A founder's multiple voting shares — saham dengan hak suara multipel, or SHSM, the dual-class shares permitted by POJK No. 22/POJK.04/2021 — can be financed, but only through security that never moves title, because under that regulation a transfer of the shares to anyone outside the narrow circle of parties designated as eligible to hold the class converts them into ordinary shares and extinguishes the extra votes. That is the structuring problem in one sentence: the asset is valuable because it carries control, and it carries control only for as long as the shares stay in eligible hands and the conditions the regulation attaches to the class continue to be met.
Indonesia is one of a small number of Asian markets that expressly permits a dual-class structure for listed issuers, and OJK drew the regime narrowly. The result is a share class unlike anything else on the Indonesia Stock Exchange: it has no continuous screen price, it is frozen in a dedicated custody account after the offering, it converts on a defined list of events, and it eventually sunsets on its own. This note sets out what the regulation provides, where the IDX board rules sit on top of it, and how a facility is documented so the security does not itself trip a conversion. It is general information, not advice.
Key takeaways
- The rule is POJK No. 22/POJK.04/2021. Multiple voting shares for issuers with innovation and a high growth rate, held by the parties designated at the general meeting before the offering and named in the prospectus — an individual, or on strict conditions a legal entity.
- The voting ratio is not a fixed multiple. The regulation sets it on a sliding scale keyed to the holders' percentage of issued and paid-up capital and recalculates it before each general meeting, so the control the collateral carries moves as that percentage moves.
- Transfer converts — but only outside the eligible circle. A transfer to a party not designated in the prospectus as able to hold the class turns the shares into ordinary shares, which is why title-transfer structures such as repo saham are unusable here.
- Lock-ups stack. The POJK's two-year prohibition on the multiple voting shares, its separate eight-month prohibition on pre-offering ordinary shares, and the IDX listing rules can run concurrently; tenor is set against the latest expiry.
- Value the ordinary shares, not the votes. The multiple voting line has no continuous screen price and conversion is the realisation case, so any indicative level is assessed against the ordinary line.
What POJK No. 22/POJK.04/2021 permits
The regime sits in POJK No. 22/POJK.04/2021, the OJK regulation on the application of the multiple-voting-share classification by issuers with innovation and a high growth rate conducting a public offering of equity securities in the form of shares. It is not a general dual-class permission but a technology-and-growth carve-out, and both the issuer and the holder must qualify. The issuer must use technology to create an innovation that raises productivity and growth and delivers broad benefit, and must meet the asset-size, growth, and operating-history thresholds the POJK sets out; those figures are stated in the regulation and confirmed for a specific issuer with Indonesian counsel.
The holder's conditions are the part most often misdescribed. The first holders of the class are the parties designated as such at the general meeting held before the offering and disclosed in the prospectus, and together they must hold more than half of all voting rights in the issuer (Pasal 12). A legal entity can hold the class, but only on strict conditions — all but total direct ownership by the designated holder, directors whose expertise matches the issuer's core business, and, for an Indonesian entity, a management-consultancy business — so the class is not confined to natural persons, and a holding vehicle is not automatically fatal to it. Separately, and after the offering, a member of the issuer's board of directors (direksi) who has made a significant contribution to the company's growth may become a holder of the class with the approval of independent shareholders (Pasal 12(5)(b)). Which of those two routes a given block came in by matters more than almost anything else about it, because the conversion events differ.
Nor is the voting ratio a single number. The regulation sets it on a sliding scale keyed to the percentage of issued and fully paid capital that the holders of the class hold: the smaller their economic stake, the higher the ratio, calibrated so that the class keeps a bare majority of the votes rather than an open-ended multiple. The ratio is recalculated shortly before each general meeting is convened and changes automatically, without any amendment to the articles of association; the regulation permits the issuer to raise it above the standard scale only within a capped ceiling and on conditions, including independent-shareholder approval. The percentages, the ratios and the ceiling are stated in the regulation and are checked against the current text for a specific holding. For a lender the consequence is structural: the control attaching to the block is dynamic, so it has to be re-derived from the current shareholding rather than read off a fixed ratio recorded at the IPO.
Two further features limit how much control the ratio buys. The first is a floor of reserved general-meeting matters on which each multiple voting share carries one vote only: amendments to the articles of association that require the approval of the Minister of Law and Human Rights, other than a change to authorised capital; the appointment or dismissal of independent commissioners; the appointment or dismissal of the public accountant giving the annual audit opinion; and a petition for the issuer to be declared bankrupt, or its dissolution (Pasal 38). That is a minimum, not a maximum — the articles of association may add to it. Note what is not on the list: mergers, consolidations, acquisitions and spin-offs, on which the class votes at the full ratio. Note too the carve-out for authorised capital, because a capital increase is exactly the corporate action that can dilute the block toward a conversion.
