Amendment to Financial Services Authority Regulation Number 35/POJK.05/2018 on the Conduct of Financing Company Business

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 7 /POJK.05/2022
CONCERNING
AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 35/POJK.05/2018 CONCERNING THE CONDUCT OF FINANCING COMPANY BUSINESS BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the increasing complexity of financing company activities, handling various problems in financing companies requires effective and efficient risk mitigation to ensure the fulfillment of prudential aspects; b. that to fulfill prudential aspects to create a healthy financing company industry ecosystem, it is necessary to adjust regulations regarding investment in the purchase of shares by financing companies;
c. that based on considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to the Financial Services Authority Regulation Number 35/POJK.05/2018 concerning the Conduct of Financing Company Business;

Recalling:

1. 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);
2. Financial Services Authority Regulation Number 35/POJK.05/2018 concerning the Conduct of Financing Company Business (State Gazette of the Republic of Indonesia Year 2018 Number 260, Supplement to the State Gazette of the Republic of Indonesia Number 6286);

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 35/POJK.05/2018 CONCERNING THE CONDUCT OF FINANCING COMPANY BUSINESS.

Article I
Several provisions in the Financial Services Authority Regulation Number 35/POJK.05/2018 concerning the Conduct of Financing Company Business (State Gazette of the Republic of Indonesia Year 2018 Number 260, Supplement to the State Gazette of the Republic of Indonesia Number 6286) are amended as follows:

1. Between Article 82 and Article 83, 1 (one) article is inserted,
   namely Article 82A so that it reads as follows:

Article 82A
(1) Financing Companies are prohibited from owning shares and/or securities with an underlying in the form of shares or guaranteed by shares for the purpose of:
a. short-term investment; b. buying and selling;
c. cash flow management; and/or
d. capital participation other than in the context of developing the business activities of the Financing Company.

(2) The prohibition as referred to in paragraph (1) is excepted for share ownership through direct participation as referred to in
Article 68.

2. The provisions of paragraph (1) and paragraph (3) of Article 115 are amended, so that
   they read as follows:

Article 115
(1) Financing Companies that violate the provisions as referred to in Article 4, Article 5 paragraph (2),
Article 10, Article 12, Article 13, Article 14 paragraph (2) and paragraph
(3), Article 15 paragraph (2) and paragraph (3), Article 16 paragraph (1) and paragraph (2), Article 17, Article 19 paragraph (2), Article 20 paragraph (2), paragraph (3), paragraph (4), and paragraph (5), Article 22 paragraph (1), Article 29, Article 30 paragraph (1), Article 31, Article 32, Article 37, Article 38, Article 39 paragraph (2), paragraph (3), and paragraph (5), Article 40 paragraph (1), Article 41 paragraph (1), Article 42, Article 43, Article 44 paragraph (1), Article 45, Article 46, Article 47, Article 48 paragraph (2), paragraph (3), paragraph (4), and paragraph (5), Article 49 paragraph (1) and paragraph (3),
Article 50, Article 51 paragraph (1), Article 52, Article 53 paragraph (1),
Article 55 paragraph (1), Article 56 paragraph (1), Article 57 paragraph (1),
Article 58 paragraph (1), Article 59, Article 64 paragraph (1), Article 66
paragraph (1), Article 67, Article 68 paragraph (1), paragraph (2), paragraph (3), and paragraph (4), Article 69, Article 70, Article 72, Article 73 paragraph (1), Article 75, Article 76 paragraph (1), Article 77, Article 78 paragraph (1), Article 79 paragraph (1), Article 81, Article 82, Article 82A paragraph (1), Article 83, Article 85 paragraph (1) and paragraph (2), Article 93 paragraph (6), and/or Article 94 paragraph (1) and paragraph (2) of this Financial Services Authority Regulation are subject to administrative sanctions in a graduated manner consisting of:
a. warning; b. suspension of business activities; and
c. revocation of business license.

(2) In addition to administrative sanctions as referred to in paragraph (1), the Financial Services Authority may:
a. restrict certain business activities; b. lower the risk level assessment results;

c. cancel approvals; and/or
d. reassess the competence and propriety of the principal parties of the Financing Company.

