Is 5% a Ceiling? What Actually Happens When an Individual Crosses 5% in an IDX-Listed Company
Until 2026, shares in the Indonesia Stock Exchange (“IDX”) could only be held by securities companies. Law No. 4 of 2026 on Amendment to Law No. 4 of 2023 on Developing and Strengthening of the Financial Sector (“P2SK Law”) and POJK No. 13 of 2026 on Shareholders of the Stock Exchange (“POJK 13/2026”) changed this position by allowing Indonesian individuals and/or legal entities, whether or not they are IDX members, to be shareholders of IDX. The change follows the IDX’s transition from a mutual and non-profit exchange to a demutualized and profit-oriented exchange. Now, share ownership is separated from IDX membership, meaning that holding IDX shares does not provide trading access, which remains available to IDX members. Individuals or public may acquire shares through the IDX’s IPO thereafter. However, before the IDX’s IPO, ownership is limited to Indonesian legal entities and certain state bodies. Until now, IDX has not yet announced a definitive timeline for its IPO. The IPO is expected to follow the completion of the demutualization process and the establishment of its new ownership structure.
As for shares ownership of IDX, according to Article 17 (1) of POJK 13/2026, a party may hold, directly or indirectly, up to 5% of the IDX’s shares. However, the 5% threshold is not an absolute cap. A party may exceed the 5% threshold or increase an existing holding above 5%, provided that it obtains prior approval from OJK. For example, approval is required for an increase from 4% to 6% or from 7% to 10%. Meanwhile, a reduction from 7% to 6% does not require approval.
OJK’s approval to the shareholders intending to exceed 5% of shares depends on the applicant’s contribution to the development of IDX, including capital strength, technological and infrastructure capabilities, connectivity, access to liquidity and market deepening. OJK also considers the applicant’s track record, capital capacity, commitment and contribution.
Other jurisdictions take different approaches. For example, India imposes a 5% ownership cap on individuals and other ordinary shareholders, while certain institutional investors may hold up to 15%. Hong Kong instead uses an approval-based model whereas a party generally cannot become a “Minority Controller” of HKEX at 5% or more of voting power without prior regulatory approval. These approaches illustrate different ways of regulating ownership and control of the exchanges.
Back to IDX, the framework raises questions about how indirect ownership and acting in concert will be monitored. Since the 5% threshold applies to direct and indirect ownership, effective monitoring will be important to prevent circumvention and excessive concentration, which could undermine the IDX’s independence and market integrity.
A further question concerns how these criteria will apply to individual investors seeking significant holdings. Applicants must demonstrate that their participation would contribute to the development of IDX, including through capital strength, technology and infrastructure, connectivity, liquidity access, or market deepening. In particular, it remains to be seen how criteria such as technological capabilities, connectivity, and market deepening will be assessed for individual investors.
These issues are particularly relevant given the IDX’s role as both a commercial entity and a market infrastructure institution subject to regulatory and supervisory oversight. It is interesting to see whether the demutualization of IDX and followed by IDX’s IPO can bring positive impacts to IDX.
For further information or consultation, please contact:
Ferry F. Rajagukguk
Partner
Vira Chairunnisa
Associate
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