Financial Services Authority Regulation Number 25/POJK.04/2018 Concerning Securities Financing Institutions

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 25 /POJK.04/2018
CONCERNING
SECURITIES FINANCING INSTITUTIONS
BY THE GRACE OF GOD THE ALMIGHTY,
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: that to increase the liquidity of securities transactions and address the limitations of funding sources for securities transactions by securities companies, it is necessary to establish a Financial Services Authority Regulation concerning Securities Financing Institutions; Recalling: 1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
2. 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);

RESOLVING:
Decree: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING SECURITIES FINANCING INSTITUTIONS.

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

Securities are negotiable instruments, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, Unit Participation in Collective Investment Contracts, futures contracts over Securities, and any derivative of Securities.
Securities Transaction is any activity or contract aimed at acquiring, disposing of, or using Securities that results in a transfer of ownership or does not result in a transfer of ownership.
Party is an individual, company, joint venture, association, or organized group.
Securities Transaction Financing is the provision of loan facilities in the form of funds and/or Securities provided in the context of Securities Transactions.
Securities Financing Institution, hereinafter abbreviated as LPE, is a Party that conducts business activities in Securities Transaction Financing.
Margin Transaction is a securities purchase transaction for the benefit of customers financed by the Securities Company.
Short Selling Transaction is a securities sale transaction where the Securities concerned are not owned by the seller at the time the transaction is executed.
Board of Directors is the company organ authorized and fully responsible for the management of the limited liability company for the benefit of the limited liability company, in accordance with the purpose and objectives of the limited liability company and representing the limited liability company, both inside and outside of court, in accordance with the provisions of the articles of association.
Board of Commissioners is the company organ tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.
Securities Company is a Party that conducts business activities as a Securities Underwriter, Securities Broker, and/or Investment Manager.
Financing Collateral is Securities and/or funds delivered by the recipient of Securities Transaction Financing as collateral to the LPE to obtain Securities Transaction Financing.
Request for Fulfillment of Financing Collateral is the request by the LPE to the recipient of Securities Transaction Financing to deliver Securities and/or funds in order to meet the maximum value limit of Securities Transaction Financing provided by the LPE to the recipient of Securities Transaction Financing or the minimum value limit of Financing Collateral for Securities Transactions that must be met by the recipient of Securities Transaction Financing.
Issuer is a Party that conducts a Public Offering.
Public Company is a Company whose shares are owned by at least 300 (three hundred) shareholders and has paid-up capital of at least IDR 3,000,000,000.00 (three billion rupiah) or a number of shareholders and paid-up capital determined by Government Regulation.
Stock Exchange is a Party that organizes and provides systems and/or facilities to match buy and sell offers of Securities from other Parties with the aim of trading Securities among them.
Clearing and Guarantee Institution is a Party that organizes clearing and guarantee services for the settlement of Stock Exchange Transactions.
Depository and Clearing Institution is a Party that organizes Central Custodian activities for Custodian Banks, Securities Companies, and other Parties.
Affiliation is:
a. family relationship due to marriage and descent up to the second degree, both horizontally and vertically; b. relationship between a Party and its employees, directors, or commissioners;
c. relationship between 2 (two) companies where there is one or more members of the board of directors or board of commissioners who are the same;
d. relationship between a company and a Party, directly or indirectly, controlling or controlled by said company; e. relationship between 2 (two) companies controlled, directly or indirectly, by the same Party; or f. relationship between a company and major shareholders.

CHAPTER II
BUSINESS ACTIVITIES, CAPITALIZATION, AND SHAREHOLDERS OF LPE
Section One
Business Activities
Article 2
Parties that can conduct business activities as an LPE are limited liability companies that have obtained a business license from the Financial Services Authority.
Article 3
(1) LPE provides Securities Transaction Financing to Securities Companies for the settlement of Margin Transactions and/or Short Selling Transactions.
(2) The Securities Company as referred to in paragraph (1) is a securities broker that meets the following requirements:
a. obtains approval from the Stock Exchange to conduct Margin Transactions and/or Short Selling Transactions; and b. has access to credit information at:

a credit information provider institution that has obtained a license from the Financial Services Authority; or
a financial information service system managed by the Financial Services Authority.
(3) The provisions for having access to credit information in the financial information service system managed by the Financial Services Authority as referred to in paragraph (2) letter b number 2) shall take effect when the Financial Services Authority Regulation regarding the financial information service system has regulated Securities Companies to have access to credit information in the financial information service system. (4) Securities Transaction Financing as referred to in paragraph (1) is provided based on the application of the Securities Company for each customer of the Securities Company. (5) At the time the LPE approves Securities Transaction Financing as referred to in paragraph (3), the LPE is required to open a sub-account for the Securities Company's securities for the benefit of the Securities Company's customers before Securities Transaction Financing is provided. (6) In the event that the Securities Company uses Securities and/or funds pledged by customers to obtain Securities Transaction Financing from the LPE as referred to in paragraph (1), the Securities Company is required to have an agreement with the customers that allows the Securities Company to use the Securities and/or funds pledged by said customers. (7) Securities Companies that use Securities and/or funds pledged by customers as referred to in paragraph (5) are exempted from:
a. the obligation to transfer customer-owned Securities for the settlement of Securities Transactions through the customer's securities sub-account; b. the obligation to transfer customer-owned funds for the settlement of customer Securities Transactions through the customer's funds account; and/or
c. the obligation to place customer collateral in the collateral securities sub-account.

Section Two
Other Securities Transaction Financing Activities
Article 4
(1) LPE may provide other Securities Transaction Financing, subject to obtaining approval from the Financial Services Authority.
(2) To obtain approval to conduct other Securities Transaction Financing activities as referred to in paragraph (1), the LPE is required to submit an application to the Financial Services Authority attaching documents containing at least an explanation regarding:
a. the type of other Securities Transaction Financing activities to be conducted; b. analysis of prospects and risks of other Securities Transaction Financing activities;
c. mechanism or method of other Securities Transaction Financing to be conducted;
d. rights and obligations between the LPE and the recipient of Securities Transaction Financing; e. written policy guidelines and procedures for other Securities Transaction Financing; and f. sample agreements to be used. (3) In processing the approval application, the Financial Services Authority analyzes the documents as referred to in paragraph (2). (4) The Financial Services Authority issues an approval or rejection letter at the latest 30 (thirty) working days after the application documents are received completely and correctly. (5) In the event of incomplete and/or inconsistent documents as referred to in paragraph (2), the Financial Services Authority may request the LPE to complete and/or adjust said documents at the latest 30 (thirty) working days after the application is received. (6) In the event that the LPE does not complete and/or adjust the documents within the 30 (thirty) working day period from the date of the notification letter, the LPE is deemed to have cancelled the approval application.

