FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 26 /POJK.04/2016

ON

CAPITAL MARKET INVESTMENT PRODUCTS IN SUPPORT OF

THE LAW ON TAX AMNESTY

BY THE GRACE OF GOD THE ALMIGHTY

THE COMMISSIONER COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:

a. that the Financial Services Authority is part of the system of governance that interacts well with other state and government institutions in achieving the goals and aspirations of Indonesian independence contained in the Constitution of the Unitary State of the Republic of Indonesia;

b. that this form of good interaction is manifested by providing support to state policies embodied in Law Number 11 of 2016 on Tax Amnesty;

c. that the support referred to in letter b is manifested in the form of legislation that can support the implementation of Law Number 11 of 2016 on Tax Amnesty, particularly in the placement of tax amnesty repatriation funds in investment instruments in the Capital Market;

d. that based on the considerations referred to in letters a, b, and c, and in order to encourage capital market industry players to utilize the opportunities of fund flows related to tax amnesty, it is necessary to establish a Financial Services Authority Regulation on Capital Market Investment Products in Support of the Law on Tax Amnesty;

Recalling:

1. Law Number 8 of 1995 on 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 on 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);

DECIDES:

To establish: FINANCIAL SERVICES AUTHORITY REGULATION ON CAPITAL MARKET INVESTMENT PRODUCTS IN SUPPORT OF THE LAW ON TAX AMNESTY.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Investor means a Taxpayer, either an individual or a legal entity, who has obtained a Tax Amnesty Certificate as referred to in the Law on Tax Amnesty.

2. Investment Manager means an Investment Manager as referred to in the Law on the Capital Market.

3. Securities Broker Dealer means a Securities Broker Dealer as referred to in the Law on the Capital Market.

Article 2

Investment Managers managing investments on behalf of Investors must comply with capital market legislation, unless otherwise regulated in this Financial Services Authority Regulation.

Article 3

Issuers issuing Asset-Backed Securities in the form of Participation Certificates to Investors must comply with the Financial Services Authority Regulation on Guidelines for Issuance and Reporting of Asset-Backed Securities in the Form of Participation Certificates for Secondary Housing Financing, unless otherwise regulated in this Financial Services Authority Regulation.

CHAPTER II

OPENING OF SECURITIES ACCOUNTS

Article 4

In opening a Securities Account to invest in:

a. Mutual Funds;

b. Individual Portfolio Management;

c. Asset-Backed Securities in the form of Collective Investment Contracts;

d. Asset-Backed Securities in the form of Participation Certificates;

e. Real Estate Investment Funds in the form of Collective Investment Contracts; and

f. Securities traded on or outside the Stock Exchange,

Investors must submit documents at least consisting of a Tax Amnesty Decision Letter to the Financial Service Provider.

CHAPTER III

MANAGEMENT OF INVESTOR FUNDS BY INVESTMENT MANAGERS

First Section

Limited Participation Mutual Funds in the Form of Collective Investment Contracts

Article 5

(1) At the time of registration, Limited Participation Mutual Funds in the form of Collective Investment Contracts may not yet have a target company.

(2) Limited Participation Mutual Funds in the form of Collective Investment Contracts must invest in a target company no later than 1 (one) year since the Limited Participation Mutual Fund in the form of Collective Investment Contract was registered.

Article 6

Debt securities that are part of the Portfolio of Limited Participation Mutual Funds in the form of Collective Investment Contracts may be supported by tangible collateral in the form of fiduciary guarantees and/or mortgage rights or be rated by a Securities Rating Company that has obtained a business license from the Financial Services Authority.

