Jakarta. For companies considering an Initial Public Offering (IPO), understanding share ownership structure is a crucial part of the preparation process. One of the key components within that structure is free float shares, which serve not only as a listing requirement but also affect stock liquidity and the quality of trading in the market.

Free float shares refer to the portion of shares owned by the public and freely traded on the secondary market. This ownership excludes shares held by controlling shareholders, major shareholders, and affiliated parties. As such, free float reflects the level of share availability for public investors — both retail and institutional — to participate in trading activities.

As part of efforts to improve the quality of Indonesia’s capital market, the Indonesia Stock Exchange (IDX) has revised Exchange Regulation No. I-A on share listings. Under the updated rules, prospective listed companies are required to meet a minimum free float requirement at the time of IPO, ranging from 15% to 25%, depending on the company’s market capitalization prior to listing.

In addition, IDX requires listed companies to maintain a minimum free float of 15% of total listed shares on an ongoing basis.

IDX Head of Listed Company Development Division, Listyorini Dian Pratiwi, said the adjustment to the free float requirement is part of broader efforts to strengthen Indonesia’s capital market structure.

“The measure is expected to improve the quality of listed companies, encourage good corporate governance, increase liquidity, and provide stronger protection for investors,” Listyorini said.

The free float requirement carries several important implications for both prospective and existing listed companies.

First, from a trading perspective, a larger public shareholding increases the potential for liquidity through higher transaction frequency and trading volume. This condition supports more efficient price discovery that better reflects market mechanisms.

Second, in terms of investor base, broader share distribution opens wider access for both domestic and foreign investors. This contributes to deeper capital markets and more stable stock trading.

Third, from a corporate governance standpoint, wider public ownership encourages greater transparency and stronger discipline in information disclosure, in line with regulator and investor expectations.

Fourth, in terms of investor confidence, a more distributed ownership structure sends a positive signal regarding a company’s commitment to protecting the interests of public shareholders.

For prospective listed companies, compliance with the free float requirement should be planned from the early stages of the IPO process. Determining the number of shares to be offered to the public must take into account the minimum threshold as well as the company’s control structure after listing.

However, fulfilling these requirements is not necessarily complicated if properly prepared from the outset. IDX provides various forms of assistance, including consultation and guidance sessions, for prospective listed companies to ensure that all requirements, including free float obligations, can be met optimally.

IDX also offers the IDX Incubator program as a development platform for companies with listing potential, allowing them to prepare more systematically before entering the IPO process.

Compliance with these requirements is not only a mandatory obligation but also reflects a company’s readiness to become an accountable public entity with a market-oriented approach. Therefore, IDX encourages companies planning to go public to fully understand the applicable regulations, including free float provisions, and coordinate with capital market supporting professionals to ensure a smooth listing process.

With proper understanding and careful planning, companies can not only fulfill listing requirements but also build a strong foundation for healthy and sustainable stock trading in the capital market.

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