POJK on the Conduct of Venture Capital Company Business

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 35 /POJK.05/2015
CONCERNING
THE CONDUCT OF VENTURE CAPITAL COMPANY BUSINESS BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering: a. that in order to foster and develop the venture capital company industry so that it can contribute more to the national economy, it is necessary to improve the provisions regarding the conduct of business by venture capital companies; b. that based on the considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning the Conduct of Venture Capital Company Business;

Recalling: Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

DECIDING:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE CONDUCT OF VENTURE CAPITAL COMPANY BUSINESS.

COPY

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are meant:

1. Venture Capital Business is a financing business through capital participation and/or financing for a certain period of time in the context of developing the business of business partners or debtors.
2. Venture Capital Company which is hereinafter abbreviated as PMV is a business entity that conducts Venture Capital Business, venture capital fund management, fee-based service activities, and other business activities with the approval of the Financial Services Authority.
3. Islamic Venture Capital Business is a financing business through investment activities and/or service provision carried out for a certain period of time in the context of developing the business of business partners, implemented based on Sharia principles.
4. Islamic Venture Capital Company which is hereinafter abbreviated as PMVS is a business entity that conducts Islamic Venture Capital Business, venture capital fund management, and other business activities with the approval of the Financial Services Authority, all of which are implemented based on Sharia principles.
5. Sharia Principles are Islamic legal provisions based on fatwas and/or Sharia conformity statements from the National Sharia Council of the Indonesian Ulema Council.
6. Sharia Business Unit which is hereinafter abbreviated as UUS is a work unit of the PMV headquarters that functions as the parent office of offices that conduct Islamic Venture Capital Business activities.
7. Venture Capital Fund is a joint investment contract made between PMV or PMVS and a custodian bank, where PMV or PMVS is given authority to manage funds from investors that will be used to conduct Venture Capital Business or Islamic Venture Capital Business.
8. Custodian Bank is a general bank that has received approval from the Financial Services Authority to act as a Custodian Bank.
9. Trustee is a party that represents the interests of holders of debt securities, including those based on Sharia Principles.
10. Venture Capital Fund Investor is an individual or institution, either domestic or foreign, that makes an investment into a Venture Capital Fund.
11. Net Asset Value is the difference between the assets and liabilities of a Venture Capital Fund.
12. Business Partner is an individual or company, including micro, small, medium enterprises, and cooperatives, that receives capital participation and/or investment based on profit-sharing principles from PMV, PMVS, or UUS.
13. Debtor is an individual or company, including micro, small, medium enterprises, and cooperatives, that receives productive business financing from PMV.
14. Divestment is the sale of PMV or PMVS shares held in the respective Business Partner.
15. General Meeting of Shareholders which is hereinafter abbreviated as GMS is the general meeting of shareholders as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for PMV or PMVS that are legal entities in the form of a limited liability company or equivalent to GMS for PMV or PMVS that are legal entities in the form of a cooperative and that are business entities in the form of a limited partnership.
16. Shareholder is a shareholder as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for PMV or PMVS that are legal entities in the form of a limited liability company or equivalent to Shareholder for PMV or PMVS that are legal entities in the form of a cooperative and that are business entities in the form of a limited partnership.
17. Board of Directors is the board of directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for PMV or PMVS that are legal entities in the form of a limited liability company or equivalent to Board of Directors for PMV or PMVS that are legal entities in the form of a cooperative or that are business entities in the form of a limited partnership.
18. Board of Commissioners is the board of commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for PMV or PMVS that are legal entities in the form of a limited liability company or equivalent to Board of Commissioners for PMV or PMVS that are legal entities in the form of a cooperative or that are business entities in the form of a limited partnership.
19. Paid-up Capital:
    a. for PMV or PMVS in the form of a limited liability company legal entity is paid-up capital; b. for PMV or PMVS in the form of a cooperative legal entity is the principal deposit and mandatory deposit; or
    c. for PMV or PMVS in the form of a limited partnership business entity is the capital contribution of the limited partner.
20. Equity:
    a. for PMV or PMVS in the form of a limited liability company legal entity, is the sum of:
21. Paid-up Capital;
22. additional Paid-up Capital, consisting of:
    a) share premium/discount; b) equity effect issuance costs; and c) others in accordance with accounting standards principles;
23. transaction difference of restructuring entities under common control;
24. retained earnings/losses;
25. current year profit/loss;
26. treasury stock; and
27. other Equity components, consisting of:
    a) changes in revaluation surplus; b) exchange differences due to translation of financial statements in foreign currency; c) gains and losses from re-measurement of available-for-sale financial assets; d) effective portion of gains and losses of hedging financial instruments in the context of cash flow hedging; and e) other Equity components in accordance with accounting standards principles. b. for PMV or PMVS in the form of a cooperative legal entity is the sum of principal deposits, mandatory deposits, reserve funds, grants, and undistributed surplus.
    c. for PMV or PMVS in the form of a limited partnership business entity is the net difference between the assets and liabilities of the limited partnership.
    d. for PMVS in the form of a limited partnership business entity or UUS is the difference between the amount of assets and the sum of liabilities and temporary funding.
28. Financial Services Authority which is hereinafter abbreviated as OJK is the Financial Services Authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

CHAPTER II
VENTURE CAPITAL BUSINESS
First Section
PMV Business Activities
Article 2
(1) PMV conducts Venture Capital Business which includes:
a. equity participation; b. participation through the purchase of convertible bonds (quasi equity participation);
c. financing through the purchase of debt securities issued by Business Partners at the early start-up stage and/or business development; and/or
d. productive business financing.
(2) In conducting Venture Capital Business as referred to in paragraph (1), PMV may manage Venture Capital Funds.
(3) In addition to Venture Capital Business as referred to in paragraph (1) and paragraph (2), PMV may conduct other business activities:
a. fee-based service activities; and/or b. other business activities with OJK approval.
(4) Venture Capital Business activities as referred to in paragraph (1) may be accompanied by mentoring for Business Partners and/or Debtors.

Article 3
PMV that will conduct fee-based business activities as referred to in Article 2 paragraph (3) letter a must report to OJK by attaching documents containing at least an explanation regarding:
a. fee-based products to be marketed; b. the mechanism of fee-based business activities;
c. rights and obligations of the parties;
d. cooperation agreements; and e. permits from competent authorities (if any).

Article 4
(1) PMV that will conduct other business activities as referred to in Article 2 paragraph (3) letter b must meet the following provisions:
a. have a minimum healthy financial health level; and b. not be subject to sanctions by OJK.
(2) PMV that will conduct other business activities as referred to in paragraph (1) must first obtain approval from OJK.
(3) To obtain approval as referred to in paragraph (2), PMV must submit a request to OJK by attaching documents containing at least an explanation regarding:
a. the scheme or mechanism of other business activities; b. business prospect analysis; and
c. sample business activity agreements to be used for PMV operations containing the rights and obligations of the parties.
(4) In order to grant approval or rejection of the request as referred to in paragraph (2), OJK analyzes the documents as referred to in paragraph (3).
(5) OJK issues an approval or rejection letter at the latest 30 (thirty) working days after the request as referred to in paragraph (3) is received completely.

Second Section
PMVS and UUS Business Activities
Article 5
The conduct of PMVS and UUS business activities must fulfill the principles of justice ('adl), balance (tawazun), benefit (maslahah), and universalism (alamiyah) and must not contain gharar, maysir, riba, zhulm, risywah, and haram objects.

Article 6
(1) PMVS and UUS conduct Islamic Venture Capital Business which includes:
a. investment consisting of:

1. equity participation;
2. purchase of sukuk or convertible Sharia bonds;
3. purchase of sukuk or Sharia bonds issued by Business Partners at the early start-up stage and/or business development; and/or
4. financing based on profit-sharing principles;
   b. service provision; and/or
   c. other business activities based on OJK approval.
   (2) In conducting Islamic Venture Capital Business as referred to in paragraph (1), PMVS or UUS may manage Venture Capital Funds implemented based on Sharia Principles.
   (3) PMVS or UUS are prohibited from conducting financing sales and purchases except to Business Partners who have previously received investment from PMVS or UUS.
   (4) Service provision activities as referred to in paragraph (1) letter b are business activities of PMVS or UUS that generate additional income in the form of remuneration (ujrah/fee).

