Indonesia Stock Exchange: Minimum Free Float & Shareholder Rules
The Indonesia Stock Exchange (IDX) requests 28 companies that are listed on the IDX to comply with the minimum free float and shareholder requirements that are stipulated by BEI No. Kep-00001/BEI/01-2014. Initially, the IDX provided time until 31 January 2016 for publicly-listed companies to comply with new rules. However, currently there are still 28 companies that fail to meet the new requirements (but which forms an improvement from the year-start when 90 companies still had to comply with new regulations).
The minimum free float and shareholder requirements, announced in early 2014, aim to increase liquidity in the local stock market. Listed companies on the IDX now need to have a minimum free float of 7.5% (at least 50 million shares) and need to have at least 300 shareholders.
Samsul Hidayat, Director of Corporate Listing at the IDX, said six out of the remaining 28 companies are yet to comply with the minimum 7.5 percent free float rule (trading of one of these companies has been temporarily suspended), while 17 companies have not met the minimum 300 shareholders requirement yet (trading of three of these companies has been suspended). Lastly, 5 companies are yet to meet both rules (among these companies three have been suspended). However, he added that the IDX detected a positive trend: while at the year-start there were still 90 listed companies that not yet met the new criteria, the figure has declined to 28 companies in November 2016. Ten companies have been handed a fine as they failed to comply with the new minimum free float requirement before October 2016.
Hidayat refrained from mentioning the names of the firms that are yet to comply with the new regulations. He added that the companies will be given time until the year-end to comply with new rules. Although the listed companies already indicated that they are willing to comply with the rules, they require more time to adjust their structure.
The IDX also said liquidity has risen due to the sliding number of penny stocks. According to the latest IDX statement, there are now 10 listed companies regarded as "penny stocks". Generally, a common stock that is valued at less than USD $1 (recently this definition has been adjusted to USD $5) is labeled a penny stock; they constitute highly speculative stocks.
Indonesia's Financial Services Authority (OJK) recently stated that there are 30 listed companies on the Indonesia Stock Exchange that are valued below IDR 50 (approx. USD $0.0037) per share. The OJK added that it may decide to remove these stocks from the IDX. This move, which may be conducted in the first half of 2017, is not expected to impact too much on the benchmark Jakarta Composite Index. Perhaps it could take away up to 0.15 percent of the benchmark index if all these cheap stocks are removed from the bourse.
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