compliance with IDX rules. Indonesia may complete the free-float reform while index providers continue requesting improvements in beneficial-ownership transparency, ownership concentration, accessibility, or data quality.

The 15% threshold provides a clearer direction for liquidity and ownership distribution. Its effect will depend on implementation. Transparent placements that broaden the investor base will produce a different outcome from administrative adjustments made shortly before a deadline.

Disclaimer

This material is provided for educational purposes and does not constitute a recommendation to buy or sell shares. Free-float data, capitalization, shareholder classifications, and deadlines may change through issuer reports or IDX and OJK decisions. The calculations use simplified assumptions and do not estimate the requirement of any specific company. Investors should review official disclosures and current exchange rules before making a decision.