FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

COPY

FINANCIAL SERVICES AUTHORITY REGULATION

REPUBLIC OF INDONESIA

NUMBER 26 OF 2023

CONCERNING

THE USE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IN THE CAPITAL MARKET

BY THE GRACE OF GOD THE ALMIGHTY,

THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in line with the commitment of the Government of Indonesia in the G-20 forum and to improve Indonesia's ranking in the eyes of the world, it is necessary to support and enhance the application of high-quality accounting standards accepted internationally; b. that for the simplification of the submission of general-purpose financial reports to the Financial Services Authority and to provide legal certainty for public companies listed in more than 1 (one) country in preparing financial reports, it is necessary to provide guidelines for the preparation of financial reports for companies that choose to use international financial accounting standards in preparing financial reports;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Use of International Financial Accounting Standards in the Capital Market;

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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);

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) as amended by Law Number 4 of 2023 concerning the Development and Strengthening of the Financial Sector (State Gazette of the Republic of Indonesia Year 2023 Number 4, Supplement to the State Gazette of the Republic of Indonesia Number 6845);

DECIDING:

To establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE USE OF INTERNATIONAL FINANCIAL ACCOUNTING STANDARDS IN THE CAPITAL MARKET.

CHAPTER I

GENERAL PROVISIONS

Article 1

In this Financial Services Authority Regulation, the following terms are defined as:

1. Issuer is a party that conducts a public offering.

2. Public Company is an Issuer that has conducted a public offering of equity securities or a public company.

3. Public Company Listed in More Than 1 (One) Country is a public company established and domiciled in Indonesia that lists equity securities on the stock exchange in Indonesia and on a stock exchange in another country.

4. Capital Market Accounting Provisions, hereinafter referred to as Accounting Provisions, are regulations concerning accounting treatment in the capital market, the regulation of which is in line with financial accounting standards and aims for transparency and public investor protection.

5. International Financial Accounting Standards, hereinafter referred to as International SAK, are statements of financial accounting standards and interpretations of financial accounting standards issued by the Accounting Standards Board of the Indonesian Accountants Association that fully adopt accounting standards on international financial reporting standards (International Financial Reporting Standards Accounting Standards) issued by the International Accounting Standards Board.

6. Users of International SAK are Public Companies Listed in More Than 1 (One) Country that choose to apply International Financial Accounting Standards as a reference in preparing financial reports.

7. Annual Report is the report of accountability of the Board of Directors and Board of Commissioners in carrying out management and supervision of the Issuer or public company over a 1 (one) fiscal year to the General Meeting of Shareholders, prepared based on regulations concerning the annual report of the Issuer or public company.

CHAPTER II

PREPARATION OF FINANCIAL REPORTS

Article 2

The Accounting Provisions for Public Companies Listed in More Than 1 (One) Country regulated in this Financial Services Authority Regulation consist of:
a. regulations in the capital market sector concerning the preparation of financial reports for financial institution companies for Public Companies Listed in More Than 1 (One) Country that are financial institution companies; and b. regulations in the capital market sector concerning the presentation and disclosure of financial reports of Issuers or public companies for Public Companies Listed in More Than 1 (One) Country that are not financial institution companies.

Article 3

The financial reports of Public Companies Listed in More Than 1 (One) Country, both single entity financial reports and consolidated financial reports, for the purpose of submission to the public and to the Financial Services Authority, must be prepared based on the Accounting Provisions for Public Companies Listed in More Than 1 (One) Country as regulated in Article 2.

Article 4

(1) Public Companies Listed in More Than 1 (One) Country may choose to apply International SAK as a reference in preparing financial reports.
(2) In the event that a Public Company Listed in More Than 1 (One) Country chooses to apply International SAK, the preparation of financial reports by Users of International SAK is exempted from the provisions of Article 3.

Article 5

Users of International SAK are prohibited from preparing general-purpose financial reports based on the Accounting Provisions for Public Companies Listed in More Than 1 (One) Country as referred to in Article 2.

Article 6

The application of International SAK as referred to in Article 4 for Users of International SAK applies to fiscal years starting on or after January 1, 2024.