Article 7
(1) Business activities as referred to in Article 6 must be conducted using contracts that do not contradict Sharia Principles.
(2) The use of contracts as referred to in paragraph (1) must first be reported to OJK.
(3) Further provisions regarding the reporting of contract use as referred to in paragraph (2) are regulated in an OJK Circular.

Article 8
(1) PMVS or UUS that will conduct other business activities as referred to in Article 6 paragraph (1) letter b must meet the following provisions:
a. have a minimum healthy financial health level; and b. not be subject to sanctions by OJK.
(2) PMVS or UUS that will conduct other business activities as referred to in paragraph (1) must first obtain approval from OJK.
(3) To obtain approval as referred to in paragraph (2), PMVS or UUS must submit a request to OJK by attaching documents containing at least an explanation regarding:
a. the scheme or mechanism of other business activities to be conducted accompanied by an explanation of the contract to be used; b. business prospect analysis; and
c. sample business activity agreements to be used for PMVS or UUS operations containing the rights and obligations of the parties in accordance with the contract used.
(4) In order to grant approval or rejection of the request as referred to in paragraph (2), OJK analyzes the documents as referred to in paragraph (3).
(5) OJK issues an approval or rejection letter at the latest 30 (thirty) working days after the request as referred to in paragraph (3) is received completely.

Third Section
Objectives and Limitations in the Conduct of Business by PMV, PMVS, and/or UUS
Article 9
(1) Business activities of PMV, PMVS, and/or UUS as referred to in Article 2 paragraph (1) and/or Article 6 paragraph (1) are directed at prospective Business Partners and/or Debtors who have productive businesses and/or have ideas for developing productive businesses. (2) Business activities of PMV, PMVS, and/or UUS as referred to in Article 2 paragraph (1) and/or Article 6 paragraph (1) aim to:
a. develop new discoveries; b. develop companies or individual businesses that experience funding difficulties in the early stages of their business;
c. develop micro, small, medium enterprises, and cooperatives;
d. assist companies or individual businesses that are in the development stage or business decline stage; e. take over companies or individual businesses that are in the development stage or business decline stage; f. develop research and engineering projects; g. develop various uses of new technology and technology transfer both domestically and internationally; and/or h. assist in the transfer of company ownership.

Article 10
PMV or PMVS must include business activities as referred to in Article 2 paragraph (1) and/or Article 6 paragraph (1) in its articles of association.

Article 11
(1) PMV must have equity participation and/or participation through the purchase of convertible bonds of at least 15% (fifteen percent) of the total PMV business activities. (2) The equity participation and/or participation through the purchase of convertible bonds of at least 15% (fifteen percent) as referred to in paragraph (1) must be fulfilled within a period of at most 3 (three) years after the business license is established.

Article 12
(1) PMV, PMVS, and/or UUS must have investment value, participation, and/or receivable value originating from business activities as referred to in Article 2 paragraph (1) and/or Article 6 paragraph (1) letter a against the total assets of PMV, PMVS, and/or UUS which is hereinafter referred to as Investment and Financing to Assets Ratio (IFAR) of at least 40% (forty percent). (2) For PMV, PMVS, and/or UUS that obtain business licenses after this POJK is promulgated, the fulfillment of the IFAR value as referred to in paragraph (1) must be carried out at the latest 3 (three) years counted from the date the business license is established.

Article 13
(1) PMV or PMVS that increases Paid-up Capital in order to fulfill the gearing ratio and/or the ratio of Equity to Paid-up Capital is exempted from fulfilling the provisions as referred to in Article 12 paragraph (1) for a period of at most 1 (one) year from the date the increase in Paid-up Capital is recorded by the competent agency. (2) For PMV or PMVS that increases Paid-up Capital in order to fulfill the gearing ratio and/or the ratio of Equity to Paid-up Capital within a period of less than 3 (three) years from the establishment of its business license, the fulfillment of the provisions as referred to in Article 12 paragraph (1) is granted an additional period of at most 1 (one) year.

Article 14
(1) The value of participation, financing, and other business activities as referred to in Article 2 to one Business Partner and/or Debtor is limited to a maximum of 25% (twenty-five percent) of PMV Equity. (2) The value of investment and other business activities as referred to in Article 6 to one Business Partner is limited to a maximum of 25% (twenty-five percent) of PMVS Equity. (3) The amount of total Equity as referred to in paragraph (1) and paragraph (2) is in accordance with the monthly financial report of the last position of PMV or PMVS before conducting business activities as referred to in paragraph (1) and paragraph (2).

Fourth Section
Equity Participation Activities
Article 15
(1) Equity participation as referred to in Article 2 paragraph (1) letter a and/or Article 6 paragraph (1) letter a number 1 must be conducted by PMV, PMVS, and/or UUS in the form of direct capital participation to Business Partners in the form of a limited liability company legal entity. (2) Equity participation as referred to in paragraph (1) by PMV or PMVS in the form of a limited partnership business entity may be conducted by appointing the Board of Directors as a representative of PMV or PMVS as the owner of shares in the Business Partner. (3) Equity participation as referred to in paragraph (1) is conducted for a certain period of time of at most 10 (ten) years. (4) After the certain period as referred to in paragraph (3) expires, equity participation may be extended 2 (two) times with a total extension period of at most 10 (ten) years. (5) PMV, PMVS, and/or UUS must conduct Divestment in accordance with the period agreed upon with the Business Partner in accordance with the provisions as referred to in paragraph (3) and paragraph (4) so that PMV, PMVS, and/or UUS do not become controllers in the Business Partner.

Article 16
Divestment as referred to in Article 15 paragraph (5) may be conducted through:
a. public offering through the capital market; b. selling to PMV, PMVS, and/or new investors through a limited offering (private placement); or
c. selling back to the Business Partner (buy back).

Fifth Section
Participation through the Purchase of Convertible Bonds
Article 17
(1) Participation through the purchase of convertible bonds as referred to in Article 2 paragraph (1) letter b and/or investment through the purchase of sukuk or convertible Sharia bonds as referred to in Article 6 paragraph (1) letter a number 2 must be conducted by PMV, PMVS, and/or UUS in the form of purchasing convertible bonds or Sharia convertible bonds issued by Business Partners in the form of a limited liability company legal entity. (2) The purchase of convertible bonds or Sharia convertible bonds as referred to in paragraph (1) may be in the form of purchasing convertible bond certificates or Sharia convertible bond certificates as proof of ownership of convertible bonds or Sharia convertible bonds and/or purchasing convertible bonds or Sharia convertible bonds recorded in an agreement with a notarial deed. (3) Convertible bonds or Sharia convertible bonds as referred to in paragraph (1) may be converted into equity participation at maturity for a certain period of time. (4) Equity participation originating from the conversion of bonds or Sharia bonds is equity participation as referred to in Article 2 paragraph (1) letter a and/or Article 6 paragraph (1) letter a number 1. (5) The conversion into equity participation as referred to in paragraph (3) is conducted based on an agreement agreed upon together by PMV, PMVS, and/or UUS with the Business Partner.

Sixth Section
Productive Business Financing
Article 18
Productive business financing as referred to in Article 2 paragraph (1) letter d must be conducted by PMV in the form of disbursing financing to Debtors with the aim of producing goods and/or services that increase income for the Debtor.

Article 19
(1) In conducting productive business financing activities, PMV may cooperate with other parties in the form of:
a. channeling financing; or b. joint financing.
(2) Other parties as referred to in paragraph (1) include:
a. banks; b. PMV or PMVS;
c. financing companies;
d. Indonesian Export Financing Institutions; e. other financial institutions; and/or f. individuals.
(3) The amount of funds used for joint financing activities from individuals as referred to in paragraph (2) letter f is at least Rp250,000,000.00 (two hundred fifty million rupiah). (4) Channeling financing as referred to in paragraph (1) letter a is conducted with the following provisions:
a. risks arising from channeling financing activities become the responsibility of the fund owners; and b. recipients of funds only act as managers and receive remuneration (fee) from the fund owners. (5) In joint financing as referred to in paragraph (1) letter b, risks arising from joint financing become the burden of each party proportionally. (6) The risk sharing as referred to in paragraph (4) and paragraph (5) must be included in a written agreement between both parties.

