For many founders, the IPO represents the moment when significant personal wealth becomes liquid. The company's equity value, which has been theoretical for years, is now reflected in a tradeable share price. This expectation is legitimate. But it is frequently held with an incomplete understanding of when, and under what conditions, that liquidity is actually accessible.
Lock-up obligations and free float requirements are the two mechanisms that govern how and when founders can sell shares after listing. Understanding them before the IPO is completed is considerably more useful than understanding them after.
What the lock-up period requires
Under OJK and IDX rules, controlling shareholders, which typically includes founders and major pre-IPO investors, are subject to a lock-up period following the listing. During this period, they are prohibited from selling, transferring, or pledging their shares.
The standard lock-up period for controlling shareholders on IDX is eight months from the effective date of the offering registration statement. This is not from the listing date. It is from the date OJK declares the registration statement effective, which is typically a few weeks before listing.
In practice, this means that for approximately eight months after the IPO process formally begins at the OJK level, the controlling shareholder cannot reduce their position. For an offering that closes in, say, April, the lock-up typically expires around December of the same year.
Important note: The lock-up applies to the controlling shareholder's entire position, not just the shares offered in the IPO. If a founder holds 75% of the company before the IPO and offers 25% to the public, the remaining 75% is subject to the lock-up. Only after the lock-up expires can any of those shares be sold or pledged.
Free float and what it means for ongoing share sales
After the lock-up expires, the founder does not simply have unrestricted freedom to sell. IDX requires a minimum free float, typically 20% of total issued shares, to be maintained throughout the company's listing tenure. If the total public float falls below this threshold, the company risks being placed on a watchlist or facing suspension from trading.
This means that any secondary sale by the founder after the lock-up, whether through a block trade, a secondary offering, or open-market sales, must be structured in a way that does not reduce the public free float below the minimum threshold. For most mid-market listings, where the IPO itself creates only a modest free float, this is a meaningful constraint on the pace at which founders can realise liquidity.
Pledging shares as security
During the lock-up period, shares cannot be pledged as security for personal or corporate loans. After the lock-up expires, pledging is permitted, subject to disclosure requirements.
This matters for founders who may be considering using post-IPO shares as collateral for other business activities. If that plan is part of the founder's financial strategy, it should be factored into the timing and structure of the IPO from the outset, not discovered as a constraint after listing.
Secondary offerings and block trades
After the lock-up expires, founders wishing to reduce their position in a material way typically do so through a secondary offering (penawaran saham tanpa hak memesan efek terlebih dahulu) or a block trade arranged through a securities firm. Both mechanisms require regulatory compliance and market disclosure.
A secondary sale that is poorly timed, or conducted without appropriate market communication, can depress the share price and damage investor confidence. The manner in which a founder reduces their position after the lock-up is as much a reputational and market management question as it is a personal financial one.
Planning around these constraints
The practical implication is that founders should model their post-IPO liquidity timeline realistically, accounting for the lock-up period, the free float minimum, and the market impact of secondary sales.
For most mid-market listings, meaningful founder liquidity, beyond the proceeds of any shares sold in the IPO itself, is typically a twelve to twenty-four month story from the listing date, not an immediate outcome. Founders who build their financial planning around that realistic timeline approach the post-IPO period with appropriate expectations. Those who do not are often surprised.
If this article raises questions specific to your company’s situation, we invite you to begin with a conversation. There is no obligation in a first discussion.
Request a Confidential Discussion