Financial Services Authority Regulation Number 30/POJK.05/2014 on Good Corporate Governance for Financing Companies

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 30/POJK.05/2014
CONCERNING
GOOD CORPORATE GOVERNANCE FOR FINANCING COMPANIES BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering: a. that one of the efforts to strengthen the Financing Company industry is by improving the quality of the implementation of good corporate governance for Financing Companies; b. that based on the considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Good Corporate Governance for Financing Companies; Recalling: 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:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING GOOD CORPORATE GOVERNANCE FOR FINANCING COMPANIES.

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

1. Company means a financing company and a Sharia financing company.
2. Financing Company means a business entity that conducts financing activities for the procurement of goods and/or services.
3. Sharia Financing Company means a Financing Company whose entire business activities conduct Sharia financing.
4. Sharia Financing means the disbursement of financing conducted based on Sharia principles.
5. Sharia Principles are Islamic legal provisions based on fatwas and/or Sharia conformity statements from the National Sharia Council of the Indonesian Ulema Council.
6. Sharia Business Unit, hereinafter abbreviated as UUS, is a working unit of the head office of a Financing Company that functions as the parent office of offices conducting Sharia Financing.
7. Good Corporate Governance for Companies, hereinafter referred to as Good Corporate Governance, is the structure and process used and applied by the Company's organs to improve the achievement of business results objectives and optimize company value for all stakeholders in an accountable manner and based on legislation and ethical values.
8. Company Organ means the General Meeting of Shareholders, Board of Directors, and Board of Commissioners for Companies in the form of a limited liability company, or the General Assembly, Management, and Supervisory Board for Companies in the form of a cooperative legal entity.
9. Stakeholder means a party that has an interest in the Company, directly or indirectly, including but not limited to debtors, members/shareholders, employees, creditors, suppliers of goods and services, and/or the government.
10. Debtor:
    a. for a Financing Company means a debtor, whether a business entity or an individual, who receives financing for the procurement of goods and/or services from the Financing Company; or b. for a Sharia Financing Company or a Financing Company that has a UUS means a consumer, whether a business entity or an individual, who receives financing from the Sharia Financing Company or the Financing Company that has a UUS.
11. General Meeting of Shareholders, hereinafter abbreviated as GMS, means the general meeting of shareholders as referred to in the law concerning limited liability companies for Companies in the form of a limited liability company legal entity, or the equivalent for Companies in the form of a cooperative legal entity.
12. Board of Directors:
    a. for a Company in the form of a limited liability company legal entity means the Board of Directors as referred to in the law concerning limited liability companies; or b. for a Company in the form of a cooperative legal entity means the Management as referred to in the law concerning cooperatives.
13. Board of Commissioners:
    a. for a Company in the form of a limited liability company legal entity means the Board of Commissioners as referred to in the law concerning limited liability companies; or b. for a Company in the form of a cooperative legal entity means the Supervisory Board as referred to in the law concerning cooperatives.
14. Sharia Supervisory Board, hereinafter abbreviated as SSBoard, is a part of the Company's organ that has the task and function of supervision over the implementation of the Company's activities to ensure compliance with Sharia Principles.
15. Independent Commissioner is a member of the Board of Commissioners who is not affiliated with shareholders, members of the Board of Directors, other members of the Board of Commissioners and/or members of the SSBoard, meaning they do not have financial, managerial, shareholding, and/or family relationships with shareholders, members of the Board of Directors, other members of the Board of Commissioners and/or members of the SSBoard, or other relationships that could influence their ability to act independently.
16. Affiliation is a relationship between a person or legal entity with one or more persons or other legal entities, such that one of them can influence the management or policy of the other person or legal entity, or vice versa, by exploiting shared share ownership or shared company management.
17. Conflict of Interest is a state where there is a conflict between the economic interests of the Company and the personal economic interests of shareholders, members of the Board of Directors, members of the Board of Commissioners and/or SSBoard, and Company employees.
18. Financial Services Authority, hereinafter abbreviated as OJK, is an independent agency as referred to in the law concerning the Financial Services Authority.