Article 20
(1) PMV must conduct risk mitigation for productive business financing activities.
(2) Risk mitigation for productive business financing conducted by PMV as referred to in paragraph (1) may be conducted by:
a. transferring financing risk through credit insurance or credit guarantee mechanisms; b. transferring risk over goods from the object of collateral through insurance; and/or
c. establishing collateral attachments on the object of collateral.

Article 21
(1) PMV that transfers risk as referred to in Article 20 paragraph (2) letter a and letter b must use an insurance company or guarantee institution that meets the following provisions:
a. has obtained a business license from OJK; and b. is not subject to sanctions restricting business activities or suspending business activities from OJK.
(2) The coverage period for credit insurance, credit guarantees, and insurance over collateral objects as referred to in Article 20 paragraph (2) letter a and letter b is at least equal to the period of productive business financing.

Seventh Section
Financing Based on Profit-Sharing Principles
Article 22
Financing based on profit-sharing principles as referred to in Article 6 paragraph (1) letter a number 4 is conducted in the form of providing capital to Business Partners for a certain period of time for productive business activities with profit sharing in accordance with the agreement of the parties.

Article 23
(1) In conducting its business activities, PMVS or UUS may cooperate with other parties in the form of channeling financing cooperation conducted in accordance with Sharia Principles. (2) Other parties as referred to in paragraph (1) include:
a. banks; b. PMVS or PMV that has a UUS;
c. financing companies;
d. Indonesian Export Financing Institutions; e. other financial institutions; and/or f. individuals.
(3) Channeling cooperation as referred to in paragraph (1) must be conducted using the wakalah bil ujrah contract.
(4) In channeling cooperation as referred to in paragraph (1), PMVS or UUS may act as:
a. the distributing party (manager/agent) through investment activities based on profit-sharing principles; and/or b. the fund/capital/goods provider party, i.e., the party that delegates to other parties. (5) In the event that PMVS and UUS act as the distributing party (manager/agent) as referred to in paragraph (4) letter a, PMVS or UUS only acts as a manager and receives remuneration (ujrah) from the management of those funds. (6) Risks arising from channeling cooperation as referred to in paragraph (1) become the responsibility of the fund/capital/goods provider party.

(7) Risk sharing provisions as referred to in paragraph (6) must be clearly stated in a written agreement between both parties.

Article 24
(1) PMVS and UUS must conduct risk mitigation for investment business activities based on the profit-sharing principle.
(2) Risk mitigation for investment business activities based on the profit-sharing principle as referred to in paragraph (1) can be done by:
a. transferring the risk of investment business activities based on the profit-sharing principle through a Sharia guarantee mechanism; b. transferring the risk of goods serving as collateral for investment business activities based on the profit-sharing principle through a Sharia insurance mechanism; and/or
c. establishing a guarantee attachment on the collateral object.

Article 25
Provisions regarding the transfer of risk as referred to in Article 21 apply mutatis mutandis to PMVS and UUS that conduct risk mitigation through Sharia mechanisms.

CHAPTER III
BUSINESS ACTIVITY AGREEMENTS

Article 26
(1) All business activity agreements between PMV, PMVS, and/or UUS with Business Partners and/or Debtors must be made in writing.
(2) Business activity agreements between PMV, PMVS, and/or UUS with Business Partners and/or Debtors must meet the agreement drafting provisions as regulated in the OJK Regulation regarding consumer protection in the financial services sector.

Article 27
Business activity agreements as referred to in Article 26 must contain at least:
a. type of business activity; b. agreement number and date;
c. identity of the parties;
d. amount of participation and/or financing; e. duration of participation and/or financing; f. financing return rate (if any); g. collateral object (if any); h. details of costs related to the participation/financing provided, which must contain at least:

1. survey costs (if any);
2. commission costs (if any);
3. notary costs (if any); and
4. collateral attachment costs (if any);
   i. provisions regarding the rights and obligations of the parties;
   j. provisions regarding penalties (if any); and k. mechanisms in the event of disputes and selection of dispute resolution venue.

CHAPTER IV
HEALTH LEVEL

First Section
General

Article 28
(1) PMV and PMVS must at all times meet financial health level requirements with a minimum healthy condition.
(2) Measurement of the financial health level as referred to in paragraph (1) includes:
a. quality of productive assets; and b. profitability.
(3) Further provisions regarding the financial health level as referred to in paragraph (1) are regulated in an OJK Circular.

Second Section
Quality of Productive Assets

Article 29
(1) In order to measure the financial health level as referred to in Article 28 paragraph (2) letter a, PMV must assess, monitor, and take necessary steps to maintain the quality of participation and financing receivables. (2) In order to measure the financial health level as referred to in Article 28 paragraph (2) letter a, PMVS and UUS must assess, monitor, and take necessary steps to maintain the quality of investments. (3) Further provisions regarding the procedures for assessing the quality of participation and financing receivables as referred to in paragraph (1) and assessing the quality of investments as referred to in paragraph (2) are regulated in an OJK Circular.

Third Section
Provision for Write-Off of Productive Assets

Article 30
(1) PMV, PMVS, and/or UUS must calculate and form provisions for write-off of productive assets.
(2) Provisions regarding the calculation and formation of provisions for write-off of productive assets as referred to in paragraph (1) are regulated in an OJK Circular.

Fourth Section
Formation of Impairment Loss Provisions

Article 31
(1) PMV, PMVS, and/or UUS must form impairment loss provisions in accordance with applicable financial accounting standards.
(2) The formation of impairment loss provisions as referred to in paragraph (1) is conducted in the preparation of financial reports that have been audited by a public accounting firm.

Fifth Section
Profitability

Article 32
(1) In order to measure the financial health level as referred to in Article 28 paragraph (2) letter b, PMV or PMVS must assess the profitability factor.
(2) Profitability as referred to in paragraph (1) is the ability of PMV or PMVS to generate profit.
(3) Assessment of the profitability factor as referred to in paragraph (1) includes assessment of asset performance and operational efficiency.
(4) Further provisions regarding the procedures for assessing the profitability factor as referred to in paragraph (1) are regulated in an OJK Circular.

CHAPTER V
EQUITY

Article 33
(1) PMV in the form of a business entity:
a. limited liability company must have Equity of at least Rp50,000,000,000.00 (fifty billion rupiah); b. cooperative must have Equity of at least Rp25,000,000,000.00 (twenty-five billion rupiah); or
c. limited partnership must have Equity of at least Rp25,000,000,000.00 (twenty-five billion rupiah).
(2) PMV in the form of a limited liability company that has obtained a business license before this OJK Regulation is promulgated and is a national private company and has Equity below the provisions as referred to in paragraph (1) letter a, must have Equity with the following stages:
a. at least Rp20,000,000,000.00 (twenty billion rupiah) no later than December 31, 2020; and b. at least Rp50,000,000,000.00 (fifty billion rupiah) no later than December 31, 2025. (3) For PMV in the form of a limited liability company that has obtained a business license before this OJK Regulation is promulgated and is a joint venture company and has Equity below the provisions as referred to in paragraph (1) letter a, must have Equity of at least Rp50,000,000,000.00 (fifty billion rupiah) no later than December 31, 2020. (4) PMV in the form of a cooperative legal entity that has obtained a business license before this OJK Regulation is promulgated and has Equity below the provisions as referred to in paragraph (1) letter b, must have Equity with the following stages:
a. at least Rp10,000,000,000.00 (ten billion rupiah) no later than December 31, 2020; and b. at least Rp25,000,000,000.00 (twenty-five billion rupiah) no later than December 31, 2025.

Article 34
(1) PMVS in the form of a business entity:
a. limited liability company must have Equity of at least Rp20,000,000,000.00 (twenty billion rupiah); b. cooperative must have Equity of at least Rp10,000,000,000.00 (ten billion rupiah); or
c. limited partnership must have Equity of at least Rp10,000,000,000.00 (ten billion rupiah).
(2) PMV in the form of a limited liability company legal entity and has carried out all business activities based on Sharia Principles before this OJK Regulation is established and has Equity below the provisions as referred to in paragraph (1) letter a, must have Equity with the following stages:
a. at least Rp10,000,000,000.00 (ten billion rupiah) no later than December 31, 2020; and b. at least Rp20,000,000,000.00 (twenty billion rupiah) no later than December 31, 2025. (3) PMV in the form of a cooperative legal entity and has carried out all business activities based on Sharia Principles before this OJK Regulation is promulgated and has Equity below the provisions as referred to in paragraph (1) letter b, must have Equity with the following stages:
a. at least Rp5,000,000,000.00 (five billion rupiah) no later than December 31, 2020; and b. at least Rp10,000,000,000.00 (ten billion rupiah) no later than December 31, 2025. (4) UUS must have Equity of at least Rp10,000,000,000.00 (ten billion rupiah). (5) PMV that has carried out part of its business activities based on Sharia Principles through UUS before this OJK Regulation is promulgated and has UUS Equity below the provisions as referred to in paragraph (4), must have UUS Equity of at least Rp10,000,000,000.00 (ten billion rupiah) no later than December 31, 2020.