Section Three
Capitalization and Shareholders
Article 5
(1) LPE is required to have a minimum paid-up capital of IDR 250,000,000,000.00 (two hundred fifty billion rupiah).
(2) The Financial Services Authority may require the shareholders of the LPE to increase the capitalization of the LPE by considering the operational needs or business conditions of the LPE.
Article 6
(1) Parties that can become shareholders of the LPE are the Stock Exchange, Clearing and Guarantee Institution, Depository and Clearing Institution, and other Parties approved by the Financial Services Authority. (2) Other Parties as referred to in paragraph (1) must be legal entities. (3) The majority of shares of the LPE must be owned by the Stock Exchange.
Article 7
Shareholders of the LPE are prohibited from having an Affiliation relationship with other shareholders of the same LPE through:
a. direct or indirect ownership of at least 20% (twenty percent) of the issued shares of the LPE, except for ownership by the Stock Exchange, Clearing and Guarantee Institution, and Depository and Clearing Institution; b. holding concurrent positions as members of the Board of Directors, members of the Board of Commissioners, or equivalent positions; and/or
c. control in the field of management and/or company policy, directly or indirectly by the same Party.
Article 8
(1) Plans for changes in shareholders of the LPE must be submitted to the Financial Services Authority for approval.
(2) In the event that the LPE is an Issuer or a Public Company, the obligation to obtain prior approval from the Financial Services Authority as referred to in paragraph (1) only applies to changes in controlling shareholders. (3) In providing approval or rejection for plans for changes in shareholders as referred to in paragraph (1), the Financial Services Authority may conduct further clarification through face-to-face meetings, request presentations, assess the competence and propriety of prospective shareholders, and/or request additional documents.

CHAPTER III
MEMBERS OF THE BOARD OF DIRECTORS AND MEMBERS OF THE BOARD OF COMMISSIONERS OF LPE
Section One
Requirements for Members of the Board of Directors and Members of the Board of Commissioners of LPE
Article 9
(1) Members of the Board of Directors and members of the Board of Commissioners of the LPE must be Indonesian citizens.
(2) Members of the Board of Directors and members of the Board of Commissioners of the LPE must meet integrity requirements as follows:
a. competent to perform legal acts; b. have good character and morality;
c. have never been declared bankrupt or served as a member of the Board of Directors or Board of Commissioners who were declared guilty or complicit in causing a company to be declared bankrupt;
d. have never been sentenced for proven criminal offenses within a certain period prior to nomination; e. have never committed disgraceful acts proven by submitting at least a police record certificate where the period from the date of issuance to submission to the Financial Services Authority is not more than 6 (six) months or according to the validity period given by the police if less than 6 (six) months; f. have never committed material violations of laws and regulations in the financial services sector; and g. have a commitment to the development of the LPE and the Indonesian capital market. (3) Members of the Board of Directors and members of the Board of Commissioners of the LPE must meet competency and expertise requirements as follows:
a. for members of the Board of Directors:

have adequate and relevant understanding of Securities Transaction Financing in relation to their position;
have a minimum education level equivalent to a Bachelor's degree (Strata 1);
have at least 3 (three) years of experience in the capital market in a managerial position;
have understanding of capital market laws and regulations and broad insight into the capital market industry; and
understand good corporate governance principles and risk management principles;
b. for members of the Board of Commissioners:
have adequate knowledge in the capital market field or have at least 3 (three) years of experience in bodies or companies operating in the capital market field;
have understanding of capital market laws and regulations and broad insight into the capital market industry; and
understand good corporate governance principles and risk management principles.
Article 10
Members of the Board of Directors of the LPE must reside in Indonesia.

Section Two
Membership of the Board of Directors and Board of Commissioners of LPE
Article 11
(1) LPE must have at least 2 (two) members of the Board of Directors.
(2) One of the members of the Board of Directors of the LPE must be designated as the President Director.
Article 12
(1) LPE must have at least 2 (two) members of the Board of Commissioners.
(2) One of the members of the Board of Commissioners of the LPE must be designated as the Chief Commissioner.

Section Three
Assessment of Competence and Propriety of Members of the Board of Directors and Members of the Board of Commissioners of LPE
Article 13
(1) Each prospective member of the Board of Directors and member of the Board of Commissioners of the LPE must first pass the competence and propriety assessment conducted by the Financial Services Authority before being appointed by the LPE's General Meeting of Shareholders. (2) In conducting the competence and propriety assessment as referred to in paragraph (1), the Financial Services Authority may form a special committee. (3) The competence and propriety assessment of prospective members of the Board of Directors and members of the Board of Commissioners of the LPE as referred to in paragraph (1) is conducted at least through administrative research, further clarification through face-to-face meetings, and/or request for presentation covering at least the strategic plan for the development of the LPE.
Article 14
The Financial Services Authority is authorized to stop the nomination process for prospective members of the Board of Directors and prospective members of the Board of Commissioners of the LPE if the prospective candidate is undergoing legal proceedings.

Section Four
Prohibitions for Members of the Board of Directors and Members of the Board of Commissioners of LPE
Article 15
Members of the Board of Directors of the LPE are prohibited from:
a. having an Affiliation relationship with the management and/or shareholders of the recipient of Securities Transaction Financing, Issuers, and/or Public Companies; b. owning shares and/or acting as a controller, directly or indirectly, in the recipient of Securities Transaction Financing;
c. controlling, directly or indirectly, Issuers or Public Companies and/or trading Securities of Issuers or Public Companies; and
d. holding concurrent positions in any capacity in other companies.
Article 16
(1) In the event that a member of the Board of Directors of the LPE owns shares and/or acts as a controller, directly or indirectly, in the recipient of Securities Transaction Financing, said shares must be transferred at the latest 6 (six) months from the General Meeting of Shareholders appointing the member of the Board of Directors of the LPE. (2) During the period as referred to in paragraph (1), members of the Board of Directors of the LPE are prohibited from using voting rights in the General Meeting of Shareholders of the recipient of Securities Transaction Financing concerned, and the LPE is prohibited from providing Securities Transaction Financing to the recipient of Securities Transaction Financing whose shares are owned by said member of the Board of Directors of the LPE. (3) In the event that a member of the Board of Directors of the LPE appointed by the General Meeting of Shareholders already holds Securities of Issuers or Public Companies, said Securities cannot be traded until 6 (six) months after their term of office ends.
Article 17
Members of the Board of Commissioners of the LPE are prohibited from:
a. having an Affiliation relationship with the management and/or shareholders of the recipient of Securities Transaction Financing, Issuers, and/or Public Companies; b. owning shares and/or acting as a controller, directly or indirectly, in the recipient of Securities Transaction Financing;
c. controlling, directly or indirectly, Issuers or Public Companies and/or trading Securities of Issuers and/or Public Companies; and
d. holding concurrent positions in the recipient of Securities Transaction Financing.
Article 18
(1) In the event that a member of the Board of Commissioners of the LPE owns shares and/or acts as a controller, directly or indirectly, in the recipient of Securities Transaction Financing, said shares must be transferred at the latest 6 (six) months from the General Meeting of Shareholders appointing the member of the Board of Commissioners of the LPE. (2) During the period as referred to in paragraph (1), members of the Board of Commissioners of the LPE are prohibited from using voting rights in the General Meeting of Shareholders of the recipient of Securities Transaction Financing concerned, and the LPE is prohibited from providing Securities Transaction Financing to the recipient of Securities Transaction Financing whose shares are owned by said member of the Board of Commissioners of the LPE. (3) In the event that a member of the Board of Commissioners of the LPE appointed by the General Meeting of Shareholders already holds Securities of Issuers or Public Companies, said Securities cannot be traded until 6 (six) months after their term of office ends.