CHAPTER II
IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE
Article 2
(1) In carrying out its activities, the Company is required to implement the principles of Good Corporate Governance in all its business activities at all levels or tiers of the organization. (2) The principles of Good Corporate Governance as referred to in paragraph (1) include:
a. transparency, namely openness in the decision-making process and openness in disclosure and provision of relevant information regarding the Company, which is easily accessible by Stakeholders in accordance with financing legislation and standards, principles, and practices of healthy financing business operations; b. accountability, namely clarity of function and implementation of responsibility of the Company Organ so that the Company's performance can run transparently, fairly, effectively, and efficiently;
c. responsibility, namely the conformity of Company management with financing legislation and ethical values as well as standards, principles, and practices of healthy financing business operations;
d. independence, namely the state of the Company being managed independently and professionally and free from Conflicts of Interest and influence or pressure from any party that is not in accordance with financing legislation and ethical values as well as standards, principles, and practices of healthy financing business operations; and e. fairness, namely equality, balance, and justice in fulfilling the rights of Stakeholders arising from agreements, legislation, and ethical values as well as standards, principles, and practices of healthy financing business operations. (3) The implementation of Good Corporate Governance aims to:
a. optimize Company value for Stakeholders, particularly Debtors, creditors, and/or other Stakeholders; b. improve Company management professionally, effectively, and efficiently;
c. improve compliance of the Company Organ and SSBoard and the ranks below them so that in making decisions and carrying out actions they are grounded in high ethics, compliance with legislation, and awareness of the Company's social responsibility towards Stakeholders and environmental sustainability;
d. realize a healthier, reliable, trustworthy, and competitive Company; and e. increase the Company's contribution to the national economy.
(4) The implementation of the principles of Good Corporate Governance as referred to in paragraph (2) must be formulated in a guideline that at least describes the following:
a. procedures for carrying out the duties and responsibilities of the Board of Commissioners and Board of Directors; b. completeness and procedures for carrying out the duties of committees and work units that perform internal control functions;
c. policies and procedures for the implementation of compliance, internal audit, and external audit functions;
d. policies and procedures for risk management implementation, including the internal control system; e. remuneration policies; f. policies on transparency of financial and non-financial conditions; and g. procedures for preparing long-term plans as well as annual work and budget plans. (5) In conducting business activities, the Company is required to conduct its business activities in a healthy manner and comply with all financial services industry regulations under the supervision of the OJK. (6) The Company is required to have adequate standard operating procedures for all Company business activities established by the Board of Directors.

CHAPTER III
GENERAL MEETING OF SHAREHOLDERS
Article 3
(1) The Company's GMS must be held in accordance with legislation and the Company's Articles of Association that are transparent and accountable.
(2) In making decisions, the GMS must safeguard the interests of all parties, particularly the interests of Debtors, creditors, and minority shareholders.

CHAPTER IV
SHAREHOLDERS
Article 4
(1) Each party that is a controlling shareholder of the Company is required to meet the fit and proper test requirements.
(2) The provisions regarding the fit and proper test as referred to in paragraph (1) are regulated by an OJK Regulation concerning the fit and proper test.
Article 5
Shareholders of the Company through the GMS must ensure that the Company is run based on healthy financing business practices.
Article 6
Shareholders must have a commitment to the operational development of the Company.
Article 7
(1) Shareholders of the Company are prohibited from interfering in the operational activities of the Company that are the responsibility of the Board of Directors in accordance with the provisions of the Company's Articles of Association and legislation, except in the context of exercising rights and obligations as the GMS. (2) Shareholders of the Company who serve as members of the Board of Directors, members of the Board of Commissioners, or members of the SSBoard in the same Company must prioritize the interests of the Company.

CHAPTER V
BOARD OF DIRECTORS
Article 8
(1) A Company with assets exceeding IDR 200,000,000,000.00 (two hundred billion rupiah) is required to have at least 3 (three) members of the Board of Directors.
(2) A Company with assets up to IDR 200,000,000,000.00 (two hundred billion rupiah) is required to have at least 2 (two) members of the Board of Directors.
(3) All members of the Board of Directors of a Company whose shareholders are:
a. Indonesian citizens; and/or b. Indonesian legal entities, owned directly or indirectly by Indonesian citizens, must be Indonesian citizens.
(4) A Company that has foreign ownership, whether direct or indirect, is required to have at least 50% (fifty percent) of Board of Directors members who are Indonesian citizens. (5) Members of the Board of Directors of the Company as referred to in paragraph (1) and paragraph (2) must reside within the territory of the Republic of Indonesia. (6) For Board of Directors members who are foreign citizens, they are required to possess:
a. a residence permit; and b. a work permit from the competent authority.
(7) All members of the Board of Directors of the Company must possess knowledge relevant to their position.
Article 9
(1) Members of the Board of Directors of the Company are prohibited from holding concurrent positions as Directors in other companies, except as members of the Board of Commissioners in at most 3 (three) other companies. (2) Concurrent positions as referred to in paragraph (1) do not include cases where the Board of Directors member responsible for supervision over investments in subsidiaries that have businesses in the financing field, performs functional tasks as a member of the Board of Commissioners in a subsidiary controlled by the Company, provided that such concurrent position does not cause the individual to neglect the execution of duties and authorities as a member of the Board of Directors of the Company.
Article 10
(1) Each member of the Board of Directors of the Company is required to pass the fit and proper test.
(2) The provisions regarding the fit and proper test as referred to in paragraph (1) are regulated by an OJK Regulation concerning the fit and proper test.
Article 11
Members of the Board of Directors of the Company are required to meet the following criteria:
a. be able to act with good faith, honesty, and professionalism; b. be able to act in the interest of the Company and/or other Stakeholders;
c. prioritize the interests of the Company and/or other Stakeholders over personal interests;
d. be able to make decisions based on independent and objective assessments for the interest of the Company and Debtors, creditors, and/or other Stakeholders; and e. be able to avoid abuse of authority to obtain undue personal gains or cause losses to the Company.
Article 12
The Board of Directors of the Company is required to:
a. comply with legislation, the Articles of Association, and other internal regulations of the Company in carrying out their duties; b. manage the Company in accordance with their authority and responsibility;
c. be accountable for the execution of their duties to the GMS;
d. ensure that the Company considers the interests of all parties, particularly the interests of Debtors, creditors, and/or other Stakeholders; e. ensure that information regarding the Company is provided to the Board of Commissioners and SSBoard accurately and completely in a timely manner; and f. assist and provide facilities and/or resources for the smooth execution of duties and authorities of the Company Organ and SSBoard.
Article 13
(1) The Company is required to have a Board of Directors member who oversees the compliance function.
(2) The compliance function as referred to in paragraph (1) is a series of actions or steps to ensure that policies, regulations, systems, and procedures, as well as business activities conducted by the Company, are in accordance with legislation and to ensure the Company's compliance with commitments made by the Company to the OJK and/or other competent supervisory authorities. (3) The Board of Directors member who oversees the compliance function as referred to in paragraph (1) cannot be held concurrently by a Board of Directors member who oversees the financing function, marketing function, and financial function, except for the Chief Executive Director.
Article 14
(1) The Company is required to have a work unit or employee that performs the compliance function.
(2) The work unit or employee as referred to in paragraph (1) is tasked with assisting the Board of Directors in ensuring compliance with legislation in the financing business field and other legislation. (3) The work unit or employee as referred to in paragraph (1) is responsible to the Board of Directors member who oversees the compliance function.
Article 15
Members of the Board of Directors of the Company are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Company where the respective Board of Directors member serves; b. utilizing their position at the Company where they serve for personal, family, and/or third-party interests that can harm or reduce the profits of the Company where they serve;
c. taking and/or receiving personal gains from the Company where they serve, other than remuneration and facilities established based on GMS decisions; and
d. fulfilling requests from related shareholders regarding the operational activities of the Company where they serve, other than those established in the GMS.
Article 16
(1) The Board of Directors of the Company is required to hold Board of Directors meetings regularly at least 1 (one) time in 1 (one) month.
(2) The Board of Directors of the Company is required to attend Board of Directors meetings for at least 50% (fifty percent) of the total Board of Directors meetings in a 1 (one) year period. (3) The results of the Board of Directors meetings as referred to in paragraph (1) must be recorded in the Board of Directors meeting minutes and documented properly. (4) Differences of opinion (dissenting opinions) occurring in Board of Directors meeting decisions must be clearly stated in the Board of Directors meeting minutes, accompanied by the reasons for such dissenting opinions. (5) Board of Directors members of the Company, whether present or absent from the Board of Directors meeting, have the right to receive a copy of the Board of Directors meeting minutes. (6) The number of Board of Directors meetings held and the attendance of each Board of Directors member of the Company must be included in the Good Corporate Governance implementation report.
Article 17
The Board of Directors of the Company must guarantee effective, precise, and rapid decision-making and be able to act independently, having no interests that can interfere with their ability to carry out duties independently and objectively.