Article 35
PMV or PMVS must have an Equity to Paid-up Capital ratio of at least 30% (thirty percent).

CHAPTER VI
FUNDING SOURCES

First Section
General

Article 36
(1) Funding sources for PMV, PMVS, and/or UUS can come from:
a. Venture Capital Funds; b. loans;
c. asset securitization in accordance with capital market legislation provisions;
d. issuance of medium-term notes; e. issuance of bonds; f. subordinated loans or funding; g. issuance of shares; h. waqf; and/or
i. grants.
(2) Parties that can provide funding as referred to in paragraph (1) include:
a. the government; b. state-owned enterprises or regional-owned enterprises;
c. financing companies;
d. Indonesia Export Financing Agency; e. banks; f. other financial institutions; g. multilateral financial institutions; h. other business entities; and/or
i. individuals.
(3) Parties as referred to in paragraph (2) can be from within the country or from abroad.
(4) Loans originating from individuals must meet the following provisions:
a. made in the form of a notarial deed; b. loan term of at least 1 (one) year; and
c. loan amount of at least Rp250,000,000.00 (two hundred fifty million rupiah).

Article 37
(1) PMVS or UUS can conduct funding activities as referred to in Article 36.
(2) Funding as referred to in paragraph (1) must be conducted with the following provisions:
a. using deeds that do not contradict Sharia Principles; and b. in accordance with legislation provisions.

Second Section
Subordinated Loans or Funding

Article 38
(1) Subordinated loans or funding received by PMV or PMVS as referred to in Article 36 paragraph (1) letter f must meet the provisions:
a. with a term of at least 5 (five) years; b. in the event of liquidation, the claim right applies last among all existing loans; and
c. documented in the form of a notarial deed agreement between PMV or PMVS and the lender.
(2) In conducting subordinated loan or funding activities as referred to in paragraph (1), PMVS must meet the provisions:
a. using deeds that do not contradict Sharia Principles; and b. in accordance with legislation provisions.

Third Section
Gearing Ratio

Article 39
(1) PMV or PMVS must meet gearing ratio provisions of a minimum of 0 (zero) and a maximum of 10 (ten) times.
(2) Gearing ratio as referred to in paragraph (1) is the ratio between the amount of loans or funding and the sum of Equity and subordinated loans or funding.
(3) Subordinated loans or funding that can be calculated in the gearing ratio calculation as referred to in paragraph (2) is at most 50% (fifty percent) of Paid-up Capital.

CHAPTER VII
VENTURE CAPITAL FUNDS

First Section
Requirements for PMV or PMVS as Venture Capital Fund Manager

Article 40
(1) PMV, PMVS, and/or UUS that will manage Venture Capital Funds as referred to in Article 2 paragraph (2) and Article 6 paragraph (2) must meet the following provisions:
a. have Equity of at least:

1. for PMV in the form of a limited liability company legal entity at Rp20,000,000,000.00 (twenty billion rupiah);
2. for PMV in the form of a cooperative legal entity at Rp10,000,000,000.00 (ten billion rupiah);
3. for PMV in the form of a limited partnership business entity at Rp10,000,000,000.00 (ten billion rupiah);
4. for PMVS in the form of a limited liability company legal entity at Rp10,000,000,000.00 (ten billion rupiah);
5. for PMVS in the form of a cooperative legal entity at Rp5,000,000,000.00 (five billion rupiah); or
6. for PMVS in the form of a limited partnership business entity at Rp5,000,000,000.00 (five billion rupiah); and
7. for UUS at Rp5,000,000,000.00 (five billion rupiah); and
   b. have human resources with experience in investment management.
   (2) PMV, PMVS, and/or UUS that will manage Venture Capital Funds as referred to in Article 2 paragraph (2) and Article 6 paragraph (2), must submit an application to OJK and must attach documents containing a description of at least:
   a. establishment deed of PMV or PMVS; b. organizational structure;
   c. draft agreement for the formation of Venture Capital Funds;
   d. list of human resources managing Venture Capital Funds; and e. standard operating procedures related to the management of Venture Capital Funds.
   (3) OJK conducts analysis of the documents as referred to in paragraph (2).
   (4) OJK issues an approval or rejection letter no later than 30 (thirty) working days after the application is received completely.

Second Section
Formation of Venture Capital Funds

Article 41
Formation of Venture Capital Funds is conducted between PMV and/or PMVS with a Custodian Bank based on a joint investment contract.

Article 42
(1) The number of Venture Capital Fund Investors is at most 25 (twenty-five) parties.
(2) PMV, PMVS, and/or UUS must meet the minimum managed fund value amount for each Venture Capital Fund formed.
(3) For the first time since this OJK Regulation is promulgated, the minimum managed fund value amount as referred to in paragraph (2) is set at Rp1,000,000,000.00 (one billion rupiah). (4) After obtaining approval from OJK as referred to in Article 40 paragraph (4), PMV, PMVS, and/or UUS can collect funds from Venture Capital Fund Investors to meet the minimum managed fund value amount as referred to in paragraph (3) within a period of at most 30 (thirty) days. (5) In the event that the time period as referred to in paragraph (4) expires and PMV, PMVS, and/or UUS obtains managed funds of at least Rp750,000,000.00 (seven hundred fifty million rupiah), then PMV is given additional time to collect funds from Venture Capital Fund Investors for 30 (thirty) days. (6) In the event that the time period as referred to in paragraph (4) and paragraph (5) expires and PMV, PMVS, and/or UUS cannot meet the minimum managed fund value amount as referred to in paragraph (2), then PMV, PMVS, and/or UUS must return the managed funds to the Venture Capital Fund Investors. (7) PMV, PMVS, and/or UUS must conduct participation in accordance with provisions regarding minimum participation limits for each Venture Capital Fund managed. (8) For the first time since this OJK Regulation is promulgated, the minimum participation limit for each Venture Capital Fund managed is set at 10% (ten percent). (9) Provisions regarding changes to the minimum managed fund value amount for each Venture Capital Fund as referred to in paragraph (3) and the minimum participation limit for each Venture Capital Fund managed as referred to in paragraph (7) are regulated in an OJK Circular.

Article 43
Venture Capital Funds must state the name of PMV or PMVS and a name appropriate to the investment purpose.

Third Section
Venture Capital Fund Formation Agreement

Article 44
(1) The Venture Capital Fund formation agreement is made with a notarial deed.
(2) The Venture Capital Fund formation agreement as referred to in paragraph (1) must contain at least:
a. identity of PMV or PMVS with the Custodian Bank involved in the agreement; b. duties and responsibilities of PMV or PMVS;
c. duties and responsibilities of the Custodian Bank;
d. investor rights; e. investment purpose, investment policy, costs, and investment risk overview; f. dispute/settlement resolution among the parties; and g. agreement termination provisions.

Fourth Section
Obligations, Prohibitions, and Duties of PMV or PMVS and Custodian Bank

Article 45
(1) In managing Venture Capital Funds, PMV or PMVS must:
a. have good faith and full responsibility in managing funds as best as possible for the interest of investors; b. store and maintain all bookkeeping and important records related to financial reports and fund management;
c. separate such bookkeeping and records from the bookkeeping and records of PMV or PMVS managing the Venture Capital Funds;
d. provide information to investors/candidate investors about the investment risk overview clearly; e. determine the fair market value of participation and/or financing values to Business Partners and/or Debtors and submit them immediately to the Custodian Bank every three months; f. establish a method for calculating the fair market value of participation and/or financing values to Business Partners and/or Debtors consistently to calculate and determine Net Asset Value; and g. apply the customer due diligence principle in accordance with applicable legislation. (2) In conducting fund management, PMV or PMVS managing Venture Capital Funds is prohibited from:
a. having an affiliation with the Custodian Bank; and b. having a portfolio of participation and/or financing to Business Partners and/or Debtors affiliated with PMV or PMVS of more than 20% (twenty percent) of the Net Asset Value of the Venture Capital Fund, except for affiliation relationships resulting from government ownership or participation capital.