Section Five
Term of Office of Members of the Board of Directors and Members of the Board of Commissioners of LPE
Article 19
(1) The term of office for members of the Board of Directors of the LPE is 5 (five) years calculated from the General Meeting of Shareholders appointing the members of the Board of Directors of the LPE until the closing of the 5th (fifth) annual General Meeting of Shareholders and can only be reappointed for 1 (one) term of office. (2) The calculation of 1 (one) term of office for a member of the Board of Directors of the LPE is if the individual has served for at least 2/3 (two-thirds) of the term of office of the Board of Directors of the LPE.
Article 20
(1) The term of office for members of the Board of Commissioners of the LPE is 5 (five) years calculated from the General Meeting of Shareholders appointing the members of the Board of Commissioners of the LPE until the closing of the 5th (fifth) annual General Meeting of Shareholders and can only be reappointed for 1 (one) term of office. (2) The calculation of 1 (one) term of office for a member of the Board of Commissioners of the LPE is if the individual has served for at least 2/3 (two-thirds) of the term of office of the Board of Commissioners of the LPE.
Article 21
(1) Plans for changes in the composition of members of the Board of Directors and/or members of the Board of Commissioners of the LPE must be submitted to the Financial Services Authority for approval. (2) Plans for changes in the composition of members of the Board of Directors and/or members of the Board of Commissioners of the LPE as referred to in paragraph (1) must be submitted at the latest 35 (thirty-five) days before the General Meeting of Shareholders appointing the members of the Board of Directors and/or members of the Board of Commissioners of the LPE. (3) The submission of plans for changes in the composition of members of the Board of Directors of the LPE as referred to in paragraph (1) must be accompanied by the following documents:
a. a list of names and data of members of the Board of Directors of the LPE, including:

a signed curriculum vitae;
photocopy of the latest formal education diploma and certificates of expertise or proof of experience in the capital market field;
photocopy of the identity card or other valid identification;
two (2) recent color passport-sized photos, 4x6 cm, with a red background;
photocopy of the tax identification number; and
police record certificate;
b. a statement letter from each prospective member of the Board of Directors of the LPE submitted, wherein the individual states that the following requirements are met:
has met the provisions as referred to in Article 9;
has or does not have an Affiliation relationship with the management and/or shareholders of the recipient of Securities Transaction Financing, Issuers, and/or Public Companies;
willingness not to own shares or act as a controller, directly or indirectly, in the recipient of Securities Transaction Financing during their term as a member of the Board of Directors of the LPE, at the latest 6 (six) months from the General Meeting of Shareholders appointing the member of the Board of Directors of the LPE, and during this period, the individual is willing not to have voting rights in the General Meeting of Shareholders;
willingness not to control, directly or indirectly, Issuers and/or Public Companies;
willingness not to trade shares of Issuers and/or Public Companies owned by them until 6 (six) months after their term of office ends; and
not holding concurrent positions in any capacity in other companies.
(4) The submission of plans for changes in the composition of members of the Board of Commissioners of the LPE as referred to in paragraph (1) must be accompanied by the following documents:
a. a list of names and data of members of the Board of Commissioners of the LPE, including:
a signed curriculum vitae;
photocopy of the latest formal education diploma and certificates of expertise or proof of experience in the capital market field;
photocopy of the identity card or other valid identification;
two (2) recent color passport-sized photos, 4x6 cm, with a red background;
photocopy of the tax identification number; and
police record certificate;
b. a statement letter from each prospective member of the Board of Commissioners of the LPE submitted, wherein the individual states that the following requirements are met:
has met the provisions as referred to in Article 9;
has or does not have an Affiliation relationship with the management and/or shareholders of the recipient of Securities Transaction Financing, Issuers, and/or Public Companies;
willingness not to own shares or act as a controller, directly or indirectly, in the recipient of Securities Transaction Financing during their term as a member of the Board of Commissioners of the LPE, at the latest 6 (six) months from the General Meeting of Shareholders appointing the member of the Board of Commissioners of the LPE, and during this period, the individual is willing not to have voting rights in the General Meeting of Shareholders;
willingness not to control, directly or indirectly, Issuers and/or Public Companies;
willingness not to trade shares of Issuers and/or Public Companies owned by them until 6 (six) months after their term of office ends; and
not holding concurrent positions in any capacity in the recipient of Securities Transaction Financing.
(5) In the event that there are no selected prospective members of the Board of Directors and/or members of the Board of Commissioners of the LPE from the results of the competence and propriety assessment as referred to in Article 13 for 1 (one) or more positions of members of the Board of Directors and/or members of the Board of Commissioners of the LPE, the Financial Services Authority informs the shareholders to submit other prospective members of the Board of Directors and/or members of the Board of Commissioners of the LPE for the vacant positions where candidates have not yet been selected by the Financial Services Authority in the competence and propriety assessment process, at the latest 21 (twenty-one) days before the General Meeting of Shareholders appointing the members of the Board of Directors and/or members of the Board of Commissioners of the LPE.

(6) Shareholders may re-submit candidates for members of the Board of Directors and/or members of the Board of Commissioners of the SFI to the Financial Services Authority for positions where the candidates were not selected by the Financial Services Authority as referred to in paragraph (1), to the Financial Services Authority no later than 14 (fourteen) days before the General Meeting of Shareholders for the appointment of members of the Board of Directors and/or members of the Board of Commissioners of the SFI.

(7) In the event that all documents as referred to in paragraph (2) and/or (3) are complete and the candidates for members of the Board of Directors and/or members of the Board of Commissioners of the SFI have met the requirements, the Financial Services Authority transmits the list of selected candidates for members of the Board of Directors and/or members of the Board of Commissioners of the SFI for each position of member of the Board of Directors and/or member of the Board of Commissioners of the SFI, along with photocopies of the documents of the candidates for members of the Board of Directors and/or members of the Board of Commissioners of the SFI, to the Board of Directors of the SFI no later than 7 (seven) days before the General Meeting of Shareholders for the appointment of members of the Board of Directors and/or members of the Board of Commissioners of the SFI.

Article 22
The term of office of members of the Board of Directors and members of the Board of Commissioners of the SFI ends automatically if:
a. they lose Indonesian citizenship; b. they are incapable of performing legal acts;
c. they are declared bankrupt or become members of the Board of Directors or members of the Board of Commissioners who are declared guilty or jointly guilty in causing a company to be declared bankrupt;
d. they are sentenced for proven criminal acts; e. they are permanently unable; f. they die; and/or g. their term of office expires.

