Markets
Indonesia: PMTHMETD, the 10% cap and a 25-day floor
Indonesia permits a placement but not a refixing one. A capital increase without pre-emptive rights, PMTHMETD, runs on a shareholder resolution, is capped at 10% of paid-up capital for ordinary purposes, and must be priced at not less than 90% of the average closing price over the 25 trading days before the listing application. A conversion price set later cannot meet that test.
Key takeaways
- An Indonesian capital increase has exactly two doors. HMETD, a rights issue that preserves pre-emption, and PMTHMETD, the capital increase that does not. A placement is the second, and OJK Regulation 38/POJK.04/2014 governs it.
- The price floor is computed, not negotiated. Peraturan I-A requires a non-pre-emptive issue to be priced at least 90% of the average closing price over the 25 consecutive trading days in the Regular Market before the listing application — unless the purpose is to strengthen the company's finances.
- Ten per cent, and a general meeting every time. For any purpose other than improving the company's financial position the increase is capped at 10% of paid-up capital, and a RUPS is required. There is no annual board mandate to draw on.
- Indonesia's two escape hatches are the same hatch. The uncapped capacity route and the free-pricing exception both open only for issuers in defined financial difficulty, so the flexibility arrives exactly when the company least wants to advertise it.
Two channels, and a placement only fits one
Indonesian company law does not think in terms of placement capacity. It thinks in terms of whether existing shareholders are being offered their rights. A HMETD issue, hak memesan efek terlebih dahulu, is a rights issue: everyone is invited pro rata. A PMTHMETD, penambahan modal tanpa hak memesan efek terlebih dahulu, takes those rights away, and it is the only channel a third-party subscriber can use.
Taking the rights away is a shareholder decision. Every PMTHMETD goes to a RUPS, the rapat umum pemegang saham or general meeting of shareholders. That fact alone removes the drawdown facility from the menu: an investor cannot subscribe on demand when each exercise of capacity requires a meeting to be convened, noticed and held.
The price is computed backwards from 25 trading days
What settles the question is not company law but the Exchange's listing regulation, Peraturan I-A, issued by IDX Board of Directors Directive No. Kep-00183/BEI/12-2018 of 26 December 2018. For a non-pre-emptive issue the price must be at least 90% of the average closing price over the 25 consecutive trading days in the Regular Market before the listing application.
Note the shape of that rule. It is a minimum price, not a maximum discount, and the window it reads sits before an event the issuer schedules. A conversion price that refixes at each conversion produces a different number every time, none known when the listing application goes in. Indonesia sits between India and the general-mandate markets of the region rather than alongside China. The distinction is the discount, and it is why one market is closed here and the other constrained: the Indian floor is the higher of two look-backs and admits no discount at all, whereas the Indonesian floor sits at ninety per cent of a twenty-five-day average, so a ten-per-cent discount to a market-referenced price is available. A capped discount to a formula is a constraint. No discount at any price is a closed door.
The floor has one published exception, and it points at the same door as the capital-increase rule: it does not apply where the shares strengthen the company's financial position, in which case the price is agreed at arm's length with the creditors. Indonesia lets a price be negotiated freely, but only when the company is in enough trouble to need it.
| What the structure needs | What Indonesia provides |
|---|---|
| A price determined at conversion | A floor computed off 25 trading days before the listing application |
| Drawdown on the issuer's demand | A RUPS for each exercise of capacity |
| Capacity sized to the raise | 10% of paid-up capital outside the financial-condition route |
| A recognised convertible instrument | Obligasi konversi appears mainly as consideration in a debt settlement |
| Not an offer, a quote, or a rate card. | |
Ten per cent, and the door marked distress
Where the purpose is something other than improving the company's financial position, POJK 38/2014 caps the increase at 10% of paid-up capital. The uncapped alternative is written for issuers already in difficulty: a company unable to meet a maturing obligation to an unaffiliated lender willing to take shares or convertible bonds instead, or one whose balance sheet has passed defined thresholds of distress. It is a restructuring gateway, and an issuer that fits through it is telling the market something.
Obligasi konversi has no separate route
The obligasi konversi, or convertible bond, is not a distinct Indonesian channel. Whatever the instrument, the shares it produces must be issued through HMETD or PMTHMETD and listed under the additional-listing rule, so the convertible inherits the capacity cap, the meeting and the price floor rather than escaping them. A waran, or warrant, is treated with equal care.
Local note
Foreign ownership is not the obstacle here. Outside the restricted sectors on the Positive Investment List there is no general foreign ownership ceiling on Exchange-listed shares. The constraint is capital-increase procedure, not the investor's nationality.
What Indonesia does support
A scheduled placement to a named investor, approved at a RUPS and priced at the floor, is an ordinary Indonesian transaction. So is a rights issue, often the faster road for a controlled company with a supportive major shareholder. What is not available is capital drawn down over time at a price the market sets at each drawdown. For the structure that does not fit, see how a committed equity facility works and convertible notes for listed issuers; where there is also a United States listing, Rule 144 and restricted securities governs that stock separately.
General information, not legal advice. Neither the IDX nor the OJK document server was readable at review. The 90% floor and its financial-strengthening exception come from Indonesian counsel analyses of Directive Kep-00183/BEI/12-2018; article numbers of POJK 38/2014 are deliberately not cited because they were not confirmed, and whether a later POJK supersedes it was not established. Take advice from qualified Indonesian counsel.
Related markets and reading
Same family
India
A computed minimum under SEBI's ICDR rules, and the same consequence for a refixing strike.
The ICDR pricing formula →Same family
China
A refinancing pricing floor set against a 20-trading-day average.
Why the floor closes the market →Regional contrast
Malaysia
The same 10% capacity number, but a capped discount instead of a computed floor.
Bursa's price-fixing date →Primary sources
- OJK — POJK 38/POJK.04/2014, capital increase without pre-emptive rights
- Government legal database — POJK 38/POJK.04/2014
- Indonesia Stock Exchange — Listing Regulation No. I-A
- Indonesia Stock Exchange — regulations index
Financing an IDX-listed issuer: frequently asked questions
Can an IDX-listed company issue a convertible whose conversion price refixes?
No route has been identified for one. Conversion shares still have to be listed, and the Exchange prices new shares against an average measured over 25 trading days before the listing application. A conversion price fixed later has nothing to submit. Ask Indonesian counsel before signing a term sheet.
How large can a placement be without going to shareholders?
It cannot. A capital increase without pre-emptive rights requires a general meeting of shareholders, the RUPS, in every case. There is no Indonesian equivalent of an annual general mandate a board can draw on between meetings. For an ordinary commercial purpose the increase is also capped at 10% of paid-up capital.
What is the minimum price for shares issued without pre-emptive rights?
Peraturan I-A sets a floor of 90% of the average closing price over the 25 consecutive trading days in the Regular Market before the listing application. That is a computed minimum, not a maximum discount, and it is disapplied only where the issue strengthens the company's financial position. Confirm the current text with Indonesian counsel.
Are the new shares tradable once issued?
New shares are listed on the Exchange and settle into C-BEST, the KSEI depository, and once listed are ordinarily tradable. We could not confirm whether any lock-up attaches to shares issued without pre-emptive rights, so settle that with Indonesian counsel rather than assume it.
If this is about a live situation
Indonesia prices a non-pre-emptive placement for you at not less than 90% of a 25-day average, and caps it at 10% of paid-up capital, so size settles before structure does. The eligibility criteria are the faster route.