Yes, once the pledge is released. Tendering means delivering the shares to the offeror's custodian, and pledged shares are blocked at KSEI, so the lender has to release them first, with the loan repaid from the tender proceeds at settlement. A voluntary delisting, run through a tender offer or a company buyback, raises the same question.
Key takeaways
- The release comes first. Shares frozen for a pledge cannot be transferred, and tendering means delivering them to the offeror's custodian.
- Unencumbered shares are an offer term, not an OJK rule. OJK's tender offer rules do not themselves require tendered shares to be free of security; any such condition comes from the offer document.
- The settlement timetable sets the repayment date. A voluntary tender offer settles within 12 days after the offer period ends, and a mandatory one in cash within 12 days after it closes.
- Going private runs through a buyback or a tender offer. Under POJK 45/2024, a company going private needs independent shareholders' approval and must bring its shareholders below 50.
- A low offer price can leave a shortfall. If the proceeds do not cover the loan, the gap has to be met from other funds.
Can I tender shares that are pledged?
Not while the pledge is in place. Tendering means delivering the shares to the custodian the offeror appoints, and shares frozen for a pledge cannot be transferred out of the account until the lender releases them, so the release has to be agreed before you tender.
OJK's voluntary tender offer rule, POJK 54/POJK.04/2015, does not itself require tendered shares to be free of security interests. The offeror may set special terms and conditions, though, and a condition that tendered shares be unencumbered would come from the offer document, which is worth reading early.
Tendered shares can be withdrawn at any time before the offer ends. That protects the borrower if the offer changes, but it also means the lender will want control over where the shares and the cash go between release and settlement.
The same applies to a mandatory tender offer that follows a takeover under POJK 9/POJK.04/2018: shareholders deliver their shares to the custodian appointed by the new controller and can withdraw them before the offer ends.
How is the loan repaid from the tender proceeds?
Through a release agreed against repayment: the lender releases the pledge so the shares can be delivered, and the tender proceeds go towards the loan when the offer settles, which for a voluntary offer is within 12 days after the offer period ends.
Between release and settlement the lender is unsecured, so expect it to ask for the proceeds to be paid into an account it controls, or for the release to be timed as close to delivery as the custodian allows. Any surplus after repayment belongs to the borrower.
If the offer fails or is cancelled, the shares come back within 12 days and the pledge can be put back in place. A mandatory tender offer settles in cash within 12 days after its fixed 30-day offer period ends.
The table sets the voluntary offer timetable against the loan.
| Tender offer step | Timing (POJK 54/POJK.04/2015) | Loan step |
|---|---|---|
| Offer statement filed with OJK | Effective 15 days after a complete filing, or earlier if OJK declares it effective (Article 7) | Tell the lender; read the loan agreement and the offer terms |
| Offer period opens | No later than 2 business days after effectiveness (Article 17) | Agree a release against repayment and where the proceeds are paid |
| Offer period | At least 30 days, extendable to 90 unless OJK agrees otherwise (Articles 17 and 22) | Lender releases the pledge; shares delivered to the offeror's custodian |
| Withdrawal | Any time before the offer ends (Article 25) | Pledge restored if the shares are withdrawn |
| Settlement | No later than 12 days after the offer period ends (Article 18) | Proceeds repay the loan; any surplus goes to the borrower |
| Offer fails or is cancelled | Shares returned within 12 days (Articles 19 and 20) | Pledge reinstated; the loan continues |
If you would rather sell outright than tender or keep borrowing, our comparison of block trades and stock loans sets out when a negotiated sale makes more sense.
Releasing the pledge changes the pledged amount, which is itself reportable where the pledge carries 5% or more of the voting rights, and a tender that moves a 5%-plus holding across a whole percentage point is an ownership change to report, as our note on OJK disclosure and share pledge reporting explains.
What happens to pledged shares when a company goes private?
If you do not sell, pledged shares become shares in an unlisted company. Under POJK 45/2024, a company going private needs independent shareholders' approval, then buys back the public's shares, or another party makes a tender offer for them, until fewer than 50 shareholders remain.
After the buyback or tender offer, OJK revokes the company's registration, the exchange delists the shares and KSEI removes them from collective custody. At that point there is no exchange price to value them against and no KSEI pledge record of the usual kind, so the collateral changes character.
Read what your loan agreement says about delisting. It may require repayment or substitute collateral before the shares leave the exchange, which in practice means tendering, or selling into the buyback, and repaying from the proceeds.
The price protects minority holders: the buyback price must exceed the average of the daily highest prices on the exchange over the 90 days before the RUPS announcement, and the same floor applies to a tender offer used instead of a buyback. The buyback must be completed within 12 months of the disclosure.
A company can also be required to go private by OJK, or after the exchange delists it, under separate provisions of the same regulation; the effect on a pledge is similar.
What if the tender price is below my loan's trigger levels?
A tender price below your margin-call trigger need not leave the proceeds short of the loan, but it can bring a top-up demand before settlement. Only an offer that values the shares below the outstanding debt leaves a gap to fill from other funds.
If the market price settles near a low offer price, the lender's valuation follows it, and the buffers and cure periods in the loan decide what happens next; our note on margin calls, top-ups and default explains how they work.
OJK's price floors set a minimum, not a market price: a voluntary tender offer must be priced above the average of the daily highest prices over the previous 90 days, among other tests, and a mandatory offer at no less than the higher of that average and the takeover price. A floor does not guarantee that the price covers your loan.
With recourse, any shortfall after the collateral is used remains the borrower's debt; without it, the lender's claim is limited to the shares. That choice was made when the loan was signed, which is one more reason to read the agreement before deciding whether to tender.
This article is general information about share-backed financing in Indonesia and is not legal, tax, or financial advice. A tender offer's own terms, the loan agreement and the facts of the transaction decide what happens to pledged shares; confirm the position with your Indonesian counsel before tendering.