Article 23
Members of the Board of Directors and members of the Board of Commissioners of the SFI may be dismissed from their positions by the Financial Services Authority if:
a. they do not have good character and morality; b. they commit disgraceful acts in the financial services sector;
c. they commit material violations of regulations in the financial services sector;
d. they do not have commitment to the development of the SFI and/or the Indonesian capital market; and/or e. they fail or are incapable of carrying out their duties.

CHAPTER IV
OPERATIONAL AND INTERNAL CONTROL OF SFI

Article 24
In providing Securities Transaction Financing, the SFI is required to do the following:
a. apply prudence principles and risk management in handling risks arising from Securities Transaction Financing; b. conduct identification and verification of the profile and risk of the recipient of Securities Transaction Financing (due diligence);
c. ensure the availability of sufficient Securities and/or funds from the recipient of Securities Transaction Financing as collateral for Securities Transaction Financing;
d. have a written agreement regarding Securities Transaction Financing with the recipient of Securities Transaction Financing; e. have an adequate operational system to carry out Securities Transaction Financing activities; and f. become a member of a credit information provider institution that has obtained a license from the Financial Services Authority.

Article 25
The written agreement between the SFI and the recipient of Securities Transaction Financing as referred to in Article 24 letter d is required to contain at least the following provisions:
a. collateral assessment policy in the form of Securities, including the type of Securities, determination of fair market value, and determination of haircut; b. the obligation of the SFI to notify the Request for Collateral Fulfillment to the recipient of Securities Transaction Financing in the event of a decrease in the fair market value of the Collateral;
c. the obligation of the recipient of Securities Transaction Financing to fulfill the SFI's request regarding the Request for Collateral Fulfillment at any time;
d. the obligation of the recipient of Securities Transaction Financing to settle obligations for Securities Transaction Financing from the SFI or to substitute the Collateral received by the SFI if the pledged Securities are temporarily suspended from trading or delisted from the Stock Exchange; e. the obligation of the Securities Company to settle obligations for Securities Transaction Financing in the event the Securities Company is temporarily suspended from conducting Securities Transactions by the Financial Services Authority or the Stock Exchange, its business license is revoked by the Financial Services Authority, or its approval as a stock exchange member is revoked by the Stock Exchange, in the event the recipient of Securities Transaction Financing is a Securities Company; f. the right of the SFI to sell or buy Securities and/or take other actions at any time in the event the recipient of Securities Transaction Financing does not fulfill its obligations as referred to in letter c, letter d, and/or letter e; g. the right of the SFI to request payment of the remaining invoice from the recipient of Securities Transaction Financing, in the event the funds obtained from the sale of Securities as referred to in letter f are still insufficient to close the recipient of Securities Transaction Financing's obligations to the SFI; h. the recipient of Securities Transaction Financing cannot choose the Securities to be liquidated or sold to fulfill obligations for its failure in Securities Transaction Financing;
i. provisions regarding the duration and calculation of the interest rate of Securities Transaction Financing; and
j. dispute resolution mechanisms.

Article 26
In the event the SFI intends to use the Collateral received from the recipient of Securities Transaction Financing for Securities Transaction Financing, the SFI is required to have an agreement with the recipient of Securities Transaction Financing that allows the SFI to use the Securities and/or funds pledged by the recipient of Securities Transaction Financing.

Article 27
The operational system for Securities Transaction Financing as referred to in Article 24 letter e is required to meet at least the following provisions:
a. integrated with the clearing and settlement systems of the capital market; b. calculate the maximum Securities Transaction Financing that can be provided to each recipient of Securities Transaction Financing, type of Securities, and concentration of Securities per Issuer;
c. calculate the Securities Transaction Financing ratio;
d. conduct automatic rejection processes for Securities Transaction Financing requests from the recipient of Securities Transaction Financing if the recipient's Securities Transaction Financing ratio has reached the Request for Collateral Fulfillment ratio; and e. provide automatic notification if the Request for Collateral Fulfillment ratio and the ratio for the SFI to sell or buy Securities and/or take other actions in the event the recipient of Securities Transaction Financing does not fulfill its obligations have been reached.

CHAPTER V
SFI RISK MANAGEMENT

Article 28
In order to mitigate risks arising from Securities Transaction Financing provided to the recipient of Securities Transaction Financing, the SFI is required to have adequate risk management for Securities Transaction Financing activities.

Article 29
(1) For each type of Securities Transaction Financing activity, the SFI is required to have written policy guidelines and procedures that have previously obtained approval from the Financial Services Authority, containing at least the following:
a. Securities and/or funds that can be used as Collateral; b. applying haircuts on each type of pledged Securities;
c. minimum value of Collateral;
d. maximum value of Securities Transaction Financing that can be provided to each recipient of Securities Transaction Financing, type of Securities, and concentration of Securities per Issuer; e. Collateral value that must be maintained for each Securities Transaction Financing provided; f. Request for Collateral Fulfillment to the recipient of Securities Transaction Financing in the event the Collateral value experiences a decrease; and g. mechanisms for the sale and/or purchase of Securities or taking other actions in the event the recipient of Securities Transaction Financing cannot fulfill obligations for Securities Transaction Financing. (2) The written policy guidelines and procedures as referred to in paragraph (1) are required to be implemented by the SFI. (3) Changes to the written policy guidelines and procedures as referred to in paragraph (1) are required to be submitted to the Financial Services Authority to obtain approval.

CHAPTER VI
SFI FUNDING SOURCES

Article 30
SFI funding can come from the following sources:
a. fund loans from financial services institutions; b. issuance of debt securities or sukuk;
c. subordinated loans from SFI shareholders;
d. paid-in capital additions including through public stock offerings; and/or e. securities loans.

Article 31
(1) The SFI is required to maintain a gearing ratio of no more than 10 (ten) times.
(2) In the event the SFI's gearing ratio exceeds the limit as referred to in paragraph (1), the SFI is required to:
a. stop activities that increase the gearing ratio; b. submit to the OJK a plan containing the schedule, method, and form of gearing ratio recovery, reduction of business activities, or cessation of business activities, no later than 2 (two) working days after the SFI's gearing ratio exceeds the limit as referred to in paragraph (1); and
c. restore the SFI's gearing ratio to the limit as referred to in paragraph (1) no later than 30 (thirty) working days since the submission of the report as referred to in letter b.