The second is that the classification is not permanent: it runs for a maximum of ten years from the date the registration statement becomes effective, extendable once for a further period of up to ten years, and that extension requires the approval of independent shareholders in general meeting — a vote in which the holder of the class does not participate at all, rather than one in which the enhanced votes are merely reduced to one (Pasal 5). For a lender that is a tenor question before it is anything else: a facility maturing beyond the remaining sunset runway is secured on a class that may no longer exist at repayment, and the extension that would save it is not in the borrower's gift.
The conversion triggers, and what they do to collateral
The commercial heart of the regulation is not the voting ratio. It is the set of events on which the shares stop being multiple voting shares and become ordinary shares automatically, by operation of the regulation rather than by anyone's decision (Pasal 14). Not every event on that list applies to every holder, which is why establishing how a particular block qualified is the first piece of diligence.
| Event | Effect on the shares | What it means for the financing |
|---|---|---|
| Transfer to a party not designated in the prospectus as eligible to hold the class | Convert to ordinary shares | A repo, a fiduciary transfer, or an enforcement sale to an outside buyer all collapse the voting right |
| Death of the holder, or guardianship, with no transfer into eligible hands within six months | Convert to ordinary shares | Succession is a credit condition here, not a private matter, and the window is short |
| A holder who qualified through the post-offering director route ceases to hold office | Convert to ordinary shares | That route only; where it applies, covenants and step-in rights must not disturb the founder's seat |
| The holders' votes fall to half or less of all votes and stay there for six months | Convert to ordinary shares | A dilutive raising can convert the collateral without any act of the borrower — monitor the percentage, not the share count |
| A corporate holder ceases to meet the conditions for an entity to hold the class | Convert to ordinary shares | Where the block sits in an entity, that entity's ownership and business are part of the collateral analysis |
| Sunset expiry without extension | Convert to ordinary shares | Tenor is set inside the remaining sunset runway |
| Reserved general-meeting matters | No conversion; one vote per share | On those items control is narrower than the ratio suggests — but mergers are not among them |
The death provision repays a closer reading than it usually gets. The shares convert on the holder's death, or on the holder being placed under guardianship, unless they are transferred within six months to another holder of the class or to a party already designated as eligible to hold it — and the two-year transfer prohibition described below is lifted in that event so that the transfer can be made. The class can therefore survive a death, but only into eligible hands and only inside that window, which makes an estate plan part of the credit rather than a private matter. Where a generational transfer is the actual objective, the relevant note is our piece on stock loans for Indonesian family-business succession, which deals with ordinary controlling blocks rather than a statutory share class.
Lock-ups: the POJK, Regulation No. I-A and the New Economy Board
A founder who has just listed is usually restricted by more than one instrument, and the restrictions do not expire together. POJK No. 22/POJK.04/2021 imposes a minimum holding period on the multiple voting shares themselves, running from the date the registration statement becomes effective — the regulation's floor is two years, save for the limited circumstances it contemplates. The same regulation separately prohibits every pre-offering ordinary shareholder from transferring for eight months after effectiveness where book value per share on the latest financial statements is lower than the offer price (Pasal 6). That second prohibition is easy to miss, and it bites on the ordinary line — the very shares the collateral is marked against. During either window the collateral is not merely illiquid: disposal is prohibited.
IDX Regulation No. I-A, the listing rule for the Main and Development Boards, adds a restriction with a different trigger again: shares acquired at a price below the offer price within the six months before the registration statement was submitted may not be transferred for eight months after that statement becomes effective. Different rule, different trigger, different clock. Where the issuer listed on the Papan Ekonomi Baru — the New Economy Board, the venue IDX built for high-growth technology issuers and the board on which an issuer applying the multiple voting classification is admitted — the operative listing rule is IDX Regulation No. I-Y rather than I-A, and it carries its own admission requirements, an equivalent restriction, and holding undertakings for the controlling shareholder.
Mapping those clocks is the first piece of work on a facility of this kind, because a lock-up does not merely reduce what the collateral is worth — it removes the enforcement route entirely for its duration. A security interest that cannot be realised until a date certain is, for that period, a covenant package rather than collateral, and both sides should price it as such. The same discipline applies to restricted lines generally, as in which Indonesian stocks qualify for a stock loan.
