In Indonesia, public companies are those which may be listed on the Indonesia Stock Exchange (IDX). Shareholders of a public company may be any general member of the public. There are also certain advantages that come with owning a public company as well as certain regulations which only pertain to them.

Public Companies in ID

Definition of Public Companies

A public company can be defined as one in which all registered securities are transacted and owned by the general public. It can also be known as a publicly owned company. There is much distribution and trading of the shares of a public company. It is important to note that public companies were once private companies until they fulfilled all necessary requirements to become public. Once they did so, they then opted to become public companies so as to raise capital. All public companies may participate in the stock exchange.

It may initially appear that only a small portion of the shares of the company reaches the public but expands over time. A public company is referred to as such because the shareholders who are the owners of the establishment may be any person from the public. Anyone from the public is allowed to obtain stock in the company. Indonesian companies are among the most influential in stock exchange markets across Southeast Asia.

In Indonesia, there are currently 38 companies which are allowed to go public. These companies inhabit a range of industries. Public companies in Indonesia today include banks, airlines, restaurant chains, supermarkets, telecommunications companies, and even football clubs.

Advantages of Owning a Public Company

  • Dividends

Dividends are the company’s shares of profit and are based on revenue. After an agreement has been reached at the General Assembly, a dividend is granted. If an investor wants to receive a dividend, the investor must own a share for a period of time deemed to be sufficient. When the shareholder has the right to receive the dividend is recognized as the shareholder, the period of ownership will be considered to be sufficient.

  • Capital Gains

Capital gains are different from purchase price to sales price. Capital gains are derived from the secondary market’s trading activities. For example, if an investor were to buy a company’s shares at 3,000 rupiah per share and sell the shares at 3,500 rupiah per share, it would mean that for every sold share, the investor would have a capital gain of 500 rupiah.

Regulations Imposed on Public Companies in Indonesia

The Indonesia Stock Exchange (IDX) established some legislations on December 2018 on regulations related to listed companies and the listing of shares and securities issued by them. Certain changes were introduced by the new IDX regulations so that the listing procedure would be simplified and that the financial requirements could be understood and adhered to by all. This was part of a bid to increase the interest of companies to become public and joi the IDX. The regulations were enacted a day after their establishment.

Another aim of the new IDX regulations for listed companies is to accommodate some modifications to the registration procedures for public choices at Indonesia’s Financial Services Authority (OJK). The OJK will now accept the submission online via SPRINT. The new IDX regulations state some important changes that has been made to the listing process and also replace some provisions that had been made in January 2014.

The following is a list of important aspects affected by the modifications made:

  1. Online application and streamlined requirement for listing
  2. Flexibility in compliance with requirements
  3. Prohibition of companies from conducting stock split or reverse within 12 months
  4. Principal listing approval
  5. Financial requirements for listing
  6. New guidelines for price tags of newly issued shares
  7. Lack of obligatory lock-up
  8. Change of duration required to list additional new frames
  9. Lack of prerequisites for prelisted shares to become effective