CHAPTER VII
SFI LICENSING APPLICATION PROCEDURES

Article 32
(1) Applications for SFI business licenses are submitted by the applicant to the Financial Services Authority in accordance with the format of the business license application letter as an SFI as contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (2) The business license application as referred to in paragraph (1) is accompanied by at least the following documents:
a. detailed information regarding the applicant, name, address, telephone number, and facsimile; b. photocopy of the deed of establishment of the limited liability company that has been certified by the competent authority, along with the articles of association and/or the latest amendment to the articles of association of the limited liability company that has obtained approval or has been issued a notice of receipt of amendment to the articles of association from the competent authority;
c. photocopy of the limited liability company's tax identification number;
d. list of names and data of members of the Board of Directors and members of the Board of Commissioners of the SFI, including:

curriculum vitae signed by the respective person;
photocopy of the latest formal education diploma and expertise certificates or proof of experience in the capital market field;
photocopy of the identity card or other valid identification;
latest color passport-sized photos size 4x6 cm with a red background, 2 (two) copies;
photocopy of the tax identification number; and
police record certificate;
e. list of names and data of shareholders, including:
photocopy of the deed of establishment of the legal entity that has been certified by the competent authority, along with the articles of association and/or amendment to the articles of association that have been approved or have been issued a notice of receipt of amendment to the articles of association from the competent authority;
photocopy of the tax identification number for Indonesian legal entities;
information regarding Parties controlling the shareholders, whether directly or indirectly, including name and form of control;
latest financial statements; and
list of names and data of members of the Board of Directors, members of the Board of Commissioners, and/or management including:
a) curriculum vitae that has been signed; b) photocopy of identity card or other valid identification; and c) latest color passport-sized photos size 4x6 cm with a red background, 2 (two) copies; f. latest financial statements audited by an accountant registered with the Financial Services Authority; g. photocopy of bank statements; h. proof of lawful capital deposit;
i. statement letter from each candidate for member of the Board of Directors of the SFI submitted, wherein the respective person states that the following requirements are met:
has met the provisions as referred to in Article 9;
has or does not have an Affiliation relationship with management and/or shareholders of the recipient of Securities Transaction Financing, Issuer, and/or Public Company;
willingness to not own shares or be a controller, whether directly or indirectly, in the recipient of Securities Transaction Financing during their term as a member of the Board of Directors of the SFI for at least 6 (six) months since the General Meeting of Shareholders for the appointment of members of the Board of Directors of the SFI, and during that period the respective person is willing to not have voting rights in the General Meeting of Shareholders;
willingness to not control, whether directly or indirectly, the Issuer and/or Public Company;
willingness to not trade shares of the Issuer and/or Public Company owned by them until 6 (six) months after their term of office ends; and
not holding concurrent positions in any other company;
j. statement letter from the candidate for member of the Board of Commissioners of the SFI submitted, wherein the respective person states that the following requirements are met:
has met the provisions as referred to in Article 9;
has or does not have an Affiliation relationship with management and/or shareholders of the recipient of Securities Transaction Financing, Issuer, and/or Public Company;
willingness to not own shares or be a controller, whether directly or indirectly, in the recipient of Securities Transaction Financing during their term as a member of the Board of Commissioners of the SFI no later than 6 (six) months since the General Meeting of Shareholders for the appointment of members of the Board of Commissioners of the SFI, and during that period the respective person is willing to not have voting rights in the General Meeting of Shareholders;
willingness to not control, whether directly or indirectly, the Issuer and/or Public Company;
willingness to not trade shares of the Issuer or Public Company owned by them until 6 (six) months after their term of office ends; and
not holding concurrent positions in any capacity in the recipient of Securities Transaction Financing;
k. information on business location and photo of the office room;
l. description of operational plans and mission for at least the next 3 (three) years;
m. organizational structure and job descriptions of employees; n. written policy guidelines and procedures as referred to in Article 29; and o. draft of Securities Transaction Financing agreement between the SFI and the recipient of Securities Transaction Financing as referred to in Article 25.

Article 33
To process the SFI business license application, the Financial Services Authority may conduct further clarification through face-to-face meetings, request presentations, conduct on-site examinations, and/or request additional documents.

Article 34
In the event the application does not meet the requirements upon receipt, no later than 30 (thirty) working days since the receipt of the application, the Financial Services Authority provides a notification letter to the applicant stating that:
a. the application has not met the completeness requirements and/or document consistency; or b. the application is rejected.

Article 35
In the event the submitted application has met the requirements, the Financial Services Authority grants the SFI business license to the applicant no later than 30 (thirty) working days since the application is received completely and correctly.

CHAPTER VIII
SFI ANNUAL WORK PLAN AND BUDGET

Article 36
(1) The SFI must submit its annual work plan and budget to the Financial Services Authority no later than the end of November of each reporting year.
(2) The submission of the SFI's first annual work plan and budget is submitted to the Financial Services Authority at the time of submitting the SFI business license application. (3) The SFI's annual work plan and budget must first obtain approval from the Financial Services Authority before becoming effective.

Article 37
(1) The SFI's annual work plan and budget must be prepared for a 1 (one) fiscal year starting from January 1 to December 31 of the following year and contain at least the work plan, revenue budget plan, and expenditure budget plan. (2) The annual budget must be presented comparatively with the previous year's budget. (3) In the event there are material changes to the annual work plan and budget, the SFI is required to submit the said changes to the Financial Services Authority to obtain approval.

CHAPTER IX
SFI REPORTS

Article 38
(1) The SFI is required to report to the Financial Services Authority the following:
a. annual financial statements audited by an accountant registered with the Financial Services Authority and annual activity reports signed by members of the Board of Directors and members of the Board of Commissioners of the SFI, no later than the end of the 3rd (third) month after the date of the SFI's annual financial statements; b. monthly activity reports no later than on the 15th of the following month;
c. quarterly reports on the realization of the work plan and budget submitted through members of the Board of Commissioners of the SFI no later than on the 12th (twelfth) day after the end of the respective quarter;
d. resignation of members of the Board of Directors and/or members of the Board of Commissioners of the SFI no later than 2 (two) working days since the date the resignation letter is received by the SFI; e. results of the SFI's General Meeting of Shareholders no later than 2 (two) working days since the date of the holding of the said General Meeting of Shareholders, with the provision that the notarial deed of the SFI's General Meeting of Shareholders is required to be submitted to the Financial Services Authority no later than 2 (two) working days after the notarial deed is received by the SFI; f. failure of the recipient of Securities Transaction Financing to fulfill obligations for Securities Transaction Financing no later than 1 (one) working day after the occurrence of the failure; and g. failure of the SFI to meet the maximum gearing ratio limit no later than 1 (one) working day after the occurrence of the event; and h. reports or documents requested at any time by the Financial Services Authority. (2) The Financial Services Authority may postpone the resignation of members of the Board of Directors and members of the Board of Commissioners of the SFI as referred to in paragraph (1) letter d, in the event the resignation can affect the performance and operations of the SFI. (3) In the event the deadline for submitting reports as referred to in paragraph (1) letter a, letter b, and letter c falls on a holiday, the reports are required to be submitted on the next working day.