CHAPTER VI
BOARD OF COMMISSIONERS
Article 18
(1) A Company with assets exceeding IDR 200,000,000,000.00 (two hundred billion rupiah) is required to have at least 2 (two) members of the Board of Commissioners.
(2) The Company is required to have at least 1 (one) member of the Board of Commissioners who resides within the territory of the Republic of Indonesia.
(3) For Board of Commissioners members who are foreign citizens residing within the territory of the Republic of Indonesia, they are required to possess:
a. a residence permit; and b. a work permit, from the competent authority.
(4) Members of the Board of Commissioners of the Company are prohibited from holding concurrent positions as members of the Board of Commissioners in more than 3 (three) other companies. (5) Concurrent positions as referred to in paragraph (4) do not include cases where:
a. a non-independent member of the Board of Commissioners performs functional tasks from the shareholder of the Company in the form of a legal entity within its business group; and/or b. a member of the Board of Commissioners holds a position in a non-profit organization or institution, provided that the individual does not neglect the execution of duties and responsibilities as a member of the Board of Commissioners of the Company.
Article 19
(1) Each member of the Board of Commissioners of the Company is required to pass the fit and proper test.
(2) The provisions regarding the fit and proper test as referred to in paragraph (1) are regulated by an OJK Regulation concerning the fit and proper test.
Article 20
The Board of Commissioners of the Company is required to:
a. carry out supervisory tasks and provide advice to the Board of Directors; b. supervise the Board of Directors in maintaining the balance of interests of all parties;
c. prepare a Board of Commissioners activity report which is part of the Good Corporate Governance implementation report;
d. monitor the effectiveness of the implementation of Good Corporate Governance; e. provide approval in cases where the SSBoard requires assistance from committee members whose organizational structure is below the Board of Commissioners; and f. ensure that the Board of Directors has followed up on audit findings and recommendations from the Company's internal audit work unit, external auditors, OJK supervision results, and/or other authorities' supervision results.
Article 21
Members of the Board of Commissioners of the Company are prohibited from:
a. conducting transactions that have a Conflict of Interest with the activities of the Company where the respective Board of Commissioners member serves; b. utilizing their position at the Company where they serve for personal, family, and/or third-party interests that can harm or reduce the profits of the Company where they serve;
c. taking and/or receiving personal gains from the Company where they serve, other than remuneration and facilities established based on GMS decisions; and
d. interfering in the operational activities of the Company that are the responsibility of the Board of Directors.
Article 22
Members of the Board of Commissioners of the Company have the right to obtain complete and timely information from the Board of Directors regarding the Company.
Article 23
A Company with assets exceeding IDR 200,000,000,000.00 (two hundred billion rupiah) is required to have at least 1 (one) Independent Commissioner.
Article 24
The Independent Commissioner of the Company as referred to in Article 23 must meet the following requirements:
a. have no Affiliation relationship with members of the Board of Directors, members of the Board of Commissioners, members of the SSBoard, or shareholders of the Company, in the same Company; b. have never been a member of the Board of Directors, member of the Board of Commissioners, member of the SSBoard, or held a position one (one) level below the Board of Directors in the same Company or another company that has an affiliation relationship with the Company within the last 2 (two) years;
c. understand legislation in the financing field and other relevant legislation;
d. have good knowledge regarding the financial conditions of the Company where the Independent Commissioner serves; e. be an Indonesian citizen; and f. reside in Indonesia.
Article 25
The Independent Commissioner has the main task of performing a supervisory function to voice the interests of Debtors, creditors, and other Stakeholders.
Article 26
(1) The Independent Commissioner is required to report to the OJK no later than 10 (ten) calendar days since the discovery of:
a. violations of legislation in the financing field; and/or b. conditions or estimated conditions that can endanger the continuity of the Company's business.
(2) In the event that the deadline for submitting the report as referred to in paragraph (1) falls on a holiday, the deadline for submitting the report is the next working day.
Article 27
The Company is prohibited from dismissing the Independent Commissioner due to actions taken by the Independent Commissioner in carrying out their duties as referred to in Article 25 and Article 26 paragraph (1).
Article 28
(1) A Company with total assets exceeding IDR 200,000,000,000.00 (two hundred billion rupiah) is required to form an audit committee.
(2) One of the members of the audit committee as referred to in paragraph (1) is an Independent Commissioner who also serves as the chairman of the committee.
(3) The committee...

