FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 27 /POJK.04/2017

REGARDING

GUIDELINES FOR CUSTODY CONTRACTS FOR CORPORATE-STRUCTURED MUTUAL FUNDS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, since December 31, 2012, the functions, duties, and authorities for the regulation and supervision of financial services activities in the capital market sector, including regulations regarding guidelines for custody contracts for corporate-structured mutual funds, have shifted from the Capital Market and Financial Institution Supervisory Board to the Financial Services Authority;

b. that to provide clarity and certainty regarding regulations on guidelines for custody contracts for corporate-structured mutual funds, existing legislation in the capital market sector regarding such guidelines issued prior to the establishment of the Financial Services Authority needs to be converted into a Financial Services Authority Regulation;

c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation regarding Guidelines for Custody Contracts for Corporate-Structured Mutual Funds;

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);

DECIDING:

To Establish: A FINANCIAL SERVICES AUTHORITY REGULATION REGARDING GUIDELINES FOR CUSTODY CONTRACTS FOR CORPORATE-STRUCTURED MUTUAL FUNDS.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Corporate-Structured Mutual Fund is an Issuer whose business activity involves raising funds by selling shares, and subsequently, the funds from the sale of such shares are invested in various types of Securities traded in the capital market and money market.

2. Securities are negotiable instruments, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, units of participation in collective investment contracts, futures contracts on Securities, and any derivatives of Securities.

3. Investment Manager is a party whose business activity involves managing a portfolio of Securities for clients or managing a collective investment portfolio for a group of clients, except for insurance companies, pension funds, and banks that conduct their own business activities based on applicable legislation.

4. Custodian Bank is a general bank that has obtained approval from the Financial Services Authority to conduct business activities as a custodian.

CHAPTER II

GUIDELINES FOR CUSTODY CONTRACTS FOR CORPORATE-STRUCTURED MUTUAL FUNDS

Article 2

The custody contract guidelines for Corporate-Structured Mutual Funds with a Custodian Bank must at least contain:

a. the name and address of the Custodian Bank;

b. the procedures for the sale or repurchase (redemption) of shares, for Corporate-Structured Mutual Funds that are open-ended;

c. the separation of Securities accounts in the name of the Corporate-Structured Mutual Fund;

d. the obligation to administer Securities and funds of the Corporate-Structured Mutual Fund, provide safekeeping services for Securities and other assets related to Securities, and other services, including receiving dividends, interest, other rights, and settling Securities transactions;

e. the obligation to prepare and submit reports to the Investment Manager, the Corporate-Structured Mutual Fund, and the Financial Services Authority;

f. allowing auditors to examine the financial reports and operational procedures of the Corporate-Structured Mutual Fund;

g. the obligation to carry out recording, transfer of ownership of Securities, and distribution of rights related to the shares of the Corporate-Structured Mutual Fund;

h. the obligation to provide compensation to the Corporate-Structured Mutual Fund for any losses or errors related to Securities and funds in the Corporate-Structured Mutual Fund's account;

i. costs for the Custodian Bank related to the services provided and costs charged to the Corporate-Structured Mutual Fund;

j. the obligation to insure the assets of the Corporate-Structured Mutual Fund, if the parties deem it necessary;

k. the prohibition on terminating the activities of the Custodian Bank before they are transferred to a replacement Custodian Bank; and

l. the obligation to determine the net asset value of the Corporate-Structured Mutual Fund, if the Custodian Bank is tasked with performing the net asset value calculation.

CHAPTER III

SANCTION PROVISIONS

Article 3

(1) Without prejudice to criminal provisions in the capital market sector, 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, in the form of:
a. written warning; b. fine, namely the obligation to pay a specific 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.

(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 an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a.

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

Article 4

In addition to administrative sanctions as referred to in Article 3 paragraph (1), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 5

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 3 paragraph (1) and specific actions as referred to in Article 4 to the public.

CHAPTER IV

CLOSING PROVISIONS

Article 6

Upon the commencement of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Board Number Kep-21/PM/1996 regarding Guidelines for Custody Contracts for Corporate-Structured Mutual Funds, along with Regulation Number IV.A.5 which is its appendix, is repealed and declared invalid.

Article 7

This Financial Services Authority Regulation shall come into force upon its promulgation.

This copy is in accordance with the original.

Director of Law 1
Legal Department signed
Yuliana

To ensure everyone is aware, 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 June 21, 2017

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD

Promulgated in Jakarta on June 22, 2017

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2017 NUMBER 127

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 27 /POJK.04/2017

REGARDING

GUIDELINES FOR CUSTODY CONTRACTS FOR CORPORATE-STRUCTURED MUTUAL FUNDS

I. GENERAL

Since December 31, 2012, the functions, duties, and authorities for the regulation and supervision of financial services activities in the capital market, insurance, pension funds, financing institutions, and other financial service institutions have shifted from the Minister of Finance and the Capital Market and Financial Institution Supervisory Board to the Financial Services Authority.

In light of the above, it is necessary to reorganize the existing regulatory structure, particularly those related to the capital market sector, by converting Capital Market and Financial Institution Supervisory Board Regulations related to the capital market sector into Financial Services Authority Regulations. This reorganization is conducted to ensure that there are Financial Services Authority Regulations related to the capital market sector that are consistent with Financial Services Authority Regulations in other sectors.

Based on the background and aspects mentioned, it is necessary to replace the existing legislation in the capital market sector regulating guidelines for custody contracts for Corporate-Structured Mutual Funds, namely the Decision of the Chairman of the Capital Market Supervisory Board Number Kep-21/PM/1996 regarding Guidelines for Custody Contracts for Corporate-Structured Mutual Funds, along with Regulation Number IV.A.5 which is its appendix, into a Financial Services Authority Regulation regarding Guidelines for Custody Contracts for Corporate-Structured Mutual Funds.

II. ARTICLE BY ARTICLE

Article 1

Sufficiently clear.

Article 2

Sufficiently clear.

Article 3

Sufficiently clear.

Article 4

Sufficiently clear.

Article 5

Sufficiently clear.

Article 6

Sufficiently clear.

Article 7

Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6074