Article 7

(1) Users of International SAK are required to disclose information on the application of International SAK in the Annual Report.
(2) The disclosure of information on the application of International SAK in the Annual Report as referred to in paragraph (1) must contain at least:
a. a flowchart of the structure of the preparation of financial reports based on International SAK; b. directors or employees with sufficient knowledge of International SAK, containing at least the following information:
1. name of director/employee;
2. position;
3. name of training/certification;
4. time of implementation of training/certification; and
5. body/institution organizing the training/certification.
c. special efforts made by Users of International SAK to ensure the conformity of financial reports with International SAK;
d. criteria required by authorities of other countries to be fulfilled in the context of submitting financial reports based on international standards, in the event that there are criteria required by authorities of other countries; and e. a statement of fulfillment of criteria to meet the provisions in letter d.

Article 8

(1) Users of International SAK are required to apply International SAK consistently until the User of International SAK is no longer a Public Company Listed in More Than 1 (One) Country.
(2) Users of International SAK who are no longer Public Companies Listed in More Than 1 (One) Country are required to continue to apply International SAK in the same reporting period when the User of International SAK is no longer a Public Company Listed in More Than 1 (One) Country. (3) Public Companies Listed in More Than 1 (One) Country that have chosen International SAK as a reference for the preparation of their financial reports, which are no longer Public Companies Listed in More Than 1 (One) Country, are required to apply the Accounting Provisions for Public Companies Listed in More Than 1 (One) Country as referred to in Article 3 in the reporting period after the period when the Public Company is no longer a Public Company Listed in More Than 1 (One) Country. (4) Public Companies that are no longer Public Companies Listed in More Than 1 (One) Country as referred to in paragraph (3) are required to disclose:
a. the impact of changes in accounting policies, in accordance with the Accounting Provisions for Public Companies Listed in More Than 1 (One) Country in the annual financial report; and b. a statement that they no longer apply International SAK and return to applying the Accounting Provisions for Public Companies Listed in More Than 1 (One) Country as a reference for the preparation of their financial reports, in the annual report.

CHAPTER III

ADMINISTRATIVE SANCTIONS

Article 9

(1) Any party that violates the provisions as referred to in Article 3, Article 5, Article 7 paragraph (1), and Article 8 shall be subject to administrative sanctions.
(2) Sanctions as referred to in paragraph (1) shall also be imposed on parties who cause the occurrence of violations as referred to in paragraph (1).
(3) Sanctions as referred to in paragraph (1) and paragraph (2) shall be imposed by the Financial Services Authority.
(4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fines in the form of an obligation to pay a certain amount of money;
c. restriction on business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and/or g. cancellation of registration.

(5) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (4) letter a. (6) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed alone or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g. (7) The procedure for the imposition of sanctions as referred to in paragraph (3) shall be carried out in accordance with the provisions of regulations.

Article 10

In addition to administrative sanctions as referred to in Article 9 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 11

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 9 paragraph (4) and specific actions as referred to in Article 10 to the public.

CHAPTER IV

CLOSING PROVISIONS

Article 12

This Financial Services Authority Regulation shall come into force on the date of its promulgation.

This copy is in accordance with the original

Director of Law 1
Legal Department
Mufli Asmawidjaja

In order that everyone may know it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 20, 2023

CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA,

MAHENDRA SIREGAR

Promulgated in Jakarta on December 22, 2023

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2023 NUMBER 44/OJK signed

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 26 OF 2023
CONCERNING
THE USE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS IN THE CAPITAL MARKET

I. GENERAL

Accounting is a business language recognized and used worldwide. For parties, such as management, to communicate regarding the financial condition of a company with other parties, such as shareholders and potential investors, this must be done using a language that can be understood by all parties. For this reason, it is necessary to have accounting standards that contain the rules of grammar in this business communication language.

The year 2008 was a historic year in the development of financial accounting standards in Indonesia. The Group of Twenty (G-20) member countries agreed to use International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) as a reference in preparing high-quality financial reports to support the implementation of cross-border business activities and to facilitate investors worldwide in understanding the performance of companies in various parts of the world and making decisions based on relevant, reliable, and comparable financial information.

As one of the G-20 member countries, Indonesia has a commitment to follow this agreement. Thus, Indonesia will become one of the approximately 120 countries in the world that have used IAS/IFRS as a reference in preparing financial reports. As a follow-up to this agreement, the convergence of financial accounting standards in Indonesia to IAS/IFRS becomes very relevant and important. The process of convergence of financial accounting standards to IAS/IFRS in Indonesia uses a gradual approach, not a big bang approach. The convergence process using a gradual approach is expected to reduce the psychological impact of implementing IAS/IFRS-based financial accounting standards, in other words, financial report preparers have sufficient time to understand the new accounting standards so that they can produce correct and high-quality reports.