Article 39
Reports on the failure of the recipient of Securities Transaction Financing to fulfill obligations for Securities Transaction Financing as referred to in Article 38 paragraph (1) letter f are also required to be submitted by the SFI to the Stock Exchange and the Clearing and Guarantee Institution.

CHAPTER X
SANCTION PROVISIONS

Article 40
(1) Any party that violates the provisions as referred to in Article 3 paragraph (5) and paragraph (6), Article 4 paragraph (1) and paragraph (2), Article 5 paragraph (1), Article 6, Article 7, Article 8, Article 9, Article 11, Article 12, Article 13 paragraph (1), Article 15, Article 16, Article 17, Article 18, Article 19 paragraph (1), Article 20 paragraph (1), Article 21 paragraph (1) and paragraph (2), Article 24, Article 25, Article 26, Article 27, Article 28, Article 29, Article 31, Article 36 paragraph (3), and Article 37 paragraph (3), shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) are also imposed on parties that cause the occurrence of violations as referred to in paragraph (1). (3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority. (4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and/or g. cancellation of registration.
(5) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with the provisions of legislation.
(6) Administrative sanctions as referred to in paragraph (2) letter b, letter c, letter d, letter e, letter f, or letter g may be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (2) letter a. (7) Administrative sanctions in the form of fines as referred to in paragraph (2) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (2) letter c, letter d, letter e, letter f, or letter g.

Article 41
In addition to administrative sanctions as referred to in Article 40 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 42
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 40 paragraph (4) and specific actions as referred to in Article 41 to the public.

CHAPTER XI
CLOSING PROVISIONS

Article 43
This Financial Services Authority Regulation comes into force on the date of its enactment.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Yuliana

To ensure everyone knows, it is ordered to enact this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 5, 2018
CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Enacted in Jakarta on December 10, 2018
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 241

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 25 /POJK.04/2018
ABOUT
SECURITIES FINANCING INSTITUTIONS

I. GENERAL
Efforts to increase Securities Transaction activities need to be supported by adequate facilities such as the availability of financing sources used for Securities Transactions. Currently, Margin Transactions are one of the facilities that can be utilized by customers to conduct stock exchange transactions through financing provided by Securities Companies. Regulations regarding Margin Transaction financing have been regulated in Regulation Number V.D.6, appendix of the Decision of the Chairman of the Capital Market and Financial Institution Supervisory Board Number Kep-258/BL/2008 regarding Securities Transaction Financing by Securities Companies for Customers and Short Selling Transactions by Securities Companies.

Although Margin Transactions have been running, this transaction still needs to be developed, considering that in its implementation there are several obstacles such as the limited funds owned by Securities Companies and the limited loan (funding) facilities that can be obtained by Securities Companies from the banking sector or other sources.

Considering the above, it is considered necessary to have a special institution in the Capital Market established with the purpose of providing Securities Transaction financing facilities in the form of funds and/or Securities to Securities Companies. With this special institution, Securities Companies can obtain alternative funding sources for settling Securities Transactions including Margin Transactions and Short Selling Transactions, so that it is expected to encourage an increase in the liquidity of Securities Transactions. In addition, the SFI can provide Securities Transaction Financing for other Securities Transactions besides Margin Transactions and Short Selling Transactions. Based on the background of thought and aspects thereof, a Financial Services Authority Regulation on Securities Financing Institutions was formed.

II. ARTICLE BY ARTICLE
Article 1
Quite clear.

Article 2
Quite clear.

Article 3
Paragraph (1)
Quite clear.

Paragraph (2)
Letter a
Quite clear.

Letter b
Quite clear.

Paragraph (3)
Quite clear.

Paragraph (4)
Quite clear.

Paragraph (5)
Quite clear.

Paragraph (6)
Agreements between Securities Companies and customers can be in the form of an addendum to the Margin Transaction or Short Selling Transaction agreement of the Securities Company to the customer.

Paragraph (7)
Letter a
What is meant by "obligation to perform securities mutation of customer-owned securities for the settlement of Securities Transactions through customer securities sub-accounts" is the obligation that at the time this Financial Services Authority Regulation comes into force

Regulated in number 2 letter l of Circular Letter Number: SE-16/BL/2012 regarding the Explanation of Capital Market Supervisory Agency and Financial Services Institution Regulation No. V.D.3 regarding Internal Control of Securities Companies Engaging in Business Activities as Securities Brokers.

Letter b
What is meant by “obligation to transfer customer funds for the settlement of Securities Transactions through customer funds accounts” is an obligation that, at the time this Financial Services Authority Regulation takes effect, is regulated in number 3 letter a of Circular Letter Number: SE-16/BL/2012 regarding the Explanation of Capital Market Supervisory Agency and Financial Services Institution Regulation No. V.D.3 regarding Internal Control of Securities Companies Engaging in Business Activities as Securities Brokers.

Letter c
What is meant by “obligation to place customer collateral in a collateral securities sub-account” is an obligation that, at the time this Financial Services Authority Regulation takes effect, is regulated in number 6 letter c of the Chairman of the Capital Market Supervisory Agency and Financial Services Institution Decision Number: Kep-549/BL/2010 dated December 28, 2010 regarding Control and Protection of Securities Stored by Securities Companies, along with Regulation No. V.D.4 which is its appendix.

Article 4
Paragraph (1)
What is meant by “Other Securities Financing Transactions” includes, among others, financing for public offerings in the primary market, financing through repurchase agreement mechanisms (contracts to buy securities with a promise to sell back at a specified time and price), and borrowing securities through securities lending schemes.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
Clearly stated.

Article 5
Clearly stated.

Article 6
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
What is meant by “owned” includes ownership both directly and indirectly.

Article 7
Clearly stated.

Article 8
Clearly stated.

Article 9
Paragraph (1)
Clearly stated.

Paragraph (2)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
What is meant by “criminal offense” is:

criminal offenses in the financial field, namely criminal offenses in the banking field, criminal offenses in the capital market field, and criminal offenses in the non-bank financial industry field that are proven to have been committed within the last 20 (twenty) years before nomination;
special criminal offenses, namely criminal offenses other than those regulated in the Criminal Code with a prison sentence threat of 1 (one) year or more, at least: corruption; narcotics/psychotropics; smuggling; customs; excise; human trafficking; illegal weapons trade; terrorism; counterfeiting money; in the tax field; in the forestry field; in the environmental field; in the marine and fisheries field; that are proven to have been committed within the last 20 (twenty) years before nomination; and
criminal offenses, namely criminal offenses recorded in the Criminal Code with a prison sentence threat of 1 (one) year or more that are proven to have been committed within the last 10 (ten) years before nomination.
Assessment of the criteria in this number is conducted based on at least information obtained from the Financial Services Authority or information known to the public, that the person concerned has been sentenced for committing a criminal offense in the financial field or a special criminal offense within the last 20 (twenty) years before nomination or has been sentenced for committing a criminal offense within the last 10 (ten) years before nomination. What is meant by “before nomination” is calculated from the date the application for the name of the candidate for the Board of Directors of LPE is received completely by the Financial Services Authority.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Paragraph (3)
Letter a
Number 1
What is meant by “understanding in Securities Financing Transactions” includes, among others, understanding in Margin Transactions, repurchase agreement (repo) transactions, or securities lending transactions.

