Share Free Float: Definition, Latest 2026 Rules, and List of Shares
In March 2026, MSCI highlighted the issue of High Shareholding Concentration (HSC) among a number of Indonesian shares. MSCI acknowledged the transparency reforms announced by the Financial Services Authority (OJK), the Indonesia Stock Exchange (IDX), and the Indonesian Central Securities Depository (KSEI), including the implementation of the High Shareholding Concentration framework and a roadmap to increase the minimum free float requirement to 15%.
When reading a share profile, a list of index constituents, or news about IDX policy changes, you may have encountered the term free float. Free float is not an indicator that directly shows whether a share is good or not. However, the term is important because it relates to the number of shares genuinely available for public trading, share liquidity, and the way several share indices determine the weighting of their constituents. Moreover, in 2026 MSCI has raised the issue of free float, prompting the IDX to amend its rules by gradually increasing the minimum free float limit for listed companies to 15%.
Free float is the number of a company’s shares held by public investors and available for trading on the regular market, after excluding strategic holders such as founders, the government, and large passive investors. In short, free float describes the proportion of shares held by the public and relatively available for market transactions.
In 2026, Indonesia’s free float issue attracted MSCI’s attention. In its announcement, MSCI stated that Indonesia’s reforms include increased transparency for shareholders above 1%, more detailed investor classification, implementation of the High Shareholding Concentration framework, and a roadmap to increase the minimum free float to 15%. In the results of the June 2026 Market Classification Review, MSCI also stated that it would continue to evaluate the implementation and effectiveness of these reforms. If sufficient progress is not seen by November 2026, MSCI stated it may consider various options, including consultation on a possible reclassification of Indonesia from Emerging Market to Frontier Market.
This shows that free float is not merely an administrative figure. For global institutional investors, the quality of ownership information and shares that can genuinely be invested in is part of the assessment of market accessibility and investability. Research entitled ‘The Effect of Free Float on the Volatility of the Composite Stock Price Index: A Literature Study of the 2026 MSCI Indonesia Index Freeze Case’ shows that a high free float tends to be followed by better liquidity and lower volatility. Meanwhile, a low free float increases transaction costs and encourages investors to reduce their exposure.
For example, a company has 10 billion shares. If the shares included in the free float amount to 2 billion shares, then: Free float = 2 billion / 10 billion × 100% = 20%. This means around 20% of the company’s shares fall into the free float category.
However, free float is not the same as simply counting all shares held by investors with small holdings. The IDX has provisions regarding which shares and shareholders can be categorised as free float. Based on IDX Regulation No. I-A concerning the Listing of Shares and Equity-Type Securities Other Than Shares, effective 31 March 2026, the definition and classification of free float shares have been clarified. One of the highlighted rules is the increase in the minimum free float limit to 15%.
It should be understood that the rule increasing the minimum free float limit is being implemented gradually up to 15%. The IDX provides a transition period for relevant issuers to meet this requirement. Thus, the 15% figure is the minimum free float limit that listed companies must gradually meet, not that 15% of shares held by investors are automatically categorised as free float. Shares counted as free float must still meet the definition and provisions set by the Exchange.
Many people assume free float equals shares outstanding. In fact, free float differs from shares outstanding. Shares outstanding refers to all of a company’s shares that have been issued and remain outstanding. Meanwhile, free float is the portion of those outstanding shares that meets the criteria to be categorised as shares available to the public in accordance with the Exchange’s provisions. For example: total shares outstanding: 10 billion shares; shares included in free float: 2 billion shares; free float: 20%. Thus, a company may have a large number of shares outstanding but a relatively small free float.
Free float is closely related to the liquidity and investability of a share. On 27 January 2026, a temporary freeze of the MSCI Indonesia index occurred against a backdrop of concerns over the accuracy of free float data. As a result, the Composite Stock Price Index (IHSG) plunged 8.33% in just two trading days. Following that event, many investors came to understand that free float acts as a market stabiliser. Furthermore, in the MSCI index methodology, the existence of free float is represented through the Foreign Inclusion Factor (FIF) and is a key variable for calculating liquidity, index weighting, implementation costs, and the share price itself. The larger the portion of shares available to the public, the greater the room for investors to transact without having to move the market significantly.