Article 7

(1) Supporting documents for the registration application of Limited Participation Mutual Funds in the form of Collective Investment Contracts that invest in equity securities consist of:

a. agreements related to the Limited Participation Mutual Fund in the form of Collective Investment Contract;

b. agreements with investment committee members from third parties (if any);

c. agreements with third parties representing the Limited Participation Mutual Fund in the form of Collective Investment Contract as experts and/or members of the board of directors and/or board of commissioners at the target company;

d. legal audit reports and legal opinions prepared by legal consultants registered with the Financial Services Authority regarding the issuance of:

1. equity securities that are the underlying assets of the Limited Participation Mutual Fund in the form of Collective Investment Contract; and

2. the Limited Participation Mutual Fund in the form of Collective Investment Contract;

e. valuation reports prepared by appraisers registered with the Financial Services Authority regarding the real sector activities to be financed or equity securities;

f. due diligence results on the target company and real sector activities signed by the Investment Manager's board of directors;

g. summary financial statements of the target company issuing equity securities for the last 3 (three) years or since its establishment;

h. target company info memo;

i. disclosure documents of the Limited Participation Mutual Fund in the form of Collective Investment Contract;

j. documents related to the issuance of securities;

k. curriculum vitae of Investment Manager employees directly involved in managing the Limited Participation Mutual Fund in the form of Collective Investment Contract, accompanied by:

1. photocopy of Chartered Financial Analyst (CFA) certificate; or

2. photocopy of individual license as Deputy Investment Manager and letter of experience in managing Mutual Fund Equity Portfolios for at least 5 (five) years from the company where they work;

l. statement letter signed by prospective or current Unit Shareholders stating that they understand and comprehend the investment structure of the Limited Participation Mutual Fund in the form of Collective Investment Contract and the risks that may occur; and

m. statement letter signed by the authorized party according to the articles of association stating that the investment in the Limited Participation Mutual Fund in the form of Collective Investment Contract is made by the authorized party on behalf of the corporation, in case the prospective Unit Shareholder of the Limited Participation Mutual Fund in the form of Collective Investment Contract is a corporation.

(2) The obligation to submit documents to the Financial Services Authority as referred to in paragraph (1) letters a, b, c, d item 1, e, f, g, h, j, l, and m may be done no later than 10 (ten) working days after the Limited Participation Mutual Fund in the form of Collective Investment Contract invests in the target company.

Article 8

(1) Supporting documents for the registration application of Limited Participation Mutual Funds in the form of Collective Investment Contracts that invest in debt securities consist of:

a. agreements related to the Limited Participation Mutual Fund in the form of Collective Investment Contract;

b. collateral documents completed with fiduciary guarantee deeds and/or mortgage right deeds in the name of the Limited Participation Mutual Fund in the form of Collective Investment Contract if collateral is required (if using collateral);

c. legal audit reports and legal opinions prepared by legal consultants registered with the Financial Services Authority regarding:

1. the issuance of debt securities that are the underlying assets of the Limited Participation Mutual Fund in the form of Collective Investment Contract; and

2. the Limited Participation Mutual Fund in the form of Collective Investment Contract;

d. due diligence results on the target company and real sector activities signed by the Investment Manager's board of directors;

e. summary financial statements of the target company issuing debt securities for the last 3 (three) years or since its establishment;

f. valuation reports prepared by appraisers registered with the Financial Services Authority regarding the real sector activities to be financed (if any);

g. target company info memo;

h. disclosure documents of the Limited Participation Mutual Fund in the form of Collective Investment Contract;

i. documents related to the issuance of debt securities, including debt security issuance agreements and other related agreements;

j. curriculum vitae of Investment Manager employees directly involved in managing the Limited Participation Mutual Fund in the form of Collective Investment Contract, accompanied by:

1. photocopy of Chartered Financial Analyst (CFA) certificate; or

2. photocopy of individual license as Deputy Investment Manager and letter of experience in managing Mutual Fund Equity Portfolios for at least 5 (five) years from the company where they work;

k. statement letter signed by prospective or current Unit Shareholders stating that they understand and comprehend the investment structure of the Limited Participation Mutual Fund in the form of Collective Investment Contract and the risks that may occur; and

l. statement letter signed by the authorized party according to the articles of association/house rules stating that the investment in the Limited Participation Mutual Fund in the form of Collective Investment Contract is made by the authorized party on behalf of the corporation, in case the prospective Unit Shareholder of the Limited Participation Mutual Fund in the form of Collective Investment Contract is a corporation.