As a form of Indonesia's seriousness regarding the process of convergence of financial accounting standards to IAS/IFRS, in 2016, a Joint Statement was signed between the Financial Services Authority, the Indonesian Accountants Association (IAI), and the IFRS Foundation. After going through a convergence process since 2008 and considering the readiness of Public Companies in Indonesia, it is deemed appropriate for Indonesia to apply accounting standards that fully adopt IFRS Accounting Standards (full adoption) as a reference for Public Companies Listed in More Than 1 (One) Country (dual listed) in preparing financial reports for use by domestic and foreign stakeholders, thus it is necessary to regulate provisions concerning the use of International SAK in the capital market.

II. ARTICLE BY ARTICLE

Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
The financial reports of Public Companies Listed in More Than 1 (One) Country are 1 (one) entity financial reports or consolidated financial reports submitted to the public and to the Financial Services Authority.

Article 4
Sufficiently clear.

Article 5
The term "general-purpose financial reports" refers to reports that provide financial information about the economic resources of the reporting entity, claims against the entity, and changes in economic resources and claims for the primary users in making decisions related to providing resources to the entity.

Article 6
Sufficiently clear.

Article 7
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Letter a
The flowchart structure describes the roles of company organs, supporting functions, and related stakeholders in preparing financial reports, including directors, board of commissioners, committees under the board of directors/board of commissioners, accounting divisions/other related divisions, internal audit, external audit, and the general meeting of shareholders, from listing to the publication of financial reports, as well as coordination with groups/child entities regarding the preparation of consolidated financial reports, if there are groups/child entities.

Letter b
Examples of sufficient knowledge about International SAK:
Directors or employees have attended:

1. training; or
2. certification,
   which includes learning about the latest International SAK or IFRS Accounting Standards and is evidenced by a training or certification certificate.

Letter c
Examples of special efforts, including:

1. formation of a special division/unit tasked with carrying out the transition process from regulations in the capital market sector concerning the presentation and disclosure of financial reports of issuers or public companies to International SAK;
2. conducting impact analysis of the issuance of new/revised exposure drafts of International SAK or IFRS Accounting Standards on the company; and
3. always following press releases or standard publications by IASB/IAI.

Letter d
The term "criteria" refers to requirements for Users of International SAK in the context of submitting financial reports based on international standards. Examples of criteria include, among others, requirements for external audit of company internal controls.

Letter e
The term "statement of fulfillment of criteria" refers to a statement by the User of International SAK disclosing information regarding the fulfillment of International SAK criteria even if there are no criteria required by authorities of other countries.

Article 8
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Example:
PT ABC Tbk delisted from the Stock Exchange of Country A on April 30, 2024. PT ABC Tbk continues to use International SAK as a reference for preparing financial reports until December 31, 2024, or is used in the preparation of the June 30, 2024 interim financial report and the December 31, 2024 annual financial report.

Paragraph (3)
Example:
PT ABC Tbk delisted from the Stock Exchange of Country A on April 30, 2024. PT ABC Tbk uses regulations in the capital market sector concerning the presentation and disclosure of financial reports of Issuers or public companies as a reference for preparing financial reports starting January 1, 2025, or is first used in the preparation of the June 30, 2025 interim financial report and subsequent reporting periods.

Paragraph (4)
Letter a
Examples of changes in accounting policies, including changes in the measurement of land rights from lease to fixed assets.

Letter b
Example:
PT ABC Tbk delisted from the Stock Exchange of Country A on April 30, 2024. PT ABC Tbk uses regulations in the capital market sector concerning the presentation and disclosure of financial reports of Issuers or public companies as a reference for preparing financial reports starting January 1, 2025. PT ABC Tbk discloses a statement that PT ABC no longer applies International SAK as a reference for preparing its financial reports in the 2025 annual report.

Article 9
Sufficiently clear.

Article 10
Specific actions include, among others, orders to reissue financial reports that do not comply with the Accounting Provisions.

Article 11
Sufficiently clear.

Article 12
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 66/OJK