Article 46
(1) The Custodian Bank has the duties:
a. providing collective custody and custodian services regarding Venture Capital Fund assets; b. calculating the Net Asset Value of Venture Capital Funds every three months;
c. paying costs related to Venture Capital Funds upon order of the PMV or PMVS managing the Venture Capital Funds; and
d. storing and maintaining separate records showing all changes in investor data.
(2) The Custodian Bank is prohibited from having an affiliation with the PMV or PMVS managing the Venture Capital Funds.

Fifth Section
Trustee

Article 47
(1) In order to monitor investments in convertible bonds and/or debt securities, PMV, PMVS, and/or UUS managing Venture Capital Funds may appoint a Trustee registered with OJK to represent the interests of the Venture Capital Fund as the holder of convertible bonds and/or debt securities to supervise the implementation of the convertible bond and/or debt securities issuance agreement by the Business Partner. (2) The Trustee as referred to in paragraph (1) is prohibited from having a debt relationship with the Business Partner in an amount of more than 25% (twenty-five percent) of the value of the Business Partner's convertible bonds and/or debt securities.

Sixth Section
Placement of Venture Capital Funds

Article 48
(1) PMV must channel Venture Capital Funds in the form of Venture Capital Business as referred to in Article 2 paragraph (1) to Business Partners and/or Debtors that are not listed on the stock exchange. (2) PMVS and/or UUS must channel Venture Capital Funds in the form of Sharia Venture Capital Business as referred to in Article 6 paragraph (1) letter a to Business Partners that are not listed on the stock exchange. (3) The placement of investor funds as referred to in paragraph (1) and paragraph (2) is temporary. (4) The placement of Venture Capital Funds in productive business financing for PMV is set at a maximum of 20% (twenty percent) of the Net Asset Value of the Venture Capital Fund. (5) The placement of Venture Capital Funds in productive business financing for PMV or financing based on the profit-sharing principle for PMVS and/or UUS is set at a maximum of 20% (twenty percent) of the Net Asset Value of the Venture Capital Fund.

Seventh Section
Venture Capital Fund Reports

Article 49
(1) PMV, PMVS, and/or UUS managing Venture Capital Funds must submit written reports showing the financial position of the Venture Capital Fund to OJK and Venture Capital Fund Investors every three months for the positions of March, June, September, and December. (2) The report as referred to in paragraph (1) must be submitted by the Board of Directors of PMV or PMVS to OJK no later than 10 (ten) working days after the end of the three-month period.

Article 50
(1) The annual financial report of the Venture Capital Fund must be audited by a public accountant registered with OJK.
(2) The annual financial report of the Venture Capital Fund as referred to in paragraph (1) must be submitted by the Board of Directors of PMV or PMVS to Venture Capital Fund Investors and OJK no later than the end of the sixth month after the end of the annual financial report date.

CHAPTER VIII
VENTURE CAPITAL BUSINESS FOR MICRO, SMALL, MEDIUM ENTERPRISES, AND COOPERATIVES

Article 51
PMV or PMVS must have Venture Capital Business or Sharia Venture Capital Business activities with Business Partners and/or Debtors that fall into the micro, small, medium, and cooperative business categories of at least 5% (five percent) of total business activities.

Article 52
(1) For PMV or PMVS that conduct business activities with Business Partners and/or Debtors that fall into the micro, small, and medium business categories of at least 40% (forty percent) of total business activities, the provisions regarding gearing ratio as referred to in Article 39 are declared not applicable. (2) For PMV or PMVS that conduct business activities with Business Partners and/or Debtors that fall into the micro, small, and medium business categories of at least 40% (forty percent) of total business activities as referred to in paragraph (1), must meet gearing ratio provisions of a minimum of 0 (zero) and a maximum of 15 (fifteen) times. (3) The proportion of business activities with Business Partners and/or Debtors that fall into the micro, small, and medium business categories of at least 40% (forty percent) of total business activities as referred to in paragraph (1) and paragraph (2) is calculated based on monthly reports as of December 31. (4) The application of provisions as referred to in paragraph (1) and paragraph (2) for PMV or PMVS that conduct business activities with Business Partners and/or Debtors that fall into the micro, small, and medium business categories of at least 40% (forty percent) of total business activities applies on February 1 for a period of 1 (one) year following.

CHAPTER IX
PROHIBITIONS

Article 53
PMV, PMVS, and/or UUS are prohibited from:
a. directly withdrawing funds from the public in the form of checking accounts, savings, and/or other forms equivalent to those; b. providing guarantees in any form for the fulfillment of obligations of other parties;
c. issuing promissory notes, except as collateral for debts to banks that are their creditors; and/or
d. taking actions that cause or force other financial institutions under OJK supervision to violate applicable legislation; and/or e. taking actions that cause or force other financial institutions under OJK supervision to violate applicable legislation; and/or

[End of Document]

under the supervision of the OJK to avoid violating applicable legislation.

CHAPTER X
PERIODIC REPORTS

Article 54
(1) PMV, PMVS, and UUS are required to submit monthly reports to the OJK.
(2) PMV and PMVS are required to submit annual audited financial reports to the OJK.

Article 55
Provisions regarding monthly reports as referred to in Article 54 paragraph (1) are regulated in the OJK Regulation regarding monthly reports.

Article 56
(1) PMV or PMVS is required to submit the annual audited financial report as referred to in Article 54 paragraph (2) to the OJK at the latest 4 (four) months after the last fiscal year. (2) PMV or PMVS is required to submit the annual audited financial report as referred to in paragraph (1) in full in both hard copy and soft copy formats. (3) The annual audited financial report as referred to in paragraph (1) must be prepared based on the applicable financial accounting standards in Indonesia. (4) The annual audited financial report as referred to in paragraph (1) must include calculations of matters specifically regulated in this OJK Regulation. (5) The annual audited financial report as referred to in paragraph (1) must be prepared in Rupiah. (6) The fiscal year as referred to in paragraph (1) must be based on the calendar year. (7) In the event that PMV or PMVS obtains a business license for less than 6 (six) months until the end of the calendar year, the obligation to submit the annual audited financial report as referred to in paragraph (1) shall commence in the following calendar year. (8) If the deadline for submitting the annual audited financial report as referred to in paragraph (1) falls on a holiday, the submission deadline is the first working day following the holiday.

CHAPTER XI
INFORMATION SYSTEM AND TECHNOLOGY

Article 57
(1) In order to support the conduct of healthy business, PMV, PMVS, and/or UUS must have an integrated information and technology system.
(2) The provisions as referred to in paragraph (1) apply to PMV, PMVS, and/or UUS that have more than 5 (five) branch offices.

CHAPTER XII
COMPLIANCE ENFORCEMENT

First Section
Notification

Article 58
(1) PMV, PMVS, and/or UUS that do not meet the provisions as referred to in Article 4 paragraph (2), Article 15 paragraph (1) and (5), Article 17 paragraph (1), Article 18, Article 19 paragraph (6), Article 20 paragraph (1), Article 21 paragraph (1), Article 22, Article 23 paragraph (3) and (7), Article 24 paragraph (1), Article 26 paragraph (2), Article 42 paragraph (6) and (7), Article 44 paragraph (2), Article 45 paragraph (1) and (2), and/or Article 56 paragraph (1), (2), (3), (4), (5), and (6) of this OJK Regulation are issued a notification letter to comply with the aforementioned provisions. (2) PMV or PMVS is required to fulfill the provisions as referred to in paragraph (1) at the latest 1 (one) month from the date of the notification letter.