(2) The obligation to submit documents to the Financial Services Authority as referred to in paragraph (1) letters a, b, c item 1, d, e, f, g, i, k, and l may be done no later than 10 (ten) working days after the Limited Participation Mutual Fund in the form of Collective Investment Contract invests in the target company.

Article 9

(1) Investment Managers may add securities to the Portfolio of Limited Participation Mutual Funds in the form of Collective Investment Contracts without first obtaining approval from all Unit Shareholders through a general meeting of Unit Shareholders.

(2) Investment Managers must ensure that information on the addition of securities as referred to in paragraph (1) is communicated to the Unit Shareholders of the Limited Participation Mutual Fund in the form of Collective Investment Contract.

Article 10

In the event that the Portfolio of Limited Participation Mutual Funds consists of more than 1 (one) target company security, such securities may be debt securities and equity securities.

Article 11

(1) The time limit for placing funds in deposits for Limited Participation Mutual Funds in the form of Collective Investment Contracts that have not yet invested in a target company is at most 1 (one) year since the Limited Participation Mutual Fund in the form of Collective Investment Contract was registered.

(2) The placement of funds in deposits as referred to in paragraph (1) may only be done at general banks that are not affiliated with the Investment Manager, except for affiliations arising from government capital participation, with the provisions:

a. placement of funds in deposits at one general bank is at most 10% (ten percent) of the total Net Asset Value of the Limited Participation Mutual Fund in the form of Collective Investment Contract; and/or

b. placement of funds in deposits at one collection bank designated by the Minister of Finance may exceed 10% (ten percent) of the total Net Asset Value of the Limited Participation Mutual Fund in the form of Collective Investment Contract.

Article 12

Limited Participation Mutual Funds in the form of Collective Investment Contracts must be dissolved if they have not invested in target company securities within a period of 1 (one) year since the Limited Participation Mutual Fund in the form of Collective Investment Contract was registered with the Financial Services Authority.

Second Section

Individual Portfolio Management

Article 13

The initial managed fund amount for each Investor in Individual Portfolio Management is at least IDR 5,000,000,000.00 (five billion rupiah).

Article 14

The managed fund amount for each Investor may decrease to less than IDR 5,000,000,000.00 (five billion rupiah) provided that such decrease occurs due to market price movements of the Equity Portfolio.

Article 15

Investments in Individual Portfolio Management in deposit certificates of collection banks designated by the Minister of Finance may exceed 25% (twenty-five percent).

Third Section

Asset-Backed Securities in the Form of Collective Investment Contracts

Article 16

(1) At the time of submitting the Registration Statement for the Public Offering of Asset-Backed Securities in the form of Collective Investment Contracts to the Financial Services Authority, the Investment Manager submits at least the following documents:

a. Asset-Backed Securities Collective Investment Contract made with a notarial deed by a Notary registered with the Financial Services Authority;

b. draft final Prospectus stamped and signed by the Parties; and

c. sample certificate of Asset-Backed Securities Collective Investment Contract.

(2) Investment Managers must possess and administer documents related to the Registration Statement for the Public Offering of Asset-Backed Securities as follows:

a. legal opinions;

b. financial statements of the Asset-Backed Securities Collective Investment Contract audited by an Accountant registered with the Financial Services Authority;

c. documents containing rating results from a Rating Company that has obtained a license from the Financial Services Authority; and

d. other agreements related to the Asset-Backed Securities Collective Investment Contract.

Fourth Section

Real Estate Investment Funds in the Form of Collective Investment Contracts

Article 17

(1) At the time of submitting the Registration Statement for the Public Offering of Real Estate Investment Funds to the Financial Services Authority, the Investment Manager submits at least the following documents:

a. Real Estate Investment Fund Collective Investment Contract in the form of a Collective Investment Contract accompanied by a digital format; and

b. Prospectus stamped and signed by the Parties accompanied by a digital format.