Number 2
Clearly stated.

Number 3
Clearly stated.

Number 4
Clearly stated.

Number 5
Clearly stated.

Letter b
Clearly stated.

Article 10
Clearly stated.

Article 11
Clearly stated.

Article 12
Clearly stated.

Article 13
Clearly stated.

Article 14
What is meant by “legal process” is the investigation or judicial process (including appeal and cassation) in criminal cases that include:

criminal offenses in the financial field, namely criminal offenses in the banking field, in the capital market field, and in the non-bank financial industry field.
special criminal offenses, namely criminal offenses other than those regulated in the Criminal Code with a prison sentence threat of 1 (one) year or more, at least: corruption; narcotics/psychotropics; smuggling; customs; excise; human trafficking; illegal weapons trade; terrorism; counterfeiting money; in the tax field; in the forestry field; in the environmental field; in the marine and fisheries field;
criminal offenses, namely criminal offenses recorded in the Criminal Code with a prison sentence threat of 1 (one) year or more.

Article 15
Clearly stated.

Article 16
Clearly stated.

Article 17
Clearly stated.

Article 18
Clearly stated.

Article 19
Clearly stated.

Article 20
Clearly stated.

Article 21
Clearly stated.

Article 22
Clearly stated.

Article 23
Clearly stated.

Article 24
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
What is meant by “written agreement” includes, among others, Securities Financing Transaction Agreements for Margin Transactions, Short Selling Transactions, and agreements for Other Securities Financing Transactions.

Letter e
Clearly stated.

Letter f
Clearly stated.

Article 25
Letter a
For equity securities actively traded on the Stock Exchange, the fair market value uses the last trading price on the Stock Exchange.
For equity securities not actively traded on the Stock Exchange and/or not listed on the Stock Exchange, the fair market value uses the reference price set by a securities pricing agency. For debt securities, the fair market value uses the reference price set by a securities pricing agency. In the event that the securities pricing agency does not issue a fair market value for the aforementioned equity securities and debt securities, the fair market value is determined based on the agreement of both Parties. What is meant by “haircut” is a factor reducing the fair market value of securities according to its risk by a certain percentage of the fair market value of the aforementioned securities. The determination of the haircut can refer to the haircut size determined by the committee at the clearing and guarantee institution.

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.

Letter j
Clearly stated.

Article 26
Clearly stated.

Article 27
Clearly stated.

Article 28
Clearly stated.

Article 29
Paragraph (1)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Clearly stated.

Letter d
The maximum value of Securities Financing Transactions in these regulations includes the establishment of stricter regulations in providing Securities Financing Transactions to recipients of Securities Financing Transactions who are shareholders of LPE.

Letter e
Clearly stated.

Letter f
Clearly stated.

Letter g
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Article 30
Clearly stated.

Article 31
Paragraph (1)
What is meant by “gearing ratio” is the capitalization ratio of LPE with a comparison between the amount of loans received compared to LPE equity.
Loans received include loans obtained from creditors, including those from the issuance of securities.

Paragraph (2)
Clearly stated.

Article 32
Clearly stated.

Article 33
Clearly stated.

Article 34
Clearly stated.

Article 35
Clearly stated.

Article 36
Clearly stated.

Article 37
Clearly stated.

Article 38
Paragraph (1)
Letter a
Annual financial reports and annual activity reports can be submitted in the form of annual reports.

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.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Article 39
Clearly stated.

Article 40
Clearly stated.

Article 41
Clearly stated.

Article 42
Clearly stated.

Article 43
Clearly stated.

SUPPLEMENT TO THE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6272

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 25 /POJK.04/2018
REGARDING
SECURITIES FINANCING INSTITUTION
APPLICATION FOR BUSINESS LICENSE AS AN LPE
Number : .................... ........, ................... 20.....
Attachment : ....................
Subject : Application for Business License as a Securities Financing Institution

TO
The Executive Head of Capital Market Supervision Financial Services Authority in Jakarta

Hereby we apply for a business license as a Securities Financing Institution. As consideration material, we hereby submit the following data:

Applicant Name :...............................................................
Applicant Address :...............................................................
................................................................
(street name and number)
.................................................. -  (city and postal code)
Securities Financing Institution Name :...............................................................
Tax Identification Number (NPWP) :...............................................................
Capital :...............................................................

a. Authorized Capital :………………………………………………….. b. Paid-up Capital :…………………………………………………..
6. Company Address :...............................................................
(street name and number)
.................................................. -  (city and postal code)
7. Telephone Number,
Telex, and Fax :...............................................................
8. Contact Person :...............................................................
(include power of attorney)
9. Business Licenses Already Held by the Company :...............................................................
To complete this application, we hereby attach the following documents:

detailed information regarding the applicant, name, address, telephone number,
fax;
photocopy of the deed of establishment certified by the competent authority and the articles of association approved by the competent authority;
photocopy of the tax identification number (NPWP);
list of names and members of the Board of Directors and Board of Commissioners, including:
a. signed biographical lists; b. photocopy of the highest formal education diploma and skill certificates or proof of experience in the capital market field;
c. photocopy of the identity card or other valid identification;
d. recent 4x6 cm color photos with a red background, 2 (two) sheets; e. photocopy of the tax identification number (NPWP); and f. police record certificate.
list of names and data of shareholders, including:
a. photocopy of the deed of establishment of the legal entity certified by the competent authority and the articles of association and/or amendments to the articles of association approved by the competent authority or a letter of acceptance of the notice of amendment to the articles of association from the competent authority; b. photocopy of the tax identification number (NPWP) for Indonesian legal entities;
c. information regarding Parties controlling shareholders, both directly and indirectly, including among others name and form of control;
d. latest financial report; e. list of names and data of Board of Directors members, Board of Commissioners members, and/or management including:

biographical lists;
photocopy of identity cards or other valid identification; and
recent 4x6 cm color photos with a red background, 2 (two) sheets.