(3) The Audit Committee as referred to in paragraph (1) is tasked with assisting the Board of Commissioners in monitoring and ensuring the effectiveness of the internal control system and the execution of duties by internal and external auditors by monitoring and evaluating the planning and execution of audits to assess the adequacy of internal controls, including the financial reporting process.

(4) In addition to the Audit Committee as referred to in paragraph (1), the Company's Board of Commissioners may form other committees to support the execution of the Board of Commissioners' duties.

Article 29
Companies with total assets up to IDR 200,000,000,000.00 (two hundred billion rupiah) are required to have a function that assists the Board of Commissioners in monitoring and ensuring the effectiveness of the internal control system and the execution of duties by internal and external auditors by monitoring and evaluating the planning and execution of audits to assess the adequacy of internal controls, including the financial reporting process.

Article 30
(1) The Company's Board of Commissioners is required to hold Board of Commissioners meetings at least 1 (one) time every 3 (three) months.

(2) Members of the Company's Board of Commissioners are required to attend Board of Commissioners meetings at least 75% (seventy-five percent) of the total number of Board of Commissioners meetings within a 1 (one) year period.

(3) The results of the Board of Commissioners meetings as referred to in paragraph (1) must be recorded in the Board of Commissioners meeting minutes and documented properly.

(4) Dissenting opinions that occur in the decisions of the Board of Commissioners meetings must be clearly stated in the Board of Commissioners meeting minutes, accompanied by the reasons for the dissenting opinions.

(5) Members of the Company's Board of Commissioners, whether present or absent from the Board of Commissioners meetings, are entitled to receive copies of the Board of Commissioners meeting minutes.

(6) The number of Board of Commissioners meetings held and the attendance of each Board of Commissioners member must be included in the report on the implementation of Good Corporate Governance.

Article 31
The Company's Board of Commissioners is required to ensure effective, precise, and rapid decision-making and the ability to act independently in executing duties.

CHAPTER VII
SHARIA SUPERVISORY BOARD

Article 32
(1) Sharia Financing Companies and UUS (Unit Usaha Syariah) are required to have a Sharia Supervisory Board (DPS).

(2) The Sharia Supervisory Board as referred to in paragraph (1) consists of 1 (one) Sharia expert or more, appointed by the General Meeting of Shareholders (GMS) based on the recommendation of the National Sharia Board of the Indonesian Ulema Council.

(3) The Sharia Supervisory Board as referred to in paragraph (1) is appointed in the GMS and recorded in a notarial deed.

Article 33
(1) The Sharia Supervisory Board has at least the duties and authority to provide advice and suggestions to the Board of Directors, supervise Sharia aspects of the operational activities of Sharia Financing Companies or UUS, and act as the representative of Sharia Financing Companies or UUS at the National Sharia Board of the Indonesian Ulema Council.

(2) The duties and authority as referred to in paragraph (1) must be included in the Company's Articles of Association.

Article 34
(1) Each member of the Sharia Supervisory Board of Sharia Financing Companies and UUS must pass competency and propriety assessments.

(2) Regulations regarding competency and propriety assessments as referred to in paragraph (1) are governed by an OJK Regulation regarding competency and propriety assessments.

Article 35
(1) The Sharia Supervisory Board is prohibited from holding concurrent positions as members of the Board of Directors or Board of Commissioners in the same Financing Company.

(2) The Sharia Supervisory Board is prohibited from holding concurrent positions as members of the Board of Directors, Board of Commissioners, or Sharia Supervisory Board in more than 4 (four) other Sharia financial institutions.

