Amendment to Financial Services Authority Circular Number 15/SEOJK.05/2019 Concerning Reassessment for Key Parties of Non-Bank Financial Service Institutions

To:

1. Board of Directors of Insurance Companies;
2. Management and Acting Management of Pension Funds;
3. Board of Directors of Financing Companies;
4. Board of Directors of Guarantee Institutions;
5. Board of Directors of Venture Capital Companies;
6. Board of Directors of Pawnshop Companies;
7. Board of Directors of Infrastructure Financing Companies;
8. Board of Directors of PT Permodalan Nasional Madani;
9. Board of Directors of Technology-Based Crowdfunding Service Providers;
10. Board of Directors of PT Bahana Pembinaan Usaha Indonesia (State-Owned Company); and
11. Board of Directors of PT Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Persero).
    At their respective locations.

COPY

FINANCIAL SERVICES AUTHORITY CIRCULAR
REPUBLIC OF INDONESIA
NUMBER 32 /SEOJK.05/2022

CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY CIRCULAR NUMBER 15/SEOJK.05/2019 CONCERNING REASSESSMENT FOR KEY PARTIES OF NON-BANK FINANCIAL SERVICE INSTITUTIONS

In light of the implementation of Financial Services Authority Regulation Number 14/POJK.03/2021 concerning Amendment to Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment for Key Parties of Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2021 Number 165, Supplement to the State Gazette of the Republic of Indonesia Number 6701), it is necessary to make several changes to Financial Services Authority Circular Number 15/SEOJK.05/2019 concerning Reassessment for Key Parties of Non-Bank Financial Service Institutions as follows:

I. Several provisions in Financial Services Authority Circular Number 15/SEOJK.05/2019 concerning Reassessment for Key Parties of Non-Bank Financial Service Institutions are amended as follows:

1. Provisions in item 1 and item 9 of Section I are amended, and item 2 of Section I is added with 5 (five) letters, namely letter g, letter h, letter i, letter j, and letter k, so that Section I reads as follows:

1. Financial Service Institutions, hereinafter abbreviated as LJK, are Financial Service Institutions as referred to in Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Reassessment for Key Parties of Financial Service Institutions as amended by Financial Services Authority Regulation Number 14/POJK.03/2021 concerning Amendment to Financial Services Authority Regulation Number 34/POJK.03/2021 concerning Reassessment for Key Parties of Financial Service Institutions.

2. Non-Bank Financial Service Institutions, hereinafter abbreviated as LJKNB, are:

a. Insurance Companies are insurance companies, Sharia insurance companies, reinsurance companies, Sharia reinsurance companies, insurance brokers, reinsurance brokers, and insurance loss assessors;

b. Pension Funds are legal entities that manage and run programs promising pension benefits, including those conducting all business activities based on Sharia principles;

c. Financing Companies are business entities that conduct financing activities for the procurement of goods and/or services, including those conducting all business activities based on Sharia principles;

d. Guarantee Institutions are guarantee companies, Sharia guarantee companies, reinsurance guarantee companies, and Sharia reinsurance guarantee companies that conduct guarantee activities;

e. Venture Capital Companies, hereinafter abbreviated as PMV, are business entities that conduct venture capital business activities, venture fund management, fee-based service activities, and other business activities with the approval of the Financial Services Authority, including those conducting all business activities based on Sharia principles;

f. Pawnshop Companies are private pawnshop companies and government pawnshop companies, including those conducting business activities based on Sharia principles;

g. Infrastructure Financing Companies are business entities specifically established to conduct financing for infrastructure projects and/or the implementation of other activities or facilities in support of infrastructure financing, including infrastructure financing companies that conduct all or part of their business activities based on Sharia principles;

h. PT Permodalan Nasional Madani is a company established based on Government Regulation of the Republic of Indonesia Number 38 of 1999 concerning State Capital Participation for the Establishment of State-Owned Companies (Persero) in the context of Cooperatives, Small and Medium Enterprises Development;

i. Technology-Based Crowdfunding Service Providers are Indonesian legal entities that provide, manage, and operate technology-based crowdfunding services, either conventionally or based on Sharia principles;