Second Section
Compliance Plan

Article 59
(1) PMV, PMVS, and/or UUS that do not meet the provisions as referred to in Article 11 paragraph (1) and (2), Article 12 paragraph (1) and (2), Article 13 paragraph (1) and (2), Article 28 paragraph (1), Article 30 paragraph (1), Article 31 paragraph (1), Article 33 paragraph (1), paragraph (2) letter a, and paragraph (4) letter a, Article 34 paragraph (1), paragraph (2) letter a, paragraph (3) letter a, paragraph (4), and paragraph (5), Article 35, Article 39 paragraph (1), Article 48 paragraph (1) and (2), and/or Article 51 of this OJK Regulation are issued a letter requesting the submission of a compliance plan. (2) PMV or PMVS is required to submit the compliance plan at the latest 1 (one) month from the date of the letter requesting the submission of the compliance plan. (3) The compliance plan as referred to in paragraph (1) must at least contain the plan to be carried out by PMV or PMVS for compliance with the provisions, accompanied by a specific timeframe required to fulfill the provisions as referred to in paragraph (1). (4) The compliance plan as referred to in paragraph (1) must contain:
a. asset and/or liability restructuring; b. increase in Paid-in Capital;
c. restriction on accepting new loans;
d. acceptance of subordinated loans; e. transfer of part or all of the assets; f. restriction on profit distribution; g. restriction on activities causing violations of provisions; h. restriction on opening new branch offices; and/or
i. business entity merger.
(5) The compliance plan as referred to in paragraph (1) must be signed by all Directors and Commissioners.
(6) The compliance plan as referred to in paragraph (1) must first be approved by the General Meeting of Shareholders (GMS) if the plan contains a plan to increase Paid-in Capital or a business merger plan. (7) The compliance plan as referred to in paragraph (1) must obtain a statement of no objection from the OJK. (8) In the event that the compliance plan as referred to in paragraph (1) is deemed by the OJK to be insufficient to address the problems, PMV or PMVS is required to improve the compliance plan. (9) The OJK provides a statement of no objection for the compliance plan submitted by PMV or PMVS, considering the problem conditions faced by PMV or PMVS, at the latest 14 (fourteen) days calculated from the date of receiving the complete compliance plan. (10) If within the timeframe as referred to in paragraph (9), the OJK does not provide a statement of no objection or response, PMV or PMVS may implement the compliance plan as referred to in paragraph (1). (11) PMV or PMVS is required to implement the compliance plan as referred to in paragraph (1).

CHAPTER XIII
SANCTIONS

Article 60
(1) PMV or PMVS that do not meet the provisions as referred to in Article 3, Article 5, Article 6 paragraph (3), Article 7 paragraph (1) and (2), Article 8 paragraph (2), Article 10, Article 26 paragraph (1), Article 33 paragraph (2) letter b, paragraph (3), and paragraph (4) letter b, Article 34 paragraph (2) letter b and paragraph (3) letter b, Article 36 paragraph (4), Article 37 paragraph (2), Article 38 paragraph (2), Article 40 paragraph (2), Article 43, Article 49 paragraph (1) and (2), Article 50, Article 53, Article 54, Article 58 paragraph (2), and/or Article 59 paragraph (2), paragraph (8), and paragraph (11) of this OJK Regulation are subject to graduated administrative sanctions in the form of:
a. warning; b. suspension of business activities; or
c. revocation of business license.
(2) Warning sanctions as referred to in paragraph (1) letter a are issued in writing by the OJK to PMV or PMVS up to 3 (three) times consecutively, with each validity period lasting at most 2 (two) months. (3) In the event that before the validity period of the warning sanction as referred to in paragraph (2) expires, PMV or PMVS has fulfilled the provisions as referred to in paragraph (1), the OJK revokes the warning sanction. (4) In the event that the validity period of the third warning sanction as referred to in paragraph (2) expires and PMV or PMVS still does not meet the provisions as referred to in paragraph (1), the OJK imposes a suspension of business activities sanction. (5) The suspension of business activities sanction as referred to in paragraph (1) letter b is issued in writing by the OJK to the respective PMV or PMVS, and the suspension of business activities applies for 6 (six) months from the date the suspension of business activities sanction letter is issued. (6) If the validity period of the warning sanction as referred to in paragraph (2) and the suspension of business activities sanction as referred to in paragraph (5) expires on a holiday, the warning sanction and suspension of business activities sanction apply until the first working day following the holiday. (7) PMV or PMVS subject to the suspension of business activities sanction as referred to in paragraph (4) is prohibited from conducting business activities except for fulfilling the provisions as referred to in Article 12 paragraph (1). (8) In the event that before the validity period of the suspension of business activities sanction as referred to in paragraph (5) expires, PMV or PMVS has fulfilled the provisions as referred to in paragraph (1), the OJK revokes the suspension of business activities sanction. (9) In the event that the suspension of business activities sanction as referred to in paragraph (5) is still in effect and PMV or PMVS continues to conduct Venture Capital Business or Islamic Venture Capital Business, the OJK may directly impose a license revocation sanction. (10) In the event that by the end of the validity period of the suspension of business activities sanction as referred to in paragraph (5), PMV or PMVS still does not meet the provisions in this POJK, the OJK revokes the business license of the respective PMV or PMVS. (11) The OJK may announce the suspension of business activities sanction as referred to in paragraph (4) or the license revocation sanction as referred to in paragraph (9) and (10) to the public.

Article 61
(1) PMV that has a UUS and does not meet the provisions as referred to in Article 5, Article 6 paragraph (3), Article 7 paragraph (1) and (2), Article 8 paragraph (2), Article 26 paragraph (1), Article 37 paragraph (2), Article 40 paragraph (2), Article 49 paragraph (1), Article 53, and/or Article 54 paragraph (1) of this OJK Regulation is subject to graduated administrative sanctions in the form of:
a. warning; b. suspension of UUS activities; or
c. revocation of UUS license.
(2) Warning sanctions as referred to in paragraph (1) letter a are issued in writing by the OJK to PMV that has a UUS up to 3 (three) times consecutively, with each validity period lasting at most 2 (two) months. (3) In the event that before the validity period of the warning sanction as referred to in paragraph (2) expires, PMV that has a UUS has fulfilled the provisions as referred to in paragraph (1), the OJK revokes the warning sanction. (4) In the event that the validity period of the third warning sanction as referred to in paragraph (2) expires and PMV that has a UUS still does not meet the provisions as referred to in paragraph (1), the OJK imposes a suspension of UUS activities sanction. (5) The suspension of UUS activities sanction as referred to in paragraph (1) letter b is issued in writing by the OJK to PMV that has a UUS, and the suspension of UUS activities applies for 6 (six) months from the date the suspension of UUS activities sanction letter is issued. (6) If the validity period of the warning sanction as referred to in paragraph (2) and the suspension of UUS activities sanction as referred to in paragraph (5) expires on a holiday, the warning sanction and suspension of UUS activities sanction apply until the first working day following the holiday. (7) PMV that has a UUS subject to the suspension of UUS activities sanction as referred to in paragraph (4) is prohibited from conducting UUS activities except for fulfilling the provisions as referred to in Article 12 paragraph (1). (8) In the event that before the validity period of the suspension of UUS activities sanction as referred to in paragraph (5) expires, PMV that has a UUS has fulfilled the provisions as referred to in paragraph (1), the OJK revokes the suspension of UUS activities sanction. (9) In the event that the suspension of UUS activities sanction as referred to in paragraph (5) is still in effect and PMV that has a UUS continues to conduct Islamic Venture Capital Business, the OJK may directly impose a UUS license revocation sanction. (10) In the event that by the end of the validity period of the suspension of UUS activities sanction as referred to in paragraph (5), PMV that has a UUS still does not meet the provisions as referred to in paragraph (1), the OJK revokes the UUS license of the respective entity. (11) The OJK may announce the suspension of UUS activities sanction as referred to in paragraph (4) or the UUS license revocation sanction as referred to in paragraph (9) and (10) to the public.

CHAPTER XIV
TRANSITIONAL PROVISIONS

Article 62
For PMV that has obtained a business license before this OJK Regulation is promulgated, the provision regarding the inclusion of business activities in the articles of association as referred to in Article 10 is declared to apply for 2 (two) years from the date this OJK Regulation is promulgated.

Article 63
For PMV that has obtained a business license before this OJK Regulation is promulgated, the provision regarding equity participation and/or participation through the purchase of convertible bonds as referred to in Article 11 paragraph (1) is declared to apply for 5 (five) years after this OJK Regulation is promulgated.

