30 May 2022

Over the past decades, Indonesia as one of the largest economies in Southeast Asia has experienced rapid growth in the start-up ecosystem. The Head of Board of Commissioners of the Financial Services Authority/Otoritas Jasa Keuangan (“OJK”), Wimboh Santoso in the 3rd Indonesia Fintech Summit 2021 announced that as of September 2021, there are approximately 2,100 start-ups in Indonesia. Among these start-ups, seven of them are classified as unicorn or start-up companies with a valuation of over USD 1 billion, and two of them are classified as decacorn or start-up companies with a valuation of over USD 10 billion. As of September 2020, data from the Indonesian Venture Capital and Start-up Association (Amvesindo) shows that USD 1.9 billion has been raised by at least 52 startup companies in Indonesia.

To encourage the country’s fast-growing start-ups or technology-related companies to list on the Indonesia Stock Exchange (“IDX”), the OJK has enacted Regulation No. 22/POJK.04/2021 on Implementation of Shares Classification with Multiple Voting Rights by Issuer with Innovation and High Growth Rates that Conduct Public Offering of Equity Securities in the Form of Shares (the “Regulation”). As its title suggests, the Regulation allows companies to issue multiple voting rights shares (“MVS”) when conducting an Initial Public Offering (“IPO”). The Regulation aims to provide legal protection to the founders of the company to maintain their control at the management level and to enable the company to achieve its initial vision and mission following the IPO.

The implementation of dual class shares with MVS is not a new thing – several exchanges in other countries such as Hong Kong Exchange (HKEX), New York Stock Exchange (NYSE), and National Association of Securities Dealers Automated Quotations (Nasdaq), for instance, have implemented the dual class shares with MVS, which allow technology-related companies to be listed in the said exchanges.

Below are the key takeaways from the Regulation, which has been in effect from 2 December 2021.

Eligibility and listing requirements

Under the Regulation, the OJK sets several criteria for conducting a public offering of equity in the form of shares by implementing MVS. The Issuer must:

  • use technology to create product innovations that increase productivity and economic growth with broad social benefits;
  • have shareholder(s) who have made a significant contribution in the utilisation of technology that increases productivity and economic growth with broad social benefits;
  • maintain total net assets of at least IDR 2 trillion as proven by the latest audited financial statements;
  • have carried out operational activities for at least three years prior to the submission of the registration statement;
  • have a compound annual growth rate of total assets of at least 20% for the last three years as proven by audited annual financial statements;
  • have a compound annual growth rate of income of at least 30% for the last three years as proven by audited annual financial statements;
  • have never carried out a public offering of equity; and
  • meet other criteria determined by the OJK.

Technical requirements and mechanics

The OJK places limitations on the implementation of MVS under the Regulation. The maximum period to implement MVS is 10 years from the effective date of the registration statement in the context of an IPO. This period can be extended one time for an additional 10 years. It is worth noting that there must be approval from the independent shareholders for such an extension.

The Issuer must state clearly and in detail the MVS in its articles of association by covering the following:

  • classification of shares issued by the Issuer and rights attached to the classification of each concerned share;
  • provisions regarding parties who can become holders of MVS;
  • provisions on the ratio of voting rights of MVS over the ordinary shares in accordance with the number of shares owned as regulated under the Regulation;
  • provisions for limiting the voting rights of shareholders with MVS, both from MVS and ordinary shares at a maximum of 90% of all voting rights and treatment of excess voting rights in the event that shareholders with MVS have voting rights are more than 90%  of all voting rights;
  • provisions regarding the voting rights of MVS which have voting rights equivalent to ordinary shares in certain agendas at the General Meeting of Shareholder (“GMS”) as regulated under the Regulation;
  • the period of MVS and the provision of the extension;
  • provisions regarding conditions that cause the conversion of MVS into ordinary shares before the term of MVS expires; and
  • provisions regarding the treatment of votes differ from the shareholders with MVS at GMS, that the smaller vote is deemed to have given the same vote as the majority vote of shareholders with MVS.