(3) Financing Companies that violate the provisions as referred to in paragraph (1) but the violation has been resolved, remain subject to administrative sanctions in the form of a first warning that ends automatically.

(4) Administrative sanctions in the form of warnings as referred to in paragraph (1) letter a, may be given in writing at most 3 (three) times consecutively with a validity period of each of at most 2 (two) months.

(5) In the event that before the end of the validity period of the administrative sanction in the form of a warning as referred to in paragraph (4), the Financing Company has fulfilled the provisions as referred to in paragraph (1), the Financial Services Authority revokes the administrative sanction in the form of a warning.

(6) In the event that the validity period of the third warning as referred to in paragraph (4) ends and the Financing Company still does not fulfill the provisions as referred to in paragraph (1), the Financial Services Authority imposes an administrative sanction in the form of suspension of business activities.

(7) Administrative sanctions in the form of suspension of business activities as referred to in paragraph (6) are given in writing and are valid from the date of establishment for a period of at most 6 (six) months.

(8) If the validity period of administrative sanctions in the form of warnings and/or suspension of business activities ends on a holiday, the administrative sanctions in the form of warnings and/or suspension of business activities remain valid until the first working day thereafter.

(9) Financing Companies subject to administrative sanctions in the form of suspension of business activities as referred to in paragraph (6), are prohibited from conducting financing company business activities.

(10) In the event that before the end of the validity period of the suspension of business activities as referred to in paragraph (7), the Financing Company has fulfilled the provisions as referred to in paragraph (1), the Financial Services Authority revokes the administrative sanction in the form of suspension of business activities.

(11) In the event that the administrative sanction in the form of suspension of business activities is still in effect and the Financing Company continues to conduct financing company business activities, the Financial Services Authority may directly impose an administrative sanction in the form of revocation of the business license.

(12) In the event that by the end of the validity period of the suspension of business activities as referred to in paragraph (7), the Financing Company does not fulfill the provisions as referred to in paragraph (1), the Financial Services Authority revokes the business license of the Financing Company in question.

(13) The Financial Services Authority may announce administrative sanctions in the form of suspension of business activities as referred to in paragraph (1) letter b and/or revocation of business license as referred to in paragraph (1) letter c to the public.

Article II

1. For Financing Companies that already own shares
   and/or securities with an underlying in the form of shares or guaranteed by shares as referred to in Article 82A before this Financial Services Authority Regulation is promulgated must divest ownership of shares and/or securities with an underlying in the form of shares or guaranteed by shares at the latest 1 (one) year from the date this Financial Services Authority Regulation is promulgated.

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

2. This Financial Services Authority Regulation takes effect on the date of promulgation.
   To ensure that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on May 17, 2022
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on May 18, 2022
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2022 NUMBER 125

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 7 /POJK.05/2022
CONCERNING
AMENDMENT TO THE FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 35/POJK.05/2018 CONCERNING THE CONDUCT OF FINANCING COMPANY BUSINESS

I. GENERAL
The development of the financing company industry today is increasingly complex and dynamic. The rapid development of the external and internal environment in the financing company industry has the potential to cause an increase in risks faced by financing companies and can cause problems in financing companies. To strengthen the regulation of prudential aspects in financing companies, sufficient capital is needed to absorb risks arising from the financing distribution activities conducted by financing companies. In addition, practices leading to financial engineering need to be anticipated so that the capital capacity of financing companies can reflect their actual ability to absorb risks as well as in order to expand their business capacity. In relation to this, the Financial Services Authority establishes an Amendment to the Financial Services Authority Regulation Number 35/POJK.05/2018 concerning the Conduct of Financing Company Business.

II. ARTICLE BY ARTICLE
Article I
Number 1
Article 82A
Paragraph (1)
Sufficiently clear.
Paragraph (2)
An exception is given if direct participation is carried out for the purpose of:
a. long-term investment; b. not for buying and selling;
c. not for cash flow management; and/or
d. development of the business activities of the Financing Company. Number 2
Article 115
Sufficiently clear.
Article II
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6795