OJK to Set Minimum Free Float Requirement for IPOs to Enhance Market Quality

JAKARTA, Investortrust.id – Indonesia’s Financial Services Authority, or OJK, is set to introduce a minimum free float requirement for companies conducting an initial public offering, or IPO, a move aimed at enhancing the quality of listed issuers.

Free float refers to shares owned by minority investors holding less than 5% of a company's total stock and are actively traded in the regular market. These do not include shares held by company management or treasury stock.

Currently, the Indonesia Stock Exchange (Bursa Efek Indonesia/BEI) mandates that listed companies must maintain a minimum free float of 7.5% of their outstanding shares. A higher percentage of free float typically leads to improved market stability and reduced volatility.

Aligning with Global Best Practices

Head of Capital Market, Derivatives, and Carbon Exchange Supervision at OJK Inarno Djajadi stated that adjusting the free float policy is part of an effort to align with global best practices.

“A higher free float requirement generally has a positive impact on issuer quality by improving liquidity, transparency, and investor appeal,” Inarno said in a written statement on Friday, Feb. 7, 2025.

However, he emphasized that OJK and listed companies must work together to ensure good corporate governance and optimal market liquidity to enhance the competitiveness of Indonesian issuers.

“One of OJK’s key initiatives this year is to increase both the quantity and quality of listed companies. Our goal is to significantly reduce or eliminate cases of force delisting,” Inarno added.