In addition, the Issuer must apply the ratio of voting rights between MVS and the ordinary shares. The ratio is as follows:

  • if the number of MVS is at least 10% up to a maximum of 47.36% of all the issued and fully paid up capital, the ratio of voting rights between MVS and the ordinary shares is 10:1;
  • if the number of MVS is at least 5% up to less than 10% of all the issued and fully paid up capital, the ratio of voting rights between MVS and the ordinary shares is 20:1;
  • if the number of MVS is at least 3.5% up to less than 5% of all the issued and fully paid up capital, the ratio of voting rights between MVS and the ordinary shares is 30:1; or
  • if the number of MVS shares is at least 2.44% up to less than 3.5% of all the issued and fully paid up capital, the ratio of voting rights between MVS and the ordinary shares is 40:1.

The calculation of the shareholding of every shareholder with MVS must be made one working day prior to the summons for GMS. The ratio of voting rights changes according to the shareholdings of the shareholders with MVS either individually or jointly without the obligation to first change the articles of association of the Issuer.

Rights of public shareholders

To protect the interest of the public shareholder, the Regulation governs the voting rights of MVS which does not apply to all agenda at GMS. Instead, each MVS shall have one voting right at GMS for the following agendas:

  • amendments to the Issuer’s articles of association that must obtain the approval of the Minister of Law and Human Rights, except changes of authorised capital;
  • appointment or dismissal of independent commissioners;
  • appointment or dismissal of a public accountant or public accounting office that will provide audit services on annual historical financial information; and
  • filing of an application to declare the Issuer bankrupt or for the dissolution of the Issuer.

In addition to the above, the OJK would also like to ensure there is participation of public shareholders at GMS held by the eligible Issuer. The Regulation requires GMS of the eligible Issuer’s to be attended by at least 1/20 of the total voting rights of ordinary shares owned by shareholders other than the shareholders with MVS. If the number of ordinary shares present at the first GMS and the second GMS is less than 1/20, the limit on the number of ordinary shares present at the third GMS is determined by the OJK at the request of the Issuer.

Special notation

Following the issuance of the Regulation, the IDX issued Circular Letter No. 00023/BEI/12-2021 on the Additional of Special Notations for Listed Companies (“CL 23/2021”) which has been in force since 31 January 2021. Under CL 23/2021, the special notation comprises the letter “N” should be included with the relevant company codes for the Issuer who implements MVS. The addition of special notation commencing from the listing date of the Issuer until the Issuer no longer implementing MVS. The special “N” notational must be included based on the announcement by the IDX and shall be removed according to the information provided by the Issuer via IDXnet.

MVS as Free-Float Shares

On 25 March 2022, the IDX further issued Decree No. KEP-00014/BEI-03/2022 on the Special Policy for Free-Float Shares for Listed Companies that Implement Shares with Multiple Voting Rights (“Decree 14/2022”) which is effective on its issuance date. According to Decree 14/2022, shares held by common shareholders in the listed companies that implement multiple voting rights are now classified as free-float shares. In this regard, it must meet the following criteria until the conclusion of the prohibition period for transfers of shares by shareholders with MVS as regulated under the Regulation:

  • such shares should be deposited at a Depository and Settlement Institution payment point or in the form of scrip if payment points have not yet been made available; and
  • such shares should meet the qualifications set forth in Provision I.22 of Rule Number I-A on the Listing of Shares and Equity Securities Other Than Shares Issued by Listed Companies.


The issuance of the Regulation has shown Indonesian readiness to accommodate both the local and foreign start-up companies to invest in Indonesia while providing legal certainty for the public shareholders. For eligible Issuer wishes to raise its capital but at the same time willing to support the economic growth in their home country, this Regulation may be one of the push factors for them to consider conducting the IPO in Indonesia. By conducting the IPO in Indonesia, the eligible Issuer may attract domestic investors to purchase the shares because the tax imposed for each capital gain will be lower than the shares listed in foreign exchange.

If you have any questions or require any additional information, please contact Jade Hwang and David Septian Lienardo of Roosdiono & Partners (a member of ZICO Law).

This alert is for general information only and is not a substitute for legal advice.


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