j. PT Bahana Pembinaan Usaha Indonesia (Persero) is a legal entity with the status of a state-owned business entity established based on Government Regulations regarding State Capital Participation for the Establishment of State-Owned Companies in the Field of National Private Business Development and Government Regulation Number 20 of 2020 concerning Additional State Capital Participation into the Share Capital of PT Bahana Pembinaan Usaha Indonesia (Persero);

k. PT Asuransi Sosial Angkatan Bersenjata Republik Indonesia (Persero), hereinafter referred to as PT ASABRI (Persero), is the manager of the program as referred to in Financial Services Authority regulations concerning the supervision of managers of social insurance programs for soldiers of the Indonesian National Armed Forces, members of the Indonesian National Police, and civil servants in the environment of the Ministry of Defense and the Indonesian National Police by the Financial Services Authority.

3. Key Parties are parties who own, manage, supervise, and/or have significant influence on LJKNB, including those who no longer own, manage, supervise, and/or have influence at the time of reassessment.

4. Controlling Shareholders, hereinafter abbreviated as PSP, are legal entities, individuals, and/or business groups that own shares or shares equivalent to those of LJKNB and have the ability to exercise control over LJKNB.

5. Control is an action aimed at influencing the management and/or policies of a company, including LJKNB, in any way, either directly or indirectly.

6. General Meeting of Shareholders, hereinafter abbreviated as RUPS, is:

a. the company organ that has authority not given to the Board of Directors or Board of Commissioners within the limits determined by the Limited Liability Company Law and/or the Articles of Association for LJKNB with the legal form of a limited liability company; or

b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.

7. Board of Directors is:

a. the company organ authorized and fully responsible for administration in the interest of the company, in accordance with the purpose and objectives of the company and representing the company, both in and out of court, in accordance with the provisions of the Articles of Association for LJKNB with the legal form of a limited liability company; or

b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.

8. Board of Commissioners is:

a. the company organ tasked with general and/or specific supervision in accordance with the Articles of Association and providing advice to the Board of Directors for LJKNB with the legal form of a limited liability company; or

b. an organ or party equivalent to letter a, for LJKNB with a legal form or business entity other than a limited liability company.

9. Sharia Supervisory Board is a part of the organ of Insurance Companies, employer pension funds, financial institution pension funds, Financing Companies, Infrastructure Financing Companies, PT Permodalan Nasional Madani, Guarantee Institutions, PMV, Pawnshop Companies, or Technology-Based Crowdfunding Service Providers, which has the task and supervision over the implementation of business activities to ensure compliance with Sharia principles.

10. Controlling Party of Insurance Companies is a party who directly or indirectly has the ability to determine the Board of Directors and Board of Commissioners and/or influence the actions of the Board of Directors and/or Board of Commissioners in Insurance Companies.

11. Internal Auditor is an official in Insurance Companies responsible for evaluating and improving the effectiveness of risk management, control, and corporate governance processes, working independently and in accordance with practice standards.

12. Company Actuary is an official in insurance companies, Sharia insurance companies, reinsurance companies, and Sharia reinsurance companies, who is appointed and responsible for managing the financial impact of risks faced by the company, working independently and in accordance with practice standards.

13. Controlling Key Parties are PSP and/or Controlling Parties of Insurance Companies.

14. Executive Key Parties are members of the Board of Directors, acting management officials in Pension Funds, members of the Board of Commissioners, or members of the Sharia Supervisory Board.

15. Official Key Parties are Internal Auditors or Company Actuaries.

2. The provision in Section II item 1 letter d is amended so that it reads as follows:

d. For Financing Companies, Infrastructure Financing Companies, PT Permodalan Nasional Madani, Guarantee Institutions, PMV, Pawnshop Companies, Technology-Based Crowdfunding Service Providers, PT Bahana Pembinaan Usaha Indonesia (Persero), and PT ASABRI (Persero) include:

1) PSP;
2) members of the Board of Directors;
3) members of the Board of Commissioners; and
4) members of the Sharia Supervisory Board.