Article 36
The Sharia Supervisory Board as referred to in Article 32 paragraph (1) must meet the following criteria:
a. able to act with good faith, honesty, and professionalism; b. able to act in the interests of Sharia Financing Companies, UUS, and/or other Stakeholders;
c. prioritizing the interests of Sharia Financing Companies, UUS, and/or other Stakeholders over personal interests;
d. able to make decisions based on independent and objective assessments for the interests of Sharia Financing Companies, UUS, and/or other Stakeholders; and e. able to avoid abusing authority to obtain improper personal gains or cause losses to Sharia Financing Companies and UUS.

Article 37
The Sharia Supervisory Board, Sharia Financing Companies, and UUS are required to ensure effective, precise, and rapid decision-making and the ability to act independently, without interests that could interfere with their ability to execute duties independently and objectively.

Article 38
(1) The Sharia Supervisory Board is required to execute supervision duties and provide advice and suggestions to the Board of Directors so that the activities of Sharia Financing Companies or UUS are in accordance with Sharia Principles.

(2) The execution of supervision duties and the provision of advice and suggestions by the Sharia Supervisory Board as referred to in paragraph (1) is conducted regarding:
a. Sharia Financing activities; b. Sharia Financing contracts marketed by Sharia Financing Companies and UUS; and
c. Sharia Financing marketing practices conducted by Sharia Financing Companies and UUS.

(3) In executing supervision duties and providing advice and suggestions as referred to in paragraph (2), the Sharia Supervisory Board may be assisted by committee members and/or employees whose organizational structure is under the Board of Commissioners and/or Board of Directors.

Article 39
Members of the Sharia Supervisory Board are entitled to receive complete and timely information from the Board of Directors regarding Sharia Financing Companies and UUS.

Article 40
(1) The Sharia Supervisory Board is required to hold Sharia Supervisory Board meetings regularly at least 6 (six) times in 1 (one) year.

(2) The results of the Sharia Supervisory Board meetings as referred to in paragraph (1) must be recorded in the Sharia Supervisory Board meeting minutes and documented properly.

(3) Dissenting opinions that occur in the decisions of the Sharia Supervisory Board meetings must be clearly stated in the Sharia Supervisory Board meeting minutes, accompanied by the reasons for the dissenting opinions.

(4) Members of the Sharia Supervisory Board, whether present or absent from the Sharia Supervisory Board meetings, are entitled to receive copies of the Sharia Supervisory Board meeting minutes.

(5) The number of Sharia Supervisory Board meetings held and the attendance of each Sharia Supervisory Board member must be included in the report on the implementation of Good Corporate Governance.

Article 41
Members of the Sharia Supervisory Board are prohibited from:
a. conducting transactions with Conflicts of Interest regarding the activities of the Sharia Financing Companies and UUS where the Sharia Supervisory Board member serves; b. utilizing their position in the Sharia Supervisory Board and UUS where they serve for personal, family, and/or other interests that can harm or reduce the profits of the Sharia Financing Companies and UUS where they serve; and
c. taking and/or receiving personal gains from the Sharia Financing Companies and UUS where they serve, other than remuneration and other facilities determined based on GMS decisions.

Article 42
(1) In the event that the Sharia Supervisory Board assesses that there are policies or actions by Board of Directors members related to matters as referred to in Article 38 paragraph (2) that are not in accordance with Sharia Principles, the Sharia Supervisory Board is required to request explanations from Board of Directors members regarding policies or actions not in accordance with Sharia Principles.

(2) In the event that the Board of Directors rejects the Sharia Supervisory Board's assessment as referred to in paragraph (1), the Sharia Supervisory Board is required to report fully and comprehensively to OJK and copy the Board of Directors at the latest 7 (seven) working days since the explanation from Board of Directors members was received by the Sharia Supervisory Board.

(3) In the event that the Board of Directors accepts the Sharia Supervisory Board's assessment as referred to in paragraph (1), the Sharia Supervisory Board requests the Board of Directors to improve the policies or actions of Board of Directors members to be in accordance with Sharia Principles.

(4) In the event that Board of Directors members do not improve policies or actions as referred to in paragraph (3), the Sharia Supervisory Board is required to immediately report fully and comprehensively to OJK and copy the Board of Directors at the latest 7 (seven) working days since it was known that Board of Directors members did not undertake the said improvement efforts.

CHAPTER VIII
TRANSPARENCY OF SHARE OWNERSHIP

Article 43
Members of the Board of Directors and Board of Commissioners of the Company are required to disclose regarding:
a. their share ownership reaching 50% (fifty percent) or more in the Company where the Board of Directors member serves and/or in other companies located domestically and abroad; and b. financial and family relationships with other Board of Directors members, Board of Commissioners members, Sharia Supervisory Board members, and/or shareholders of the Company where the Board of Directors member serves, to the Company where the Board of Directors member serves and included in the report on the implementation of Good Corporate Governance.

CHAPTER IX
EXTERNAL AUDITORS

Article 44
(1) External auditors of the Company must be appointed by the GMS from candidates for external auditors proposed by the Board of Commissioners based on proposals from the audit committee (if any).

(2) The nomination of external auditors as referred to in paragraph (1) must be accompanied by:
a. reasons for nomination and the amount of remuneration or service fees proposed for the external auditors; and b. a statement of willingness signed by the external auditors, to be free from the influence of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and interested parties in the Company, and willingness to provide information regarding audit results to OJK.