(2) Investment Managers must possess and administer documents related to the Registration Statement for the Public Offering of Real Estate Investment Funds as follows:

a. real estate management agreements;

b. real estate valuation documents;

c. unit sales agent agreements (if any);

d. preliminary agreements between the Investment Manager and the Stock Exchange, if Unit Shares are registered on the Stock Exchange;

e. collective custody agreements for Unit Shares between the Investment Manager and the Custody and Settlement Institution if Unit Shares are registered on the Stock Exchange;

f. legal opinions and legal due diligence reports;

g. copies of lease agreements related to the Real Estate;

h. copies of real estate purchase and sale agreements;

i. photocopies of building use right certificates and land and/or other building ownership certificates; and

j. marketing and operational plans for the Real Estate Investment Fund in the form of Collective Investment Contract.

(3) In the event that the Real Estate Investment Fund in the form of Collective Investment Contract uses a Special Purpose Company, the Investment Manager must possess and administer documents related to the Registration Statement for the Public Offering of Real Estate Investment Funds as follows:

a. deed of establishment and changes to the articles of association of the Special Purpose Company;

b. business licenses from the competent authority; and

c. list of parties affiliated with the Special Purpose Company.

CHAPTER IV

REGISTRATION STATEMENT FOR THE PUBLIC OFFERING OF ASSET-BACKED SECURITIES IN THE FORM OF PARTICIPATION CERTIFICATES

Article 18

(1) At the time of submitting the Registration Statement for the Public Offering of Asset-Backed Securities in the form of Participation Certificates to the Financial Services Authority, the Issuer submits at least the following documents:

a. Asset-Backed Securities in the form of Participation Certificates transaction documents made with a notarial deed by a Notary registered with the Financial Services Authority;

b. draft final prospectus; and

c. sample certificate of Asset-Backed Securities in the form of Participation Certificates.

(2) Issuers of Asset-Backed Securities in the form of Participation Certificates must possess and administer documents related to the Registration Statement for the Public Offering of Asset-Backed Securities in the form of Participation Certificates as follows:

a. audit reports and opinions on legal aspects regarding the issuance of Asset-Backed Securities in the form of Participation Certificates;

b. Accountant opinions regarding accounting aspects of the issuance of Asset-Backed Securities in the form of Participation Certificates;

c. documents containing rating results of Asset-Backed Securities in the form of Participation Certificates from a Securities Rating Company that has obtained a license from the Financial Services Authority;

d. underwriting agreements (if any); and

e. preliminary agreements with 1 (one) or several Stock Exchanges, if Asset-Backed Securities in the form of Participation Certificates will be registered on the Stock Exchange.

CHAPTER V

OTHER PROVISIONS

Article 19

(1) The Financial Services Authority may establish specific criteria for investment products not regulated in this Financial Services Authority Regulation to support the Law on Tax Amnesty.

(2) Specific criteria as referred to in paragraph (1) are regulated in a Financial Services Authority Circular.

Article 20

The provisions as referred to in this Financial Services Authority Regulation also apply to the issuance of investment products using Sharia schemes.

Article 21

After the end of the holding period as regulated in the Law on Tax Amnesty, Investors may still continue their investments in investment products regulated in this Financial Services Authority Regulation.

CHAPTER VI

SANCTION PROVISIONS

Article 22

(1) Without prejudice to criminal provisions in the capital market, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties causing the violation, consisting of:

a. written warnings;

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 licenses;

f. cancellation of approvals; and

g. cancellation of registrations.

(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a.

(3) Administrative sanctions in the form of fines as referred to in paragraph (1) letter b may be imposed separately or together with administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 23

In addition to administrative sanctions as referred to in Article 22 paragraph (1), the Financial Services Authority may take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 24

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 22 paragraph (1) and certain actions as referred to in Article 23 to the public.

CHAPTER VII

CLOSING PROVISIONS

Article 25

This Financial Services Authority Regulation takes effect on the date of its enactment.

In order that everyone may know it, it is ordered to publish this Financial Services Authority Regulation in the State Gazette of the Republic of Indonesia.