3. The provision in Section III item 1 is amended by adding letter a.1, so that Section III item 1 reads as follows:

1. The implementation of reassessment of Key Parties is conducted at any time if, based on evidence, data, and/or information obtained from indirect supervision (off-site supervision), direct supervision (on-site supervision), and/or other information, there are indications of involvement and/or responsibility for:

a. integrity and/or financial suitability issues in PSP or Controlling Parties of Insurance Companies who are shareholders;

a.1. integrity and/or financial reputation issues in Controlling Parties of Insurance Companies who are not shareholders; or

b. integrity, financial reputation, and/or competence issues in Executive Key Parties and/or Official Key Parties of LJKNB.

4. The provision in Section III item 2 is amended so that it reads as follows:

2. Integrity and/or financial suitability issues for PSP or Controlling Parties of Insurance Companies who are shareholders as referred to in item 1 letter a, or integrity and/or financial reputation issues for Controlling Parties of Insurance Companies who are not shareholders as referred to in item 1 letter a.1, are issues related to:

a. actions, both direct and indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to hide and/or obscure violations of certain provisions or actual financial conditions and/or transactions, including:

1) false recording and/or fictitious transactions, whether conducted on the asset or liability side of LJKNB, including transactions in administrative accounts;

2) setting unreasonable actuarial assumptions;

3) embezzlement or manipulation;

4) incorrect bookkeeping and/or financial reporting practices of LJKNB;

5) hacking of LJKNB information system technology; and

6) hiding, destroying, and/or eliminating bookkeeping records and/or supporting documents of transactions or bookkeeping records of LJKNB;

b. actions, both direct and indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to provide unfair benefits to shareholders, Key Parties, employees of LJKNB, and/or other parties that can harm or reduce the profits of LJKNB, including:

1) sale and/or purchase of assets, including assets in the form of investment instruments owned by LJKNB, at prices that are unreasonable compared to market prices;

2) provision of facilities and/or salaries that do not comply with statutory regulations and/or are unreasonable to members of the Board of Commissioners, members of the Board of Directors, members of the Sharia Supervisory Board, employees, and/or other parties;

3) provision of premium rates to policyholders or financing interest rates to debtors that are unreasonable;

4) provision of interest rates on loans received or coupons on securities issued to creditors that are unreasonable;

5) approval of insurance or guarantee claims with unreasonable procedures and values;

6) provision of commissions to other parties that are unreasonable in relation to the conduct of business activities;

7) receipt of fees that are unreasonable in relation to the conduct of business activities; and

8) actions that exploit LJKNB to finance personal interests and/or their business group's interests illegally;

c. actions, both direct and indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to commit acts violating prudential principles in the financial service sector and/or good LJKNB management principles, including:

1) unhealthy debt and/or liability management practices;

2) marketing products and/or conducting activities that have not received approval from the Financial Services Authority;

3) purchase or disposal of assets, including assets in the form of investment instruments, without regard for prudential principles and risk management;

4) provision of funds to parties, sectors, and/or activities prohibited by statutory regulations; and

5) insurance closures, financing disbursements, and/or guarantee receipts that are not conducted with procedures considering the application of prudential principles and risk management;

d. actions, both direct and indirect, involving influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB conducting business activities based on Sharia principles to commit acts violating Sharia principles in the Sharia financial service sector, including:

1) implementation of business activities that do not comply with Sharia principles;

2) use of contracts that do not comply with fatwas from the National Sharia Council of the Indonesian Ulema Council; and

3) placement of assets in investment instruments that do not comply with Sharia principles;

e. proven to have committed criminal offenses that have been decided by the court and have permanent legal force, namely:

1) criminal offenses in the financial service sector;

2) criminal offenses, namely criminal offenses listed in the Criminal Code (KUHP) and/or similar criminal codes abroad with a prison sentence threat of 1 (one) year or more; and/or

3) other criminal offenses with a prison sentence threat of 1 (one) year or more, including corruption, money laundering, narcotics/psychotropics, smuggling, customs, excise, human trafficking, illegal arms trafficking, terrorism, counterfeiting money, in the field of taxation, forestry, environment, marine, and fisheries;

f. causing LJKNB to experience difficulties that endanger the continuity of LJKNB's business and/or may endanger the financial service industry, including actions violating statutory regulations that can cause LJKNB's business activities to be frozen and/or business licenses to be revoked;

g. not implementing orders from the Financial Services Authority to perform and/or not perform certain actions;

h. having non-performing loans and/or financing at LJK and/or becoming a controller, member of the board of directors, member of the board of commissioners, or equivalent of a company with non-performing loans and/or financing, excluding non-performing loans and/or financing arising from annual fees, administrative costs, and/or other charges not arising from credit card usage transactions;

i. proven to be declared bankrupt and/or becoming a shareholder, member of the board of directors, member of the board of commissioners, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked;

j. not taking necessary measures when LJKNB faces capital and/or liquidity difficulties, including:

1) not taking measures to increase capital deposits; and

2) not taking measures to seek new investors;

k. refusing to provide commitment and/or not fulfilling commitments agreed upon with the Financial Services Authority and/or the government, such as commitments that have been agreed to be fulfilled by LJKNB as stated in the results report of direct examinations of LJKNB;

l. hindering or interfering with:

1) efforts and implementation of the authority of the Financial Services Authority; and/or

2) efforts by Key Parties of LJKNB and/or other parties in handling LJKNB's solvency and/or liquidity issues, for example, hindering or interfering with efforts by other parties (such as prospective PSPs or prospective investors) who wish to increase capital or invest; and/or

m. integrity and/or financial suitability or financial reputation issues for Controlling Parties of Insurance Companies who are not shareholders, other than letters a to l, which contradict statutory regulations, for example, violations of tax regulations or violations of electronic information and transaction regulations.

5. The provision in Section III item 3 is amended and added with 2 (two) letters, namely letter l and letter m, so that Section III item 3 reads as follows:

3. Integrity, financial reputation, and/or competence issues for Executive Key Parties and/or Official Key Parties as referred to in item 1 letter b are issues related to:

a. actions, both direct or indirect, involving hiding and/or obscuring violations of certain provisions or actual financial conditions and/or transactions, including:

1) false recording and/or fictitious transactions, whether conducted on the asset or liability side of LJKNB, including transactions in administrative accounts;

2) setting unreasonable actuarial assumptions;

3) embezzlement or manipulation;

4) incorrect bookkeeping and/or financial reporting practices of LJKNB;

5) hacking of LJKNB information system technology; and

6) hiding, destroying, and/or eliminating bookkeeping records and/or supporting documents of transactions or bookkeeping records of LJKNB;

b. actions, both direct or indirect, involving providing unfair benefits to shareholders, Key Parties, employees of LJKNB, and/or other parties that can harm or reduce the profits of LJKNB, including:

1) sale and/or purchase of assets, including assets in the form of investment instruments owned by LJKNB, at prices that are unreasonable compared to market prices;

2) provision of facilities and/or salaries that do not comply with statutory regulations and/or are unreasonable to members of the Board of Commissioners, members of the Board of Directors, members of the Sharia Supervisory Board, employees, and/or other parties;

3) provision of premium/contribution rates to policyholders or financing interest rates/yields to debtors that are unreasonable;

4) provision of interest rates/yields on loans received or coupons on securities/Sharia securities issued to creditors that are unreasonable;

5) approval of insurance or guarantee claims with unreasonable procedures and values;

6) provision of commissions to other parties that are unreasonable in relation to the conduct of business activities;

7) receipt of fees that are unreasonable in relation to the conduct of business activities; and

8) actions that exploit LJKNB to finance personal interests and/or their business group's interests illegally;

c. actions, both direct or indirect, involving committing acts violating prudential principles in LJKNB and/or good LJKNB management principles, including:

1) unhealthy debt and/or liability management practices;

2) marketing products and/or conducting activities that have not received approval from the Financial Services Authority;

3) purchase or disposal of assets, including assets in the form of investment instruments, without regard for prudential principles and risk management;

4) provision of funds to parties, sectors, and/or activities prohibited by statutory regulations; and

5) insurance closures, financing disbursements, and/or guarantee receipts that are not conducted with procedures considering the application of prudential principles and risk management;

d. actions, both direct or indirect, involving committing acts violating Sharia principles for LJKNB conducting all or part of its business activities based on Sharia principles, including:

1) implementation of business activities that do not comply with Sharia principles;

2) use of contracts that do not comply with fatwas from the National Sharia Council of the Indonesian Ulema Council; and

3) placement of assets in investment instruments that do not comply with Sharia principles;

e. proven to have committed criminal offenses that have been decided by the court and have permanent legal force, namely:

1) criminal offenses in the financial service sector;

2) criminal offenses, namely criminal offenses listed in the Criminal Code (KUHP) and/or similar criminal codes abroad with a prison sentence threat of 1 (one) year or more; and/or

3) other criminal offenses with a prison sentence threat of 1 (one) year or more, including corruption, money laundering, narcotics/psychotropics, smuggling, customs, excise, human trafficking, illegal arms trafficking, terrorism, counterfeiting money, in the field of taxation, forestry, environment, marine, and fisheries;

f. causes the Non-Bank Financial Service Institution (LJKNB) to experience difficulties that endanger the continuity of the LJKNB's business and/or may endanger the financial services industry, including actions that violate applicable laws and regulations which may result in the LJKNB's business activities being frozen and/or its business license being revoked;

g. fails to implement the Financial Services Authority's (OJK) orders to perform and/or not perform specific actions;

h. has non-performing loans and/or financing at Financial Service Institutions (LJK) and/or becomes a controlling party, board of director member, board of commissioner member, or equivalent of a company that has non-performing loans and/or financing, excluding non-performing loans and/or financing originating from annual fees, administrative fees, and/or other charges not arising from credit card usage transactions;

i. is proven to be declared bankrupt and/or becomes a shareholder, board of director member, board of commissioner member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked;

j. fails to conduct strategic management for the healthy development of the LJKNB, including the ability to interpret the vision and mission of the LJKNB, anticipate economic and financial services sector developments, analyze the LJKNB industry situation and the industrial sector directly related to the LJKNB's business activities; and

k. refuses to provide commitments and/or fails to fulfill commitments agreed upon with the Financial Services Authority and/or the government, such as commitments that the LJKNB has agreed to fulfill as stated in the results of direct examination reports of the LJKNB.

l. hinders or interferes with:
1) efforts and implementation of the Financial Services Authority's authority; and/or
2) efforts by the LJKNB's Key Parties and/or other parties,

in handling the LJKNB's solvency and/or liquidity issues, for example, hindering or interfering with efforts by other parties (such as prospective Payment Service Providers or prospective investors) who wish to increase capital or invest; and/or

m. integrity, financial reputation, and/or competence issues other than letters a through l that contradict applicable laws and regulations, for example, violations of tax regulations or violations of regulations related to information and electronic transactions.

6. The provisions of Roman numeral IV are added with 2 (two) numbers, namely number 15 and number 16, so that they read as follows:

15. The Financial Services Authority may determine the final result of the reassessment without following all reassessment steps as referred to in number 1, with certain considerations, for example, there are conditions assessed to cause the LJKNB to potentially experience difficulties that may endanger the continuity of the LJKNB's business and/or threaten financial system stability.

16. The Financial Services Authority may set a submission period for responses from Key Parties of less than 10 (ten) working days as referred to in number 4 and number 8, with certain considerations including conditions where the Financial Services Authority needs to obtain immediate responses from the party undergoing reassessment in connection with the need to accelerate the handling of LJKNB issues, where the response request period from the Key Parties is declared by the Financial Services Authority at the time:

a. requesting clarification of evidence, data, and/or information from the Key Party being reassessed; and/or b. submitting the preliminary results of the reassessment to the Key Party being reassessed.

7. The provisions of Roman numeral VI number 2 letter b are amended, number 4 is amended, and 2 (two) numbers, namely number 3A and 3B, are inserted between number 3 and number 4, so that Roman numeral VI reads as follows:

1. Key Parties determined with a "pass" predicate meet the requirements to remain as PSPs, Controlling Parties of Insurance Companies, members of the Board of Directors, executors of Pension Fund management, members of the Board of Commissioners, members of the Sharia Supervisory Board, Internal Auditors, or Actuaries of Companies.