(3) The Company is required to provide all accounting records and supporting data necessary for external auditors so that external auditors can provide opinions on the fairness and compliance of the Company's financial reports with applicable audit standards.

CHAPTER X
REMUNERATION PRACTICES AND POLICIES

Article 45
(1) The Company is required to apply remuneration policies for members of the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and employees that encourage prudent behavior aligned with the Company's long-term interests and fair treatment of Debtors, creditors, and/or other Stakeholders.

(2) Remuneration policies as referred to in paragraph (1) must consider at least:
a. financial performance and fulfillment of Company obligations as regulated by applicable laws and regulations; b. individual performance;
c. fairness with the Company and/or peer group at equivalent job levels; and
d. considerations of the Company's long-term goals and strategies.

CHAPTER XI
FINANCING GOVERNANCE

Article 46
(1) The Company is required to formulate financing policies and plans, which are included in the Company's annual business plan.

(2) Financing policies and plans as referred to in paragraph (1) must:
a. be determined by the Board of Directors; and b. be socialized to management and employees in relevant work units.

Article 47
The Board of Directors is required to make financing decisions professionally and optimize the Company's wealth value while still considering protection for Debtors and interests for other Stakeholders.

Article 48
(1) The Company is required to have a work unit or employees responsible for:
a. executing marketing functions, applying customer due diligence principles, financing analysis, monitoring financing receivables quality, debt collection, handling Debtor complaints; b. formulating and applying financing operational standards and procedures; and
c. formulating and applying internal control systems and procedures to ensure that the financing process is conducted in accordance with financing policies and strategies, and does not violate applicable laws and regulations.

(2) To perform the functions as referred to in paragraph (1), the Company is required to have employees with knowledge and experience in the financing field.

Article 49
(1) The Company may cooperate with other parties to perform debt collection functions for Debtors.

(2) The Company must document cooperation with other parties as referred to in paragraph (1) in the form of a stamped written agreement.

(3) Cooperation with other parties as referred to in paragraph (1) must meet the following regulations:
a. the other party is a legal entity; b. the other party has a license from the competent authority; and
c. the other party has human resources that have obtained professional certification in the debt collection field from an institution designated by the Indonesian Financing Company Association.

(4) The Company is fully responsible for all impacts arising from cooperation with other parties as referred to in paragraph (1).

(5) The Company is required to conduct regular evaluations of cooperation with other parties as referred to in paragraph (1).

CHAPTER XII
RISK MANAGEMENT AND INTERNAL CONTROL

Article 50
(1) The Company is required to apply risk management by effectively identifying, assessing, and monitoring business risks.

(2) Risk management as referred to in paragraph (1) must be adjusted to the Company's objectives, business policies, size and complexity of business, and capabilities.

Article 51
(1) The Company's Board of Directors is required to establish effective and efficient internal controls to provide reasonable assurance that business activities are conducted in accordance with business goals and strategies, the Articles of Association, other internal regulations, and applicable laws and regulations.

(2) Internal controls as referred to in paragraph (1) must include at least the following:
a. internal control environment within the Company that is disciplined and structured; b. assessment and management of business risks, which is a process to identify, analyze, assess, and manage business risks;
c. control activities, which are actions taken in a control process regarding Company activities at every level and unit in the Company's organizational structure, including regarding authority, authorization, verification, reconciliation, performance assessment, division of tasks, and security of company assets;
d. information and communication systems, which is a process of presenting reports regarding operational, financial, and compliance activities with applicable laws and regulations in the financing business; e. monitoring procedures, which is a process of assessing the quality of the internal control system, including the internal audit function, at every level and unit of the Company's organizational structure, so that it can be executed optimally; and f. reporting mechanisms to the Board of Directors with copies to the audit committee, in the event of deviations in the quality of the internal control system, including the internal audit function, at every level and unit of the Company's organizational structure.

CHAPTER XIII
ANNUAL BUSINESS PLAN

Article 52
(1) The Company is required to formulate an annual business plan.

(2) The annual business plan as referred to in paragraph (1) must include at least:
a. executive summary; b. management policies and strategies;
c. implementation of risk management and compliance;
d. implementation of Good Corporate Governance; e. the Company's financial performance for the previous period; f. projected financial reports along with the assumptions used; g. projected ratios and financial health levels; h. financing development and marketing plans;
i. office network development and/or change plans;
j. capital plans; k. financing plans;
l. organizational and human resource development plans; and
m. other information.

(3) The Company is required to submit the annual business plan as referred to in paragraph (1) to OJK at the latest by January 30 of the following year.

(4) The Company is required to submit the annual business plan as referred to in paragraph (1) for the first time at the latest by January 30, 2016.

CHAPTER XIV
INFORMATION DISCLOSURE

Article 53
(1) The Company's communication policies and strategies must allow necessary information to be provided to OJK completely, timely, and efficiently.

(2) The Company is required to have a financial reporting system relied upon for supervision purposes and other Stakeholders.

Article 54
(1) The Company is required to disclose important matters to OJK, including at least:
a. resignation or dismissal of external auditors; b. material transactions with related parties;
c. Conflicts of Interest that are ongoing and/or may occur; and
d. other material information regarding the Company.

(2) Disclosure of important matters as referred to in paragraph (1) is included in the report on the implementation of Good Corporate Governance.