Determined in Jakarta

on July 20, 2016

CHAIRMAN OF THE COMMISSIONER COUNCIL

FINANCIAL SERVICES AUTHORITY

signed

MULIAMAN D. HADAD

Published in Jakarta

on July 25, 2016

MINISTER OF LAW AND HUMAN RIGHTS

REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 145

Copy in accordance with the original

Legal Director 1

Ministry of Law

signed

Yuliana

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 26 /POJK.04/2016

ON

CAPITAL MARKET INVESTMENT PRODUCTS IN SUPPORT OF

THE LAW ON TAX AMNESTY

I. GENERAL

That the House of Representatives of the Republic of Indonesia has agreed to ratify the Draft Law on Tax Amnesty to be established as a Law.

That the Law on Tax Amnesty regulates investments from Taxpayer funds transferred into the territory of the Unitary State of the Republic of Indonesia in the form of investments in products or forms of investment that are valid according to legislation, including investments in Capital Market products.

That the Law on Tax Amnesty regulates a limited time frame for the provision of tax amnesty, namely from the date the Law takes effect until March 31, 2017, divided into 3 (three) stages.

That on principle, all investment instruments in the Capital Market sector can serve as investment vehicles for Investors who have obtained a Tax Amnesty Certificate from the Minister of Finance, however, some relaxations are needed regarding regulations in the Capital Market sector, particularly in investments in Limited Participation Mutual Funds and Individual Portfolio Management (KPD), so as to attract Investors' interest in investing in the Capital Market.

That in order to encourage capital market industry players to utilize the opportunities of fund flows related to tax amnesty, and to support the Government's efforts in financing development, particularly through taxation, the Financial Services Authority needs to establish a Financial Services Authority Regulation specifically designed to support the implementation of the Law on Tax Amnesty.

II. ARTICLE BY ARTICLE

Article 1

Clear enough.

Article 2

Clear enough.

Article 3

Clear enough.

Article 4

Based on the provisions of this Article, Investors are not required to submit documents as regulated in Financial Services Authority Regulation Number 22/POJK.04/2014 on Know Your Customer Principles by Financial Service Providers in the Capital Market Sector to Financial Service Providers.

Article 5

Clear enough.

Article 6

Clear enough.

Article 7

Paragraph (1)

Letter a

Clear enough.

Letter b
Clearly stated.
Letter c
Clearly stated.
Letter d
Clearly stated.
Letter e
Clearly stated.
Letter f
The aforementioned due diligence is also commonly referred to as “due diligence”.
Letter g
Clearly stated.
Letter h
Clearly stated.
Letter i
Clearly stated.
Letter j
Documents related to the issuance of the aforementioned Securities include, among others, the issuance agreement for equity-type Securities and other related agreements. Letter k Clearly stated. Letter l Clearly stated. Letter m Clearly stated. Paragraph (2) Clearly stated.
Article 8
Paragraph (1)
Letter a
Clearly stated.
Letter b
Clearly stated.

Letter c
Clearly stated.
Letter d
The aforementioned due diligence is also commonly referred to as “due diligence”.
Letter e
Clearly stated.
Letter f
Clearly stated.
Letter g
Clearly stated.
Letter h
Clearly stated.
Letter i
Clearly stated.
Letter j
Clearly stated.
Letter k
Clearly stated.
Letter l
Clearly stated.
Paragraph (2)
Clearly stated.
Article 9
Paragraph (1)
Clearly stated.
Paragraph (2)
The provision of information regarding the addition of Securities to Unit Holders as referred to in this paragraph may be carried out by the Investment Manager or the Custodian Bank.
Article 10
Clearly stated.
Article 11
Clearly stated.

Article 12
Clearly stated.
Article 13
Clearly stated.
Article 14
Clearly stated.
Article 15
Clearly stated.
Article 16
Paragraph (1)
Clearly stated.
Paragraph (2)
Letter a
The aforementioned legal opinion is also commonly referred to as “legal opinion”.
Letter b
Clearly stated.
Letter c
Clearly stated.
Letter d
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
Clearly stated.
Article 25
Clearly stated.
ADDITION TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5906 ---