What happens when the prohibition ends is a separate question, and the regulation answers it in a way that shapes any enforcement plan. Once it expires, a holder who wants to transfer the class must first offer the shares to one or more other holders of the class; the transfer is executed through the exchange's negotiated market rather than the regular market; OJK and the issuer must be notified at least two business days beforehand; the issuer must announce the transfer on the exchange and its own website within one business day; and until it is announced the plan is inside information (Pasal 9). A statutory right of first refusal, a mandated market segment and a pre-announcement therefore sit in front of any realisation of this collateral. None of that prevents lending, but a waterfall drafted as though the shares could simply be sold on default does not describe what would actually happen.
IDX also applies a special notation (notasi khusus) against a listed company's ticker, a standing public marker flagging particular characteristics of the issuer, including a multiple-voting share structure. For a lender that is useful rather than adverse: the dual-class status is disclosed continuously on the trading screen rather than buried in a prospectus, and a change in status is visible in near real time — exactly the kind of monitoring trigger a facility agreement can be drafted against.
KSEI, C-BEST and what is actually being pledged
Indonesian listed shares are held scripless, in book-entry form, within the depository system operated by KSEI through C-BEST. In the ordinary case a pledge is taken over a defined position in a securities sub-account under the borrower's Single Investor Identification, and the collateral is immobilised there while beneficial ownership stays with the borrower — the mechanism described in our guide to share-backed financing in Indonesia, with KSEI, C-BEST, and the SID defined in the glossary.
A locked-up multiple voting block is not the ordinary case. While the transfer prohibitions run, the regulation requires the multiple voting shares, and the pre-offering ordinary shares, to be issued scripless and recorded in a Rekening Titipan at KSEI — a depository account outside collective custody — with the issuer notifying KSEI of the restricted shares and KSEI freezing them (Pasal 7). Only once the prohibition expires may the class be registered in collective custody (Pasal 8). The security description and the perfection steps have to be written against that account structure, and against the fact that the position is already frozen by operation of the regulation rather than by anything the lender does.
Two further things change when the collateral is a multiple voting line. First, it is a class, recorded separately from the ordinary shares, so the security documents must identify the class rather than simply a number of shares in the issuer — the collateral description has to survive those shares becoming a different class mid-facility. Second, the class does not trade in the regular market and has no continuous screen price: a transfer between eligible holders goes through the negotiated market, so there is no running mark to take from it. Marking, margin monitoring, and any indicative loan-to-value are referenced to the ordinary line, which is correct economically as well as practically, since conversion is precisely what happens in the realisation case. As on every counter, there is no single headline loan-to-value on an Indonesian stock loan; the level depends on the ordinary line's liquidity, volatility, free float, and concentration, together with the restriction profile on the collateral.
Why repo and fidusia are off the table
| Structure | Does title move? | Effect on the classification |
|---|---|---|
| Pledge — gadai saham (Arts. 1150–1160, Civil Code) | No; possessory security only | Classification preserved while the loan runs |
| Fiduciary security (UU No. 42 of 1999) | Yes, on a fiduciary basis | Risks a conversion event at the outset |
| Repo — repo saham | Yes, for the term of the repo | Transfer on the opening leg converts the shares |
| Enforcement sale to a buyer outside the eligible circle | Yes | Buyer receives ordinary shares; the enhanced votes do not travel |
The pledge — gadai, under Articles 1150 to 1160 of the Indonesian Civil Code (Kitab Undang-Undang Hukum Perdata), documented as an akta gadai saham — is possessory security: a right over the shares without movement of ownership, which is exactly the property the regulation demands. Fiduciary security under the Fiduciary Security Law, UU No. 42 of 1999, works the other way, transferring ownership on a fiduciary basis to the secured party. Repo saham transfers title on the opening leg by design. The first two are compared at greater length, in Bahasa Indonesia, in fidusia saham vs gadai saham. Whether a given structure constitutes a transfer for the purposes of the POJK, and whether a particular transferee is inside the eligible circle, are legal questions, and they are the first ones your own Indonesian counsel should be asked.
Structuring the facility so the security does not trip a conversion
Once the class is understood, the drafting problem is tractable. What follows is the shape of the answer, not a template; each point is agreed transaction by transaction with counsel on both sides.
- Possessory security over a named class. An akta gadai saham over the multiple voting shares specifically, with accretions — bonus shares, splits, and any shares arising on conversion — following into the security automatically.
- Conversion as a defined event with a defined consequence. Named in the facility agreement and carrying a stated outcome — a re-margining, a prepayment, or a repricing — rather than surfacing later as an argument. It changes the collateral's identity, not merely its value.
- An enforcement route that matches the transfer machinery. Tenor, amortisation, and the waterfall are set against the latest applicable lock-up expiry and against the pre-emption, negotiated-market and pre-announcement steps that follow it, with other collateral or recourse carrying the credit until then.