latest financial report audited by an accountant registered with the Financial Services Authority;
photocopy of bank statements;
proof of valid capital contribution;
statement letter from each Party proposed as a candidate for Board of Directors and Board of Commissioners members stating that the following requirements are met:
a. capable of performing legal acts; b. having good ethics and morality;
c. never declared bankrupt or a Board of Directors or Board of Commissioners member declared guilty causing a company to be declared bankrupt;
d. never sentenced for committing a criminal offense within a certain period before nomination; e. never committed disgraceful acts in the capital market field in particular and the financial field in general; f. never committed material violations of regulations in the financial services sector; and

g. has a commitment to the development of Securities Financing Institutions in particular and the Indonesian capital market.
10. statement letter from Parties proposed as candidate Board of Directors members stating that the following requirements are met:
a. having or not having an Affiliation relationship with management and/or shareholders of Securities Companies, Issuers and/or Public Companies; b. willingness not to own shares or as a controller, both directly or indirectly, of Securities Companies during their term as Board of Directors members of LPE for at least 6 (six) months since the general meeting of shareholders appointing LPE Board of Directors members, and during that period, the person concerned is willing not to have voting rights in the general meeting of shareholders;
c. willingness not to control, directly or indirectly, Issuers and/or Public Companies;
d. willingness not to transact shares of Issuers and/or Public Companies owned by them until 6 (six) months after the end of their term; and e. not holding any other positions in other companies.
11. statement letter from Parties proposed as candidate Board of Commissioners members stating that the following requirements are met:
a. having or not having an Affiliation relationship with management and/or shareholders of Securities Companies, Issuers and/or Public Companies; b. willingness not to own shares or as a controller, both directly or indirectly, of Securities Companies during their term as Board of Commissioners members of LPE for at least 6 (six) months since the general meeting of shareholders appointing LPE Board of Commissioners members, and during that period, the person concerned is willing not to have voting rights in the general meeting of shareholders;
c. willingness not to control, directly or indirectly, Issuers and/or Public Companies;

d. willingness not to transact shares of Issuers or Public Companies owned by them until 6 (six) months after the end of their term; and e. not holding any other positions in Securities Companies.
12. business premises information and office room photos;
13. overview of operational plans and mission for the next 3 (three) years;
14. organizational structure and employee job descriptions;
15. written policies and procedures guidelines in Securities Financing Transactions; and
16. draft agreement for Securities Financing Transactions between LPE and Securities Companies.

This application is submitted, and we thank you for your attention.
Applicant,
.............................................
(clear name and signature) stamped

QUESTIONNAIRE LIST
I. INSTRUCTIONS FOR ANSWERING QUESTIONS

All questions in this questionnaire must be answered by each Board of Directors member, Board of Commissioners member, candidate Board of Directors member, candidate Board of Commissioners member, and controllers or shareholders.
Signed by each Board of Directors member, Board of Commissioners member, candidate Board of Directors member, candidate Board of Commissioners member, and controllers or shareholders on stamped paper.
Place a checkmark  in the box in front of the word “Yes” if your answer is “Yes”, or place a checkmark  in the box in front of the word “No” if your answer to the following questions is “No”. For every “Yes” answer, a detailed and clear answer must be provided containing at least:
a. the institutions and persons involved; b. the cases and dates of actions taken;
c. the court or institution taking action; and
d. the actions or sanctions imposed.

II. INTEGRITY OF BOARD OF DIRECTORS MEMBERS, BOARD OF COMMISSIONERS MEMBERS,
CANDIDATE BOARD OF DIRECTORS MEMBERS, CANDIDATE BOARD OF COMMISSIONERS MEMBERS, AND CONTROLLERS/SHAREHOLDERS Definitions Investment is activities regarding securities, banking, insurance, or housing or real estate businesses, including activities, both directly and indirectly, related to Securities Companies, Stock Exchanges, investment advisors, Banks, or other companies operating in the financial field. Answer the following questions:

Have you ever been sentenced, pleaded guilty, or not contested charges of:
a. criminal offenses in the financial field, within the last 20 (twenty) years?
 yes  no

b. special criminal offenses within the last 20 (twenty) years?
 yes  no
c. criminal offenses within the last 10 (ten) years?
 yes  no
2. Has the court:
a. ever declared you bankrupt?
 yes  no b. within the last 20 (twenty) years prohibited you from activities related to investment?
 yes  no
c. ever decided that you caused a business related to investment, its business license or license to operate to be rejected, suspended, revoked, or restricted?
 yes  no
3. Has the Financial Services Authority ever:
a. found you making false statements or being negligent?
 yes  no b. found you involved in violations of regulations in the financial services field?
 yes  no
c. found you causing a business related to investment, its business license or license to operate to be rejected, suspended, revoked, or restricted?
 yes  no d. ordered to reject, temporarily stop, or revoke your business license, approval, registration, registration statement, or impose sanctions by restricting your activities?  yes  no
4. Have other competent institutions in Indonesia or abroad ever:

a. found you making false, misleading, dishonest, unfair, or unethical statements?
 yes  no b. found you involved in violations of regulations in the investment field or other regulations?
 yes  no
5. Have the Stock Exchange, Clearing and Guarantee Institution, and Depository and Clearing Institution ever:
a. found you making false statements or failing to provide required information?
 yes  no b. found you involved in violations of Stock Exchange, Clearing and Guarantee Institution, and Depository and Clearing Institution regulations?
 yes  no
c. found you causing the business license or license to operate of an investment-related company to be suspended, revoked, or restricted?
 yes  no d. taking action against you by issuing or suspending membership, preventing or suspending relationships with other members, or restricting activities?  yes  no
6. Have you ever or are you currently being sued by a Party regarding Investment or fraud?
 yes  no
7. Have you ever or are you currently being sued or prosecuted by a Party regarding civil or criminal cases?
 yes  no
8. Has an insurance company ever refused to pay you or revoked your insurance?

 yes  no
9. Do you have obligations based on court decisions or other agreements made with other parties that cannot be executed?
 yes  no
10. Have you ever been a director of a Investor Protection Fund Organizer, Investment Advisor, or controller of an Investor Protection Fund Organizer that was declared bankrupt?
 yes  no
11. Do you individually or collectively own shares exceeding 5% (five percent) in an Issuer or Public Company or 20% (twenty percent) in a company operating in the Investment field?
 yes  no
.............................., ..............
(Place and date)
Candidate Board of Directors Member/Candidate Board of Commissioners Member/Controller/ Shareholder*)
.............................................
(clear name) stamped

List A and B.
List A:

Provide information regarding owners/shareholders, Board of Commissioners members, and officials using the table below. If additional explanation is needed, use List B.
a. Officials are Board of Directors members or officials one level below Board of Directors members and parties having the same position or function.
b. Owners are shareholders or beneficial owners of 5% (five percent) or more of the applicant's shares.
Also report changes in Board of Commissioners members, officials, shareholders, and beneficial owners, including the date the new party starts and the date the party leaves their previous position in the relevant company using the table below:
List of Board of Commissioners Members, Officials, and Shareholders Full Name Start Date Mon.Year End Date Mon.Year Position Ownership Percentage Tax ID (NPWP) Nationality

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana
List B:
Filled with detailed explanations for “Yes” answers to questions 1 through 11 and further explanations from List A and B.
List of explanations for Questions Number 1 to 11 No. Question Number/List Explanation

Established in Jakarta on December 5, 2018
CHAIRMAN OF THE COMMISSIONER BOARD
FINANCIAL SERVICES AUTHORITY, signed
WIMBOH SANTOSO

Financial Services Authority Regulation Number 25/POJK.04/2018 Concerning Securities Financing Institutions

Lineage: In force