Good Corporate Governance for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions

Financial Services Authority Regulation Number 48 of 2024 Good Corporate Governance for Financing Institutions, Venture Capital Companies, Microfinance Institutions, and Other Financial Service Institutions

Abstract: This POJK is a mandate of the provisions of Article 121 paragraph (2), Article 269, and Article 270 paragraph (3) of Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (UU P2SK). This POJK regulates the obligation to apply Good Corporate Governance principles across the entire PVML industry so that PVML can comply with applicable laws and regulations, standards, ethical values, principles, and practices, maintain and build the foundation for value creation, and optimize sustainable performance achievements, manage rights and responsibilities, and maintain the balance of interests among shareholders and all other stakeholders in an effort to contribute more broadly to driving the national economy. The scope of financial service institutions regulated includes financing companies, infrastructure financing companies, venture capital companies, microfinance institutions, pawnshop companies, and the provision of joint financing services based on information technology.

The legal basis for this Financial Services Authority Regulation (POJK) is: Law No. 21 of 2011 as amended by Law No. 4 of 2023; and Law No. 4 of 2023.

This POJK regulates the application of good corporate governance principles at least manifested in:

1. the execution of duties and authorities of shareholders and the Annual General Meeting of Shareholders (RUPS);
2. the execution of duties, responsibilities, and authorities of the Board of Directors;
3. the execution of duties, responsibilities, and authorities of the Board of Commissioners;
4. the execution of duties, responsibilities, and authorities of the Supervisory Board (DPS);
5. completeness and execution of committee duties;
6. the application of risk management, including internal control systems;
7. the application of the compliance function;
8. the application of internal audit and external audit functions;
9. handling Conflicts of Interest;
10. the application of remuneration policies;
11. information transparency;
12. business ethics;
13. financing policies;
14. the application of sustainable finance, including the application of social and environmental responsibility; and
15. business plans.

Regulations regarding the minimum number of Directors, Commissioners, Independent Commissioners, and Supervisory Board members. Regulations regarding the composition of the Board of Directors and Board of Commissioners based on citizenship. Regulations regarding the domicile of the Board of Directors and Board of Commissioners.

• Regulations regarding the appointment, replacement, dismissal, and/or resignation of members of the Board of Directors, Board of Commissioners, and Supervisory Board, as well as the authority of the OJK to conduct evaluations and order PVML to take corrective actions. Regulations regarding concurrent positions for the Board of Directors, Board of Commissioners, and Supervisory Board. Regulations regarding the prohibition of appointing active/former OJK employees as Directors, Commissioners, and Supervisory Board members. Regulations regarding the obligations, prohibitions, and authorities of the Board of Directors and Board of Commissioners. Regulations regarding the holding of meetings of the Board of Directors, Board of Commissioners, and Supervisory Board. Regulations regarding the formation of committees as well as the functions and work units for internal audit, risk management, and compliance. Regulations regarding the application of risk management, anti-money laundering programs, counter-terrorism financing, and counter-proliferation financing of weapons of mass destruction, antifraud strategies, and sustainable finance. Regulations regarding conflicts of interest, remuneration policies, information transparency, business ethics, financing policies, and business plans. Regulations regarding the deadline for submitting reports on the implementation of Good Corporate Governance, which must be submitted by PVML no later than April 30 of the following year or become part of the health level assessment reports for PVML applying health level assessment with a Good Corporate Governance factor.

Notes: This Financial Services Authority Regulation takes effect on the date of its promulgation. This Financial Services Authority Regulation was promulgated on December 31, 2024, and established on December 30, 2024.

Upon the commencement of this Financial Services Authority Regulation: a. Financial Services Authority Regulation Number 31/POJK.05/2016 concerning Pawnshop Business; b. Financial Services Authority Regulation Number 46/POJK.05/2020 concerning Infrastructure Financing Companies; c. Financial Services Authority Regulation Number 10/POJK.05/2021 concerning Business Licensing and Institutionalization of Microfinance Institutions; and d. Financial Services Authority Regulation Number 10/POJK.05/2022 concerning Joint Financing Services Based on Information Technology, are declared to remain in force insofar as they do not conflict with the provisions in this Financial Services Authority Regulation.

Implementing regulations from: a. Financial Services Authority Regulation Number 30/POJK.05/2014 concerning Good Corporate Governance for Financing Companies as amended by Financial Services Authority Regulation Number 29/POJK.05/2020 concerning Amendments to Financial Services Authority Regulation Number 30/POJK.05/2014 concerning Good Corporate Governance for Financing Companies; and b. Financial Services Authority Regulation Number 36/POJK.05/2015 concerning Good Corporate Governance for Venture Capital Companies, are declared to remain in force for Venture Capital Companies insofar as they do not conflict with this Financial Services Authority Regulation.

Upon the commencement of this Financial Services Authority Regulation: a. Financial Services Authority Regulation Number 30/POJK.05/2014 concerning Good Corporate Governance for Financing Companies as amended by Financial Services Authority Regulation Number 29/POJK.05/2020 concerning Amendments to Financial Services Authority Regulation Number 30/POJK.05/2014 concerning Good Corporate Governance for Financing Companies; and b. Financial Services Authority Regulation Number 36/POJK.05/2015 concerning Good Corporate Governance for Venture Capital Companies, are repealed and declared invalid.