A worker wearing a protective mask walks as he cleans the floor past an electronic board displaying the stock market index at the Indonesia Stock Exchange (IDX), as the outbreak of the coronavirus disease (COVID-19) continues, in Jakarta, Indonesia, September 8, 2020. REUTERS/Willy Kurniawan

Indonesia is shaking up its listing rules as it seeks to attract start-up giants and cultivate a reputation as an IPO hub. The new regulations, which relax a number of curbs and allow firms to go public with multiple classes of shares with different voting rights, are a long time coming, say lawyers.



Rio Lassatrio, founder and partner of LHBM Counsel, says that over the past few years the Financial Services Authority (OJK) and the Indonesian Stock Exchange (IDX) have worked to revamp the listing rules and related procedures.

The changes show an intention to simplify the listing process, encourage companies to go public, and increase awareness “regarding the benefit of capital market and go public,” Lassatrio says.

“On many occasions, the IDX’s officials say ‘don’t wait until you become big. Become big instead in the Indonesian stock market,’” he says.

Taking advantage of these developments last month was PT, which broke ground as Indonesia’s first listed tech unicorn, soared 25 percent on its market debut, according to Reuters.


Lassatrio says there are a number of developments that companies will be able to take advantage of, including the initial registration requirements, which have been amended so the company considering listing “does not have to appoint an independent director for the IPO listing,” he says.

But companies in the market will have to continue to work hard to profit from the regulatory developments.

“Good planning and preparation are the keys to a successful IPO listing,” Lassatrio adds.

He warns that private companies in Indonesia are “mostly unprepared to go public and need substantial investment of time and funds to level up their capabilities to public companies’ standards.”

In order to navigate the inevitable complications of the IPO listing process, businesses must assess their readiness to go public, Lassatrio says. “The assessment of readiness means that business must understand and comply with the framework of regulatory, legal and finance, tax, and governance requirements.”

There’s the need to prepare sufficient business information, establish a marketing strategy and decide the best timing to go public, and then there’s the legal footwork that goes into preparing for an IPO.

For the legal aspects, businesses still have to ensure they are thorough Lassatrio says, adding that “full-blown due diligence” to assess any legal issues or potential risks for the company is required, and that this must cover assessment on licenses, corporate documents, agreements with third parties, as well as addressing ongoing or potential litigation.

Assessments must also be carried out on any company subsidiary to “determine whether a consolidation, merger or acquisition is necessary to be conducted before the IPO.”

Business should also be prepared to allocate adequate funds for IPO process, and “in order to be able to prepare the IPO registration statement, they must appoint an underwriter and also supporting professionals who have been registered with the OJK.”


This extensive to-do list is unlikely to spook companies with listing ambitions. Indeed, Bukalapak’s success is likely to spark wider interest in the market.

Lassatrio expects to see technology-based start-up companies set a trend for IPO listings in the coming months.

“ The record-breaking Bukalapak’s IPO could lure other start-up companies for IPO listing in the hope to replicate or transcend the value,” Lassatrio says, noting the overhaul will likely encourage further listings in the near future.

“Technology-based companies such as GoTo, a joint entity of Gojek and Tokopedia, Traveloka, and are believed by many to have started the IPO listing process and undergoing discussion with OJK and IDX while awaiting the anticipated revised listing rules,” he adds.


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