The Indonesian Stock Exchange (“IDX”) recently issued Regulation No. I-V on listing shares and equity-like securities (efek bersifat ekuitas) on the IDX acceleration board (“IDX Regulation No. I-V”).

This new regulation, which introduces more lenient requirements for small and medium enterprises (“SMEs”) to list their shares on the IDX, complies with Indonesia’s Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) requirements for SME registration statements of public offerings.

IDX Regulation No. I-V revises four key aspects of the listing requirements:

  1. only SMEs satisfying certain requirements can now list their shares on the acceleration board;

  2. underwriter commitments made in the underwriting agreement are more flexible;

  3. the application fee for an initial listing and the annual listing fee are both reduced; and

  4. the listing can be upgraded to the IDX development board or main board, provided the relevant listing requirements are met.

More lenient requirements

The key changes under IDX Regulation No. I-V are summarised below.

  • Eligible parties: IDX Regulation No. I-V was issued to support the OJK requirements on public offering registration statements by SMEs, and therefore applies only to SMEs with total assets in the range of 50 billion to 250 billion rupiah.

  • Financial statements and requirement to record revenues: The SME only has to submit an audited financial statement for the last full year or since its date of incorporation if it was established within the past year. However, prospective listed companies that are commercially operating should record their operational revenues on their latest financial statement submitted to the IDX. Companies currently experiencing losses, or not yet able to record revenues, must be able to record revenues within six years after their listing. 

  • Lower IPO share price: The shares can be listed at a minimum price of 50 rupiah per share.

  • Minimum public float requirements and number of shareholders: The IDX has set the minimum public float requirement (excluding the controlling shareholders and substantial shareholders) upon listing at 20% of the issued and paid up capital. At least 300 shareholders are needed to satisfy the requirements for a public company.

More flexibility on level of commitment required from underwriters

In contrast to listings on the development and main boards, which require the underwriters to commit on a “full commitment” basis, underwriters have more flexibility in underwriting the shares offered by SMEs in IPOs, as they are permitted to only commit on a “best efforts” basis.

Lower fees for listings

IDX sets lower application fees for listings on the acceleration board and lower annual fees for listings, of IDR25 million (USD1,800) in each case. For additional share listings, IDX imposes an additional fee of IDR25 million (USD1,800) for each corporate action, whether a rights issue or a private placement. 

Moving listing to development or main board, and relisting requirements

Once an SME has met the IDX requirements for listing its shares on the development board or main board, it can upgrade its listing to join either board. However, if the SME has been delisted from the acceleration board by the IDX, it can then only relist its shares on either the development or main board.

Conclusion

IDX Regulation No. I-V is expected to increase interest among SMEs, especially start-ups, in listing their shares on the IDX acceleration board as an alternative way to raise funds.