CHAPTER XV
BUSINESS ETHICS

Article 55
(1) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and Company employees are prohibited from offering or providing anything, directly or indirectly, to other parties, to influence decision-making related to financing transactions, in violation of applicable laws and regulations.

(2) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and Company employees are prohibited from receiving anything for personal interests in violation of applicable laws and regulations, directly or indirectly, from anyone, which can influence decision-making related to financing transactions.

Article 56
The Company is required to create guidelines on ethical behavior, containing business ethics values, as a guide for the Company's Organization and all Company employees.

CHAPTER XVI
REPORTING

Article 57
(1) The Company is required to conduct self-assessments on the implementation of Good Corporate Governance periodically.

(2) Self-assessments on the implementation of Good Corporate Governance as referred to in paragraph (1) are conducted based on the Good Corporate Governance guidelines.

Article 58
(1) The Company is required to formulate reports on the implementation of Good Corporate Governance at the end of each fiscal year.

(2) Reports on the implementation of Good Corporate Governance as referred to in paragraph (1) must include at least:
a. transparency of Good Corporate Governance implementation, including disclosure of all aspects of implementing Good Corporate Governance principles as referred to in Article 2 paragraph (2); b. self-assessments on the implementation of Good Corporate Governance as referred to in Article 57; and
c. action plans, including corrective actions required and completion times, as well as obstacles to completion, if there are still deficiencies in the implementation of Good Corporate Governance.

(3) Further regulations regarding the form and structure of reports on the implementation of Good Corporate Governance are governed by an OJK Circular Letter.

(4) Reports on the implementation of Good Corporate Governance as referred to in paragraph (1) must be submitted at the latest by April 30 of the following year.

(5) In the event that April 30 as referred to in paragraph (5) is a holiday, the submission deadline is the first working day after the said April 30.

(6) The Company is required to submit reports on Good Corporate Governance as referred to in paragraph (1) for the first time in the 2016 period, submitted at the latest by April 30, 2017.

CHAPTER XVII
SANCTIONS

Article 59
(1) Companies that violate regulations as referred to in Article 2 paragraph (1), Article 2 paragraph (4), Article 2 paragraph (5), Article 2 paragraph (6), Article 3 paragraph (1), Article 4 paragraph (1), Article 7 paragraph (1), Article 8 paragraph (1), Article 8 paragraph (2), Article 8 paragraph (3), Article 8 paragraph (4), Article 8 paragraph (5), Article 8 paragraph (6), Article 9 paragraph (1), Article 10 paragraph (1), Article 11, Article 12, Article 13 paragraph (1), Article 14 paragraph (1), Article 15, Article 16 paragraph (1), Article 16 paragraph (2), Article 16 paragraph (3), Article 16 paragraph (4), Article 18 paragraph (1), Article 18 paragraph (2), Article 18 paragraph (3), Article 18 paragraph (4), Article 19 paragraph (1), Article 20, Article 21, Article 23, Article 26 paragraph (1), Article 27, Article 28 paragraph (1), Article 29, Article 30 paragraph (1), Article 30 paragraph (2), Article 30 paragraph (3), Article 30 paragraph (4), Article 31, Article 32 paragraph (1), Article 33 paragraph (2), Article 34 paragraph (1), Article 35, Article 37, Article 38 paragraph (1), Article 40 paragraph (1), Article 40 paragraph (2), Article 40 paragraph (3), Article 41, Article 42 paragraph (1), Article 42 paragraph (2), Article 42 paragraph (4), Article 43, Article 44, Article 45 paragraph (1), Article 46, Article 47, Article 48, Article 49 paragraph (3), Article 49 paragraph (5), Article 50 paragraph (1), Article 51 paragraph (1), Article 52 paragraph (1), Article 52 paragraph (3), Article 52 paragraph (4), Article 53 paragraph (2), Article 54 paragraph (1), Article 55, Article 56, Article 57 paragraph (1), Article 58 paragraph (1), Article 58 paragraph (4), and/or Article 58 paragraph (6) of this OJK Regulation, are subject to administrative sanctions including:
a. warnings; and/or b. implementation of competency and propriety reassessments.

(2) Administrative sanctions in the form of warnings as referred to in paragraph (1) letter a can be given at most 3 (three) consecutive times with a validity period of at most 2 (two) months each, namely:
a. first warning; b. second warning; and
c. third warning.

(3) Companies that violate regulations as referred to in paragraph (1) but have resolved the violation are still subject to the first warning which ends automatically.

(4) In the event that by the end of the third warning period as referred to in paragraph (2), the Company still does not comply with the regulations as referred to in paragraph (1), the Board of Directors, Board of Commissioners, and/or controlling shareholders are subject to competency and propriety reassessments.

Article 60
In the event that the Company receives administrative sanctions in the form of warnings as referred to in Article 59 paragraph (1) letter a cumulatively 5 (five) times or more within a 2 (two) year period, OJK may request the Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or controlling shareholders to undergo competency and propriety reassessments.

CHAPTER XVIII
TRANSITIONAL PROVISIONS

Article 61
For Board of Directors of Companies who have held concurrent positions as directors in other companies before this OJK Regulation was established, the regulations as referred to in Article 9 paragraph (1) are stated to be applicable for 3 (three) years since this OJK Regulation was established.

