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View all search resultsIDX’s mass delisting raises investor protection concerns
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A man uses his mobile phone in front of a reflection of an electronic board displaying stock prices on Oct. 14 at the Indonesia Stock Exchange (IDX) building in South Jakarta. (JP/Iqro Rinaldi)
T
he Indonesia Stock Exchange (IDX) will execute a forced delisting of 18 issuers in a sweeping enforcement action to improve market quality, but the move raises concerns about retail investors facing valuation and liquidity risks.
Effective on Tuesday, the delisting follows an initial announcement in April. The measure affects seven companies declared bankrupt along with 11 issuers whose shares have been suspended from trading for more than 50 months.
Among those that will be removed from the board are stocks with high public ownership, including bankrupt textile company PT Sri Rejeki Isman (Sritex), traded under the ticker code SRIL, with a free float of 39.89 percent.
Other issuers, such as PT Envy Technologies Indonesia (ENVY) and PT Limas Indonesia Makmur (LMAS), have free float shares of 86.18 percent and 78.78 percent, respectively.
Under IDX regulations, a publicly listed company may be delisted if its business operations suffer severe "negative impacts" with no signs of recovery, or if trading in its shares has been suspended for more than 24 months.
The exchange has also disclosed several critical problems facing the affected issuers, ranging from bankruptcy and delays in financial disclosures to going-concern issues.
As part of the delisting process, the IDX has urged the delisted issuers to conduct share buybacks between May 11 and Nov. 9, so that public investors would have the opportunity to sell their shares back to the companies before they are permanently removed.