2. Controlling Key Parties determined with a "fail" predicate due to issues:

a. integrity, are prohibited from becoming:
1) Controlling Key Parties or holding shares in LJKs; and/or
2) Executive Key Parties and/or Official Key Parties at LJKs.

b. financial suitability for PSPs or Controlling Parties of Insurance Companies who are shareholders, or financial reputation for Controlling Parties of Insurance Companies who are not shareholders, are prohibited from becoming:
1) Controlling Key Parties or holding shares in the non-bank financial services industry where the Key Party undergoes reassessment, for example, a PSP at PT XYZ Multifinance determined to fail reassessment due to financial suitability issues is prohibited from becoming a PSP at any Financing Company; and/or
2) Executive Key Parties and/or Official Key Parties in the non-bank financial services industry where the Key Party undergoes reassessment, for example, Mr. A is a Controlling Party of an Insurance Company who is not a shareholder in PT Asuransi ABC determined to fail reassessment due to financial reputation issues because Mr. A was previously a board of director member declared guilty for causing PT Asuransi XYZ to be declared bankrupt within the last 5 (five) years before nomination, then the person concerned is prohibited from becoming a member of the Board of Directors, member of the Board of Commissioners, and/or member of the Sharia Supervisory Board at any Insurance Company.

3. Executive Key Parties or Official Key Parties determined with a "fail" predicate due to issues:

a. integrity, are prohibited from becoming:
1) Controlling Key Parties or holding shares in LJKs; and/or
2) Executive Key Parties and/or Official Key Parties at LJKs.

b. financial reputation, are prohibited from becoming:
1) Controlling Key Parties or holding shares in the non-bank financial services industry where the Key Party undergoes reassessment; and/or
2) Executive Key Parties and/or Official Key Parties in the non-bank financial services industry where the Key Party undergoes reassessment.

c. competence, are prohibited from becoming Executive Key Parties and/or Official Key Parties in the non-bank financial services industry where the Key Party undergoes reassessment.

3A. Key Parties determined with a "fail" predicate are treated as related parties of the LJKNB in accordance with applicable laws and regulations for the relevant LJKNB regarding business conduct or health level.

3B. The duration of treatment of Key Parties determined with a "fail" predicate as related parties of the LJKNB as referred to in number 3A is in accordance with the prohibition duration against Key Parties determined with a "fail" predicate as referred to in the Financial Services Authority Regulation regarding reassessment for Key Parties of Financial Service Institutions.

4. The imposition of prohibition durations on the parties as referred to in number 2, number 3, and number 3A is in accordance with the provisions as referred to in Article 11 of Financial Services Authority Regulation Number 14/POJK.03/2021 regarding Amendment to Financial Services Authority Regulation Number 34/POJK.03/2018 regarding Reassessment for Key Parties of Financial Service Institutions, with details as contained in the Appendix which is an integral part of this Financial Services Authority Circular.

5. LJKNBs are required to follow up on the dismissal of Executive Key Parties or Official Key Parties within a maximum of 3 (three) months from the date of notification from the Financial Services Authority, in the form of:

a. convening a General Meeting of Shareholders (RUPS) to dismiss (appoint) Executive Key Parties determined with a "fail" predicate; or b. issuing a dismissal decision letter for Official Key Parties determined with a "fail" predicate.

6. LJKNBs are required to report the follow-up as referred to in number 5 to the Financial Services Authority within a maximum of 10 (ten) working days from:

a. the date of the RUPS dismissal of Executive Key Parties; and/or b. the date of the dismissal decision letter for Official Key Parties.

7. PSPs or Controlling Parties of Insurance Companies who are shareholders determined with a "fail" predicate are required to transfer all share ownership in:

a. LJKs if the PSP or Controlling Party of an Insurance Company is determined to fail due to integrity factors; or

b. LJKNBs where the Key Party undergoes reassessment, if the PSP or Controlling Party of an Insurance Company is determined to fail due to financial suitability factors, within a maximum of 1 (one) year from the date the "fail" predicate is determined by the Financial Services Authority.

8. The Financial Services Authority may set the duration of the share ownership transfer obligation as referred to in number 7 separately in cases:

a. in the Financial Services Authority's assessment, the aforementioned steps need to be adjusted to the LJKNB's rehabilitation program as regulated in applicable laws and regulations and/or policies in the financial services sector; and/or b. PSPs or Controlling Parties of Insurance Companies who are shareholders are subject to the obligation to transfer all share ownership in more than 1 (one) LJK.

