Take Note! Regulations and Role of Free Float in Stock Listing
For companies considering an Initial Public Offering (IPO), understanding the share ownership structure is a crucial part of the preparation process. One key component of this structure is free float shares, which not only serve as a listing requirement but also impact the liquidity and quality of share trading in the market.
Free float shares refer to the portion of shares owned by the public and freely tradable on the secondary market. This ownership excludes shares held by controlling shareholders, major shareholders, and affiliated parties.
Thus, free float reflects the availability of shares for public investors, both retail and institutional, to participate in trading.
As part of efforts to improve the quality of Indonesia’s capital market, the Indonesia Stock Exchange (BEI) has refined Exchange Regulation Number I-A on share listing. Under the latest provisions, Prospective Listed Companies must meet a minimum free float at the time of IPO, ranging from 15% to 25% in stages, according to the Company’s Share Capitalisation Value before the listing date.
Additionally, BEI stipulates a minimum free float of 15% of total listed shares, which must be met and maintained continuously by Listed Companies.
Head of the Listed Companies Development Division at BEI, Listyorini Dian Pratiwi, stated that this adjustment to the free float provisions is part of efforts to strengthen Indonesia’s capital market structure.
“This step is expected to enhance the quality of Listed Companies, encourage the implementation of good governance, increase liquidity, and provide more optimal protection for investors,” said Listyorini, quoted on Monday (11/5/2026).
The free float provisions have several important implications for prospective and already listed companies. First, from the perspective of share trading. A larger portion of shares in the public domain increases liquidity potential through higher transaction frequency and volume. This condition supports the formation of share prices that better reflect market mechanisms.
Second, from the investor base perspective. Wider share distribution opens greater access for both domestic and foreign investors. This contributes to market deepening and trading stability.
Third, from the corporate governance perspective. Broader public ownership encourages increased transparency and discipline in information disclosure, in line with regulator and investor expectations.
Fourth, from the investor confidence perspective. A distributed ownership structure sends a positive signal regarding the company’s commitment to protecting public shareholders’ interests.
For prospective Listed Companies, meeting the free float requirements needs to be planned from the early stages of the IPO process. Determining the number of shares to be offered to the public must consider the minimum limits set, as well as the company’s control structure after listing.
Nevertheless, fulfilling these requirements is essentially not complicated if prepared well from the start. BEI provides various forms of assistance, including consultation sessions and guidance, for prospective Listed Companies to ensure all requirements, including free float, are optimally met.
Additionally, BEI offers the IDX Incubator programme as a development platform for companies with potential to list on the exchange, allowing them to prepare more structuredly before entering the IPO process.
Meeting these provisions is not only a mandatory requirement but also reflects the company’s readiness to become a publicly accountable and market-oriented entity. Therefore, BEI encourages companies planning to go public to thoroughly understand the applicable provisions, including the free float aspect, and to coordinate with capital market supporting professionals to ensure the share listing process runs smoothly.
“With thorough understanding and planning, companies not only meet listing requirements but also build a strong foundation for creating healthy and sustainable share trading in the capital market,” she concluded.