- Covenants written against the triggers that actually apply. Where the holder qualified through the post-offering director route, loss of the board seat converts the shares, so the facility must not contain rights whose exercise would unseat the founder and a resignation or removal is better treated as an information and re-margining event. Where the holder was designated before the offering, the live exposures are dilution below the voting threshold, the transfer restrictions and the sunset — and the covenant package should be aimed there instead.
- The takeover analysis done in advance. A change of control brought about by a purchase can engage the mandatory tender offer rules under POJK No. 9/POJK.04/2018. But POJK No. 22/POJK.04/2021 exempts a change of control at one of these issuers that is caused by the conversion of the multiple voting shares into ordinary shares — unless the new controller took an active role in bringing that conversion about, in which case the exemption falls away; and either way the issuer must designate the new controller and make a material information filing. Whether a lender's enforcement or step-in rights would amount to an active role is the question to settle at signing, not in a crisis.
- Recourse chosen deliberately. Where collateral cannot be realised for a period, the recourse profile does more work than on an ordinary liquid line.
How the facility behaves while it runs — buffers, top-ups, and cure periods — follows the logic we set out for any pledged IDX position in margin calls, top-ups and default on an IDX stock loan, with the difference that automatic liquidation is simply unavailable against a locked-up class.
Disclosure: the founder and the issuer
Three disclosure strands run alongside a financing of this kind, and all three belong to the borrower and the issuer rather than to the arranger. The first is ownership reporting. The governing instrument is POJK No. 4 of 2024, made under the Capital Market Law (UU No. 8 of 1995, as amended, including by UU No. 4 of 2023), which replaced the earlier reporting regulation with effect from 28 August 2024: directors, commissioners, any party holding at least 5% of the voting rights, and any controller must report their holding and each subsequent change to OJK through the electronic reporting system within three business days (Article 7(2)). A holder of a multiple voting block is often all four of those things at once, and because the class is a class of its own the arithmetic of what is held — and of what a conversion would change — is run explicitly rather than assumed.
The second strand attaches to the transaction itself, and it is recent enough to be missed. The same regulation creates a stand-alone pledge-reporting duty: a shareholder who pledges shares carrying at least 5% of a listed company's voting rights, taken singly or cumulatively, must report the pledge to OJK through the electronic reporting system within three business days of signing the pledge agreement (Article 7(2)), disclosing the shares pledged, the percentage they represent, the amount of the loan they secure, the date and term of the agreement, and any affiliation. It is triggered by the pledge, not by any change of ownership, so it is owed even though a pledge leaves title exactly where it was — and a founder financing a control block is above the threshold by definition. Our note on OJK disclosure and private share pledges sets out the ownership-based test in more detail.
The third sits with the issuer — the material information obligations under POJK No. 31/POJK.04/2015. Whether a founder's financing, or an event that would convert the shares, is material to the issuer is a judgement for the issuer and its counsel, but one anticipated at structuring because the answer shapes the timetable; and a conversion that moves control carries its own filing obligation in any event. We act as arranger and introducer; we do not make regulatory filings and we do not provide legal advice.
The practical takeaway
Multiple voting shares are financeable, and the founders who hold them are precisely the shareholders this market was built to serve: concentrated, control-carrying, restricted rather than merely illiquid, and reluctant to sell. But the class has to be respected on its own terms. Establish how the block qualified, because that decides which conversion events are live for it. Take security that does not move title. Assume the enhanced votes disappear on realisation and assess the collateral accordingly. Map every lock-up, and the transfer machinery that follows it, before agreeing a tenor. Watch the holders' percentage of the votes as closely as the share count. And write conversion into the agreement as an event with a consequence rather than a surprise.
Whether the classification applies to your holding, what the applicable thresholds and periods are, and how any transfer or enforcement would be characterised are questions for your own Indonesian legal counsel, engaged in parallel from the outset. See our stock loans overview and process for how a restricted, control-sensitive position is worked through, and our FAQ for the questions shareholders ask most often.
This article is a general description of Indonesia's multiple-voting-share framework and is not legal, tax, or regulatory advice. The eligibility conditions, voting ratios, holding periods, conversion events, and sunset provisions under POJK No. 22/POJK.04/2021, the ownership and pledge reporting duties under POJK No. 4 of 2024, and the listing and lock-up requirements under IDX Regulation No. I-A and No. I-Y, apply as those instruments stand at the relevant time and to the specific facts. Obtain advice from qualified Indonesian counsel before acting. It follows our editorial standards; see also our disclosures.