9. The rights of Controlling Key Parties regarding dividend distribution from LJKNBs in the form of limited liability companies, the following provisions apply:

a. Controlling Key Parties still have rights to dividend payments for a maximum of 1 (one) year calculated from the date the "fail" predicate is determined by the Financial Services Authority.

b. If the period as in letter a has expired and the Controlling Key Party has not transferred all share ownership as referred to in number 7 or number 8, then the right to dividend payments is suspended until the person concerned transfers all their share ownership in accordance with applicable laws and regulations and procedures as referred to in Financial Services Authority Regulation Number 34/POJK.03/2018 regarding Reassessment for Key Parties of Financial Service Institutions as amended by Financial Services Authority Regulation Number 14/POJK.03/2021 regarding Amendment to Financial Services Authority Regulation Number 34/POJK.03/2018 regarding Reassessment for Key Parties of Financial Service Institutions.

8. The provisions of Roman numeral IX number 1 are amended so that they read as follows:

1. Submission of clarifications, declaration letters, and/or responses from Key Parties assessed in the reassessment process are submitted to:

a. For insurance companies, reinsurance companies, Pension Funds, Financing Companies, Venture Capital Companies, Guarantee Institutions, Pawnshop Companies, Infrastructure Financing Companies, PT Permodalan Nasional Madani, Information Technology-Based Crowdfunding Service Providers, PT Bahana Pembinaan Usaha Indonesia (Persero), or PT ASABRI (Persero):
Directorate of Institutional and Non-Bank Financial Institution Products I, Financial Services Authority, Wisma Mulia 2 Building, 11th Floor, Jalan Jenderal Gatot Subroto Number 40, South Jakarta, 12710;

b. For insurance brokers, reinsurance brokers, and insurance loss adjusters:
Directorate of Non-Bank Financial Institution Support Services, Financial Services Authority, Wisma Mulia 2 Building, 12th Floor, Jalan Jenderal Gatot Subroto Number 40, South Jakarta, 12710;

c. For LJKNBs conducting business activities based on Sharia principles:
Directorate of Sharia Non-Bank Financial Institutions Wisma Mulia 2 Building, 12th Floor Jalan Jenderal Gatot Subroto Number 40, South Jakarta, 12710, with copies to the relevant supervision directorate where the Key Party undergoes reassessment.

This copy is in accordance with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

9. The provisions in this Financial Services Authority Circular shall take effect on the date of determination.

Determined in Jakarta on December 27, 2022

EXECUTIVE HEAD OF INSURANCE, PENSION FUND,
FINANCING INSTITUTION, AND
OTHER FINANCIAL SERVICE INSTITUTIONS SUPERVISOR FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed OGI PRASTOMIYONO

APPENDIX
FINANCIAL SERVICES AUTHORITY CIRCULAR
REPUBLIC OF INDONESIA
NUMBER 32 /SEOJK.05/2022
REGARDING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY CIRCULAR NUMBER 15/SEOJK.05/2019 REGARDING REASSESSMENT FOR KEY PARTIES OF NON-BANK FINANCIAL SERVICE INSTITUTIONS

DURATION OF SANCTIONS FOR CONTROLLING KEY PARTIES OF LJKNB DETERMINED TO FAIL

No.
Controlling Key Party Determined to Fail Due to Actions/Conduct Duration of Sanction

1. Influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to commit acts violating prudential principles in the financial services sector and/or good LJKNB management principles.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 2, number 3, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. proven to benefit oneself or others.

2. Proven not to implement the Financial Services Authority's orders to perform and/or not perform specific actions.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 3, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

3. Having non-performing loans and/or financing at LJKs and/or becoming a controlling party, board of director member, board of commissioner member, or equivalent of a company that has non-performing loans and/or financing.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

4. Not taking necessary actions when LJKNB faces solvency and/or liquidity difficulties.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

5. Refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority and/or the Government.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

6. Influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNBs conducting business activities based on Sharia principles to commit acts violating Sharia principles in the Sharia financial services sector.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

7. Proven to hinder or interfere with:
   a. efforts and implementation of the Financial Services Authority's authority; and/or b. efforts by LJK Key Parties and/or other parties, in handling LJK solvency and/or liquidity issues; 3 (three) years Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 6, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

8. Proven to be involved in integrity and/or financial suitability issues contradicting applicable laws and regulations.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 6, number 7, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

9. Proven to be involved in integrity and/or financial reputation issues for Controlling Parties of Insurance Companies who are not shareholders, contradicting applicable laws and regulations.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 6, number 7 and/or number 8 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

10. Influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to hide and/or obscure violations of a certain regulation or actual financial conditions and/or transactions.
    5 (five) years

11. Influencing and/or ordering Executive Key Parties, Official Key Parties, and/or employees of LJKNB to provide unfair benefits to shareholders, Key Parties, LJKNB employees, and/or other parties that can harm or reduce LJKNB profits.
    5 (five) years

12. Proven to commit criminal acts that have been decided by the court and have permanent legal force as referred to in the Financial Services Authority Regulation regarding assessment of competence and propriety for key parties of financial service institutions.
    20 (twenty) years

13. Causing LJKNB to experience difficulties that endanger the continuity of the LJKNB's business and/or may endanger the financial services industry.
    20 (twenty) years

14. Proven to be declared bankrupt and/or becoming a shareholder, board of director member, board of commissioner member, or equivalent, who is declared guilty causing a company to be declared bankrupt or have its business license revoked.
    20 (twenty) years

15. Proven to intentionally allow Executive Key Parties who Failed to act as Executive Key Parties.
    20 (twenty) years

DURATION OF SANCTIONS FOR EXECUTIVE KEY PARTIES OR OFFICIAL KEY PARTIES OF LJKNB DETERMINED TO FAIL

No.
Executive Key Party/Official Key Party Determined to Fail Due to Actions/Conduct Duration of Sanction

1. Violating prudential principles in the financial services sector and/or good LJKNB management principles.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 2, number 3, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. proven to benefit oneself or others.

2. Proven not to implement the Financial Services Authority's orders to perform and/or not perform specific actions.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 3, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

3. Having non-performing loans and/or financing at LJKs and/or becoming a controlling party, board of director member, board of commissioner member, or equivalent of a company that has non-performing loans and/or financing.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 4, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

4. Not conducting strategic management for the healthy development of LJKNB.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 5, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

5. Refusing to provide commitments and/or not fulfilling commitments agreed upon with the Financial Services Authority and/or the Government.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 6, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

6. Violating Sharia principles in the Sharia financial services sector
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 7, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

7. Proven to hinder or interfere with:
   a. efforts and implementation of the Financial Services Authority's authority; and/or b. efforts by LJK Key Parties and/or other parties, in handling LJK solvency and/or liquidity issues; 3 (three) years Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 6, number 8, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

8. Proven to be involved in integrity, financial reputation, and/or competence issues other than those contradicting applicable laws and regulations.
   3 (three) years
   Becomes 5 (five) years if:
   a. the act/conduct is repeated; b. also commits acts/conduct in number 1, number 2, number 3, number 4, number 5, number 6, number 7, and/or number 9 cumulatively; and/or
   c. the act/conduct is accompanied by benefiting oneself or others.

9. Proven to intentionally allow Official Key Parties who Failed to act as Official Key Parties
   3 (three) years

10. Hiding and/or obscuring violations of a certain regulation or actual financial conditions and/or transactions.
    5 (five) years

11. Providing unfair benefits to shareholders, Key Parties, LJKNB employees, and/or other parties that can harm or reduce LJKNB profits.
    5 (five) years

12. Proven to commit criminal acts that have been decided by the court and have permanent legal force as referred to in the Financial Services Authority Regulation regarding assessment of competence and propriety for key parties of financial service institutions.
    20 (twenty) years

13. Causing LJKNB to experience difficulties that endanger the continuity of the LJKNB's business and/or may
    20 (twenty) years

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja
Established in Jakarta on December 27, 2022
EXECUTIVE HEAD OF SUPERVISOR
INSURANCE, PENSION FUNDS,
LENDING INSTITUTIONS, AND
OTHER FINANCIAL SERVICE INSTITUTIONS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
OGI PRASTOMIYONO endangering the financial services industry.
14. Proven to be declared bankrupt
and/or become a shareholder, member of the board of directors, member of the board of commissioners, or an equivalent, who is declared guilty causing a company to be declared bankrupt or its business license revoked. 20 (twenty) years
15. Proven to still be acting as a Key Party
of Management or
Key Party of Officials after being declared not passed due to integrity issues, financial reputation issues and/or competence issues.
20 (twenty) years