Article 64
(1) Financing agreements based on profit/revenue sharing that have been conducted before this OJK Regulation is promulgated may continue until the end of the financing agreement term. (2) Financing agreements based on profit/revenue sharing as referred to in paragraph (1) are calculated as a component of the IFAR calculation as referred to in Article 12 paragraph (1).

Article 65
(1) Equity participation or participation through the purchase of convertible bonds that have been conducted by PMV before this OJK Regulation is promulgated and exceed the maximum participation limit as referred to in Article 14 paragraph (1) are exempted from fulfilling the provisions regarding the maximum limit for equity participation or participation through the purchase of convertible bonds as referred to in Article 14 paragraph (1). (2) Equity participation or participation through the purchase of convertible bonds as referred to in paragraph (1) may continue until the end of the participation agreement term.

Article 66
For PMV that has obtained a business license before this OJK Regulation is promulgated, the provision regarding the minimum business activity limit on micro, small, medium enterprises, and cooperatives as referred to in Article 51 is declared to apply for 3 (three) years after this OJK Regulation is promulgated.

Article 67
For PMV that has obtained a business license before this OJK Regulation is promulgated, the provision regarding financial health as referred to in Article 28 paragraph (1), Article 29 paragraph (1), Article 29 paragraph (2), Article 30 paragraph (1), and Article 31 paragraph (1) is declared to apply for 2 (two) years after this OJK Regulation is promulgated.

Article 68
For PMV that has obtained a business license before this OJK Regulation is promulgated, the provision regarding the fulfillment of the Equity to Paid-in Capital ratio as referred to in Article 35 is declared to apply for 2 (two) years after this OJK Regulation is promulgated.

CHAPTER XV
CLOSING PROVISIONS

Article 69
At the time this OJK Regulation comes into force, provisions regarding the conduct of business of PMV, PMVS, and UUS are subject to this OJK Regulation.

Article 70
This OJK Regulation comes into force on the date of its promulgation.

In order for everyone to know it, it is ordered to promulgate this OJK Regulation by placing it in the State Journal of the Republic of Indonesia.

Determined in Jakarta on December 21, 2015
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on December 28, 2015
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE JOURNAL OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 317 A copy in accordance with the original Legal Director 1 Ministry of Law signed Sudarmaji

Article 2 ...

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 35 /POJK.05/2015
ABOUT
THE CONDUCT OF VENTURE CAPITAL COMPANY BUSINESS

I. GENERAL
Venture Capital Companies are one of the non-bank financial institutions expected to be one of the alternative financial services that can be utilized by Business Partners and/or Debtors to finance their business activities. With the existence of PMV and PMVS, it is expected to provide an impact on national economic growth. Therefore, effective and efficient business activity management is required, carried out by PMV and PMVS to realize the aforementioned objectives in the form of regulations covering provisions regarding business activities, funding sources, risk mitigation, financial health, equity, agreement standards, regulation of business activities including those based on Sharia Principles, and the utilization of information technology systems.

In addition, with the ratification of Law Number 21 of 2011 concerning the Financial Services Authority on November 22, 2011, the supervisory duties over PMV and PMVS shifted to the Financial Services Authority as of December 31, 2012. Consequently, a legal basis is needed for the Financial Services Authority to exercise its functions and authorities in supervising PMV and PMVS, as well as to perfect the previously existing rules.

In light of this, the Financial Services Authority establishes the Financial Services Authority Regulation regarding the Conduct of Venture Capital Company Business.

II. ARTICLE BY ARTICLE

Article 1
Sufficiently clear.

Article 2
Paragraph (1)
Letter a
The term "equity participation" refers to equity participation conducted through the purchase of shares in Business Partners that are not yet traded on the stock exchange. Equity participation in these provisions also includes private equity.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Letter a
The term fee-based service activities includes among others:
a. consulting services in the fields of administration, accounting, management, and/or marketing; and/or b. marketing of financial service products such as insurance and/or mutual funds.

Letter b
The term "other business activities" refers to business activities that can be conducted by PMV but cannot be classified into the categories of equity participation, private equity, quasi equity participation (participation through the purchase of convertible bonds), debt instrument purchases, and productive business financing. These other business activities result in additional assets in the form of financing receivables and/or participations in the financial position report of PMV.

Paragraph (4)
Examples of mentoring for Business Partners and/or Debtors include among others in the fields of administration, accounting, management, and/or marketing.

Article 3
Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
The terms referred to are:
"Adl" is placing something only in its proper place, giving something only to those entitled, and treating something according to its position.
"Tawazun" includes balance in material and spiritual aspects, private and public aspects, the financial sector and the real sector, business and social aspects, and balance in utilization and sustainability aspects. "Maslahah" refers to all forms of goodness with worldly and hereafter dimensions, material and spiritual, individual and collective, and must fulfill 3 (three) elements, namely Sharia compliance (halal), benefit, and bringing goodness (thoyib) in all overall aspects without causing harm. "Alamiyah" can be conducted by, with, and for all interested parties (stakeholders) without discriminating based on ethnicity, religion, race, and class, in accordance with the spirit of universal mercy (rahmatan lil alamin). "Gharar" is a transaction where the object is unclear, not owned, existence is unknown, or cannot be delivered at the time of the transaction, unless otherwise regulated in Sharia. "Maysir" is a speculative (gambling) transaction not directly related to productivity in the real sector. "Riba" is the assurance of unlawful income addition, among others in the exchange of similar goods that do not have the same quality, quantity, and time of delivery (fadhl), or in lending transactions requiring the recipient of facilities to return funds received exceeding the principal loan due to the passage of time (nasiah). "Zhulm" is a transaction that causes injustice to other parties. "Risywah" is bribery in the form of money, facilities, or other forms that violate the law as an attempt to obtain facilities or ease in a transaction. Haram objects are goods or services prohibited in Sharia.

Article 6
Paragraph (1)
Letter a
Investments as referred to in this paragraph include among others medium-term investments based on Sharia principles (medium term note).

Number 1
The term equity participation, including equity participation conducted through private equity, refers to equity participation conducted through the purchase of shares in target companies that are not yet traded on the stock exchange, with the aim of generating added value upon the resale of shares.

Number 2
Sufficiently clear.

Number 3
Sufficiently clear.

Number 4
Financing based on profit-sharing principles is among others conducted using mudarabah, musyarakah, and/or mudarabah musytarakah contracts.

Letter b
The term "service provision" refers among others to the transfer of debt from Business Partners in the form of micro, small, and medium enterprises and/or early-stage start-up companies.

Letter c
The term "other business activities" refers to business activities that can be conducted by PMVS and UUS but cannot be classified into investment categories including equity participation, investment through the purchase of Sharia convertible bonds, and investment based on profit-sharing principles. These other business activities result in additional assets in the form of financing receivables, participations, and/or specific investments (such as temporary syirkah) in the financial position report of PMVS and UUS.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
The term "sales financing" refers to financing in the form of providing goods through sales transactions in accordance with the Sharia financing agreement agreed upon by the parties. The implementation of sales financing is among others conducted using murabahah, salam, ishtisna’, and/or other sales contracts in accordance with Sharia Principles.

Paragraph (4)
The term activities generating additional income in the form of service fees (ujrah/fee) includes among others:
a. consulting and management services can be conducted among others in the fields of administration, accounting, and/or business feasibility studies, which are among others conducted during initial consultation or during mentoring of Business Partners; and b. marketing of financial service products such as insurance and/or mutual funds.

Article 7
Sufficiently clear.

Article 8
Sufficiently clear.

Article 9
Paragraph (1)
The term productive business refers to business to produce goods or services that provide added value and increase income for Business Partners and/or Debtors.
The term ideas for productive business development refers to creative ideas owned by Business Partners and/or Debtors in order to produce goods or services that provide added value and increase income for Business Partners and/or Debtors.

Paragraph (2)
Letter a
The term new discovery refers to a new form, device, or process based on previously existing forms, processes, compositions, or ideas.

Letter b
The term early stage business refers to the business cycle where Business Partners and/or Debtors have just started business and have not yet generated profits from their business activities.

Letter c
The term micro, small, and medium enterprises refers to as referred to in regulations concerning micro, small, and medium enterprises.

Letter d
The term development stage refers to the business cycle where Business Partners and/or Debtors have started generating profits but still require development to be more productive. The term business decline stage refers to the business cycle where Business Partners and/or Debtors have passed the early stage and business development stage but then experience business slowdown so that profit amounts continue to decrease or tend to incur losses.

