Exchange Demutualization and the Expansion of Exchange Share Ownership: A Key Amendment Introduced by Law No. 4 of 2026

On 17 June 2026, the Government enacted Law No. 4 of 2026 concerning Amendments to Law No. 4 of 2023 on the Development and Strengthening of the Financial Sector (“Law No. 4/2026”). One of the amendments attracting the attention of the capital market industry in Indonesia is the revision of the share ownership framework of the Stock Exchange through the amendment of Article 8, the insertion of Article 8B, and the deletion of Article 8A of Law No. 8 of 1995 on Capital Markets, as last amended by Law No. 4 of 2023 (“Capital Market Law”).

This amendment not only broadens the categories of parties eligible to become shareholders of the Stock Exchange but also introduces formal recognition of the concept of demutualization and provides a legal basis for the Ministry of Finance, Bank Indonesia, and the Daya Anagata Nusantara Investment Management Agency (“Danantara”) to become shareholders of the Stock Exchange.

Stock Exchange Ownership Is No Longer Limited to Exchange Members

The amendment now provides that shareholders of the Stock Exchange may consist of Indonesian individuals and/or Indonesian legal entities, whether or not they are Exchange Members.

This provision differs from the previous framework, which, in practice, limited ownership of the Stock Exchange to securities companies that were Exchange Members. Through this amendment, Law No. 4/2026 no longer links shareholder status in the Stock Exchange to Exchange membership status, thereby expanding the category of parties eligible to hold shares in the Stock Exchange compared to the previous regime.

This change should also be read together with the deletion of Article 8A of the Capital Market Law, which previously permitted parties other than securities companies to become shareholders of the Stock Exchange through a mechanism to be further regulated by Government Regulation. Following the entry into force of Law No. 4 of 2026, the expansion of the shareholder base is now regulated directly by statute.

From a regulatory perspective, these changes indicate a shift from an ownership structure centered on Exchange Members to a framework that permits broader participation in the Stock Exchange's ownership.

Law No. 4/2026 Introduces Formal Recognition of Demutualization

In addition to broadening the category of shareholders, Law No. 4/2026 introduces formal recognition of demutualization through the Elucidation of Article 8 paragraph (3), which states that the Stock Exchange is demutualized, profit-oriented, and may become a public company.

For market participants, this provision is significant because demutualization is essentially about separating the Exchange's ownership from the membership rights previously attached to Exchange Members.

Nevertheless, Law No. 4/2026 does not further regulate the implementation mechanism for demutualization, changes to capital structure, procedures for changes in share ownership, or the consequences for the current ownership structure. Accordingly, the regulation of these aspects remains subject to further implementing regulations at the time of this article's preparation.

The Entry of the Ministry of Finance, Bank Indonesia, and Danantara as Shareholders

Another important amendment introduced by Law No. 4/2026 is the insertion of Article 8B, which provides a legal basis for the Ministry of Finance, Bank Indonesia, and Danantara to become shareholders of the Stock Exchange.

This provision introduces a category of shareholders that was not previously expressly regulated under the Capital Market Law. At the same time, Article 8B requires that the share ownership of these three institutions preserve the independence of the Stock Exchange.

Nevertheless, Law No. 4/2026 does not further regulate the contemplated form of ownership, shareholding limits, the parameters of Stock Exchange independence, or the mechanism for applying the principle of independence. Accordingly, the scope of Article 8 B's implementation will still depend on further regulations to be issued by the Financial Services Authority (“OJK”).

Regulatory Transition Period: The Capital Market Law and Existing POJK Remain in Force

From an implementation perspective, the statutory amendments must be read together with OJK Regulation No. 3/POJK.04/2021 concerning the Conduct of Activities in the Capital Market Sector (“POJK No. 3/2021”), which remains in force as of the date this article is prepared.

Article 6 paragraph (1) of POJK No. 3/2021 still provides that shareholders of the Stock Exchange may only be securities companies that have obtained a business license as a broker-dealer. Meanwhile, Article 8 paragraph (3) of the Capital Market Law, as amended by Law No. 4/2026, provides that shareholders of the Stock Exchange may consist of Indonesian individuals and/or Indonesian legal entities, whether or not they are Exchange Members.

This divergence indicates that the statutory amendment has not yet been followed by corresponding adjustments in the implementing regulation. In addition, the OJK Regulation mandated under Article 8 paragraph (5) of Law No. 4/2026 has also not yet been issued.

This situation places the capital markets industry in a regulatory transition period, during which the statutory legal framework has changed, while the operative provisions under OJK regulations still reflect the previous regulation.

Key Points to Watch

Although the direction of the regulatory change is already apparent from the statutory provisions, a number of important aspects remain unregulated in detail, including the demutualization mechanism, the independence parameters of the Stock Exchange, the ownership structure that may be implemented, and the alignment of POJK No. 3/2021, which remains in force for the time being.

Accordingly, in the near term, market participants are likely to focus on the implementing regulations to be issued by OJK. Such regulations are expected to provide clarity on the implementation of the demutualization concept, the categories and requirements of shareholders of the Stock Exchange, the independence parameters of the Stock Exchange as referred to in Article 8B of Law No. 4/2026, and the adjustment of POJK No. 3/POJK.04/2021, which remains in force.

Closing Remarks

The development of the implementing regulations to be issued by OJK will be a critical factor in determining how the amendments introduced by Law No. 4/2026 will be implemented in practice. FKNK Law Firm actively monitors regulatory developments in the capital markets and financial services sectors and stands ready to assist industry participants in identifying and managing the legal implications arising therefrom, including matters relating to regulatory compliance, corporate governance, licensing, capital market transactions, and other strategic issues in the financial services sector.

For further information, please contact:

Ferry F. Rajagukguk

Partner

rajagukguk@fknk.co.id 

Melvern Adreva Ramiro Damita 

Associate

melvern@fknk.co.id