Letter e
Sufficiently clear.

Letter f
Sufficiently clear.

Letter g
Sufficiently clear.

Letter h
Clearly stated.

Article 10
Clearly stated.

Article 11
Paragraph (1)
What is meant by "equity participation" is equity participation carried out through the purchase of shares in Business Partners that are not yet traded on the stock exchange.

Equity participation in these provisions also includes private equity.

Paragraph (2)
Clearly stated.

Article 12
Paragraph (1)
Example of IFAR calculation for a Venture Capital Company (PMV):
Company assets of Rp100 billion, consisting of:

• Equity participation amounting to Rp10 billion
• Participation through the purchase of convertible bonds amounting to Rp15 billion
• Financing receivables amounting to Rp35 billion
• Other assets amounting to Rp40 billion

The calculation of the IFAR value is as follows:

• Total value of participation and receivables = Rp10 billion + Rp15 billion + Rp35 billion = Rp60 billion
• Total PMV assets = Rp100 billion

Therefore, the IFAR value = (Rp60 billion : Rp100 billion) x 100% = 60%.

Example of IFAR calculation for a Sharia Venture Capital Company (PMVS) and Business Unit (UUS):
PMVS and UUS assets of Rp100 billion, consisting of:

• Investment in equity participation amounting to Rp10 billion
• Investment through the purchase of sukuk or Sharia bonds issued by Business Partners amounting to Rp15 billion
• Investment through the purchase of convertible Sharia bonds amounting to Rp10 billion
• Investment based on profit-sharing principles amounting to Rp35 billion
• Other assets amounting to Rp30 billion

The calculation of the IFAR value is as follows:

• Total investment value = Rp10 billion + Rp15 billion + Rp10 billion + Rp35 billion = Rp70 billion
• Total PMV assets = Rp100 billion

Therefore, the IFAR value = (Rp70 billion : Rp100 billion) x 100% = 70%.

Paragraph (2)
Clearly stated.

Article 13
Paragraph (1)
Example of calculating the time period for fulfilling the Investment and Financing to Assets Ratio (IFAR):
To meet the equity ratio compared to paid-up capital requirements, PT Intan Ventura increased its Paid-up Capital, which resulted in PT Intan Ventura violating the IFAR regulations. The addition of Paid-up Capital was recorded by the competent authority on December 31, 2015.

Based on the provisions of this article, the company is granted a relaxation to fulfill the IFAR requirements no later than December 31, 2016.

Paragraph (2)
Example of a PMV or PMVS that received a license on January 5, 2016, which then increased its paid-up capital on July 5, 2016, in order to meet the gearing ratio and/or equity to paid-up capital ratio, must fulfill a minimum IFAR of 40% no later than January 5, 2019.

Article 14
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Example of a PMV conducting equity participation on July 10, 2016, the equity value used as the basis for calculation in these provisions is the PMV's equity value based on the monthly financial report for the position in June 2015.

Article 15
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
PT Intan Ventura participated in shares of Business Partner PT Permata Usaha in 2015 for a specific period until 2025. Given the financial problems faced by PT Permata Usaha, in 2025 PT Intan Ventura and PT Permata Usaha agreed to extend the duration of the equity participation by an additional 6 years until 2031. Subsequently, in 2031, it was agreed again to extend the equity participation agreement by a maximum of 4 years, followed by divestment in 2035.

Paragraph (4)
What is meant by "controller" in the Business Partner is in the case of a PMV, PMVS, and/or UUS:
a. holding shares in the Business Partner amounting to 25% (twenty-five percent) or more of the issued shares and having voting rights; or b. holding shares in the Business Partner less than 25% (twenty-five percent) of the issued shares and having voting rights, but the PMV, PMVS, and/or UUS can prove that it has exercised control over the Business Partner, either directly or indirectly.

Paragraph (5)
Clearly stated.

Article 16
Letter a
Public offerings through the capital market can be conducted on the Indonesian capital market or the capital market of other countries.

Letter b
Clearly stated.

Letter c
Clearly stated.

Article 17
Clearly stated.

Article 18
What is meant by productive business financing in this article also includes financing based on profit/revenue sharing and subordinated loans distributed by the PMV to the Debtor.

Article 19
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
What is meant by proportional risk sharing is sharing according to the amount of funds disbursed by each party.

Paragraph (6)
What is meant by both parties is the PMV and the party cooperating with the PMV to conduct channeling financing and joint financing.

Article 20
Paragraph (1)
What is meant by risk mitigation for productive business financing is efforts carried out by the PMV to reduce the risk borne by the PMV due to the Debtor's inability/failure to meet payment obligations to the PMV.

Paragraph (2)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Guarantees provided by the Debtor can be in the form of movable or immovable property in the form of ownership certificates secured by a mortgage right or fiduciary right.

Article 21
Clearly stated.

Article 22
Clearly stated.

Article 23
Clearly stated.

Article 24
Paragraph (1)
What is meant by risk mitigation for investment activities based on profit-sharing principles is efforts carried out by the PMVS and UUS to reduce the risk borne by the PMVS and UUS due to the Business Partner's inability/failure to meet obligations to the PMVS and UUS.

Paragraph (2)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Guarantees provided by the Business Partner can be in the form of movable or immovable property in the form of ownership certificates secured by a mortgage right or fiduciary right.

Article 25
Clearly stated.

Article 26
Clearly stated.

Article 27
Clearly stated.

Article 28
Paragraph (1)
Clearly stated.

Paragraph (2)
Letter a
What is meant by "productive assets" for a PMV consists of equity participation, participation through convertible bonds, receivables for productive business financing and/or other business activities based on OJK approval. For PMVS and UUS, productive assets consist of assets for investment business activities and financing for sales and purchases in the event that PMVS and UUS conduct sales and purchase financing.

Letter b
Clearly stated.

Paragraph (3)
Clearly stated.

Article 29
Clearly stated.

Article 30
Clearly stated.

Article 31
Clearly stated.

Article 32
Clearly stated.

Article 33
Clearly stated.

Article 34
Clearly stated.

Article 35
Clearly stated.

Article 36
Paragraph (1)
Clearly stated.

Paragraph (2)
Letter a
Funding originating from the government can, for example, come from revolving fund management agencies or other government programs.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Letter h
Clearly stated.

Letter i
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Article 37
Clearly stated.

Article 38
Paragraph (1)
Subordinated loans or funding can originate from affiliated or unaffiliated parties.

Affiliated parties include, for example, the Board of Directors and Board of Commissioners of the PMV or PMVS, shareholders of the PMV or PMVS, directors and commissioners of the business entity holding shares in the PMV or PMVS, etc.

Unaffiliated parties include parties that do not have a direct relationship with the conduct of PMV or PMVS business.

Paragraph (2)
Clearly stated.

Article 39
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Example of gearing ratio calculation:

• Loans amounting to Rp100 billion
• Subordinated loans amounting to Rp30 billion
• Equity amounting to Rp40 billion
• Paid-up Capital Rp20 billion

Gearing Ratio = (100+30)/(40+10) = 2.6 x

Subordinated loans counted as a denominator component are only Rp10 billion (50% of paid-up capital).

Article 40
Clearly stated.

Article 41
Clearly stated.

Article 42
Clearly stated.

Article 43
Clearly stated.

Article 44
Clearly stated.

Article 45
Clearly stated.

Article 46
Clearly stated.

Article 47
Clearly stated.

Article 48
Clearly stated.

Article 49
Clearly stated.

Article 50
Clearly stated.

Article 51
What is meant by micro, small, and medium enterprises is as referred to in the provisions of legislation concerning micro, small, and medium enterprises.

Article 52
Clearly stated.

Article 53
Clearly stated.

Article 54
Clearly stated.

Article 55
Clearly stated.

Article 56
Clearly stated.

Article 57
Clearly stated.

Article 58
Clearly stated.

Article 59
Clearly stated.

Article 60
Clearly stated.

Article 61
Clearly stated.

Article 62
Clearly stated.

Article 63
Clearly stated.

Article 64
Clearly stated.

Article 65
Clearly stated.

Article 66
Clearly stated.

Article 67
Clearly stated.

Article 68
Clearly stated.

Article 69
Clearly stated.

Article 70
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5787