Article 62
For Companies that have obtained business licenses before this OJK Regulation was established, the regulations of Article 23, Article 28 paragraph (1), and Article 58 paragraph (1) are stated to be applicable for 2 (two) years since this OJK Regulation was established.

Article 63
For Companies that have obtained business licenses before this OJK Regulation was established, the regulations in this Regulation are stated to be applicable for 1 (one) year since this OJK Regulation was established, except for the regulations of Article 9 paragraph (1), Article 23, Article 28 paragraph (1), and Article 58 paragraph (1).

CHAPTER XIX
CLOSING PROVISIONS

Article 64
Upon the commencement of this OJK Regulation, regulations regarding Good Corporate Governance for Companies are subject to this OJK Regulation.

Article 65

Article 65
This Financial Services Authority Regulation shall come into force on the date of its enactment.
To ensure that everyone knows it, it is ordered to enact this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia. Determined in Jakarta on 19 November 2014 CHAIRMAN OF THE COMMISSIONERS BOARD FINANCIAL SERVICES AUTHORITY, Signed, MULIAMAN D. HADAD Enacted in Jakarta on 19 November 2014 MINISTER OF LAW AND HUMAN RIGHTS REPUBLIC OF INDONESIA, Signed, YASONNA H. LAOLY STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2014 NUMBER 365 A copy in accordance with the original Director of Legal Affairs 1 Ministry of Law, Signed, Tini Kustini

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 30/POJK.05/2014
CONCERNING
GOOD CORPORATE GOVERNANCE FOR FINANCING COMPANIES

I. GENERAL
The very rapid and dynamic development of the Financing Company industry is generally accompanied by increasingly complex business activities, resulting in increased risk exposure for Financing Companies. In order to improve the performance of Financing Companies, protect the interests of Stakeholders, and increase compliance with legislation, Financing Companies are required to conduct their business activities based on good corporate governance principles. The implementation of good corporate governance in the Financing Company industry must always be based on five basic principles, which include:
a. transparency, namely openness in the decision-making process and openness in the disclosure and provision of relevant information regarding the company, which is easily accessible by Stakeholders in accordance with legislation in the financing sector as well as standards, principles, and practices of healthy financing business operations; b. accountability, namely the clarity of functions and the implementation of responsibility by the Company's Organ so that the company's performance can run transparently, fairly, effectively, and efficiently;
c. responsibility, namely the alignment of Company management with legislation in the Company sector and ethical values as well as standards, principles, and practices of healthy financing business operations;
d. independence, namely the state of the Company being managed independently and professionally and free from Conflicts of Interest and influence or pressure from any party that is not in accordance with legislation in the financing sector and ethical values as well as standards, principles, and practices of healthy financing business operations; and e. fairness, namely equality, balance, and justice in fulfilling the rights of Stakeholders arising from agreements, legislation, and ethical values as well as standards, principles, and practices of healthy financing business operations. In order to implement the five basic principles mentioned above, Financing Companies are required to refer to various regulations and minimum requirements as well as guidelines related to the implementation of good corporate governance. In efforts to improve and increase the quality of the implementation of good corporate governance, Financing Companies are required to periodically compile reports on their implementation, so that if there are still deficiencies, corrective actions can be taken immediately. In addition, with the implementation of Law Number 21 of 2011 concerning the Financial Services Authority, there are several improvements to regulations that are necessary regarding the implementation of the supervision system by the Financial Services Authority over Financing Companies. In relation to the above matters, it is also necessary to pay attention to legislation that is relevant to these provisions, including legislation applicable regarding limited liability companies, cooperatives, capital markets, and other regulations.

II. ARTICLE BY ARTICLE EXPLANATION
Article 1
It is clear enough.

Article 2
It is clear enough.

Article 3
It is clear enough.

Article 4
Paragraph (1)
It is clear enough.
Paragraph (2)
Provisions regarding controlling shareholders of the Company being required to meet the provisions on competence and propriety assessment are regulated in the Financial Services Authority Regulation concerning Competence and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies.

Article 5
It is clear enough.

Article 6
Examples of commitments include, among others, if specifically needed to maintain the Company's Health Level, shareholders are willing to increase the Company's operational funds, such as adding paid-up capital, subordinated loans, and/or changing the composition/number of shareholders.

Article 7
It is clear enough.

Article 8
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
Based on these provisions, if the number of Board of Directors members is even, then the number of Board of Directors members who are Indonesian citizens must be at least equal to the number of Board of Directors members who are foreign citizens. Whereas if the number of Board of Directors members is odd, then the number of Board of Directors members who are Indonesian citizens must be greater than the number of Board of Directors members who are foreign citizens. As an example, if the number of Board of Directors members is 3 (three), then the number of Board of Directors members with Indonesian nationality must be at least 2 (two). Paragraph (5) It is clear enough. Paragraph (6) It is clear enough. Paragraph (7) It is clear enough.

Article 9
Paragraph (1)
Company Directors cannot hold concurrent positions as Directors in other companies, both in Financing Companies and non-financing companies.
In the event that a person has served as a Director in a Financing Company, they are permitted to hold concurrent positions as a Commissioner in at most 3 (three) Financing Companies, not including concurrent positions as a Commissioner on the Board of Commissioners in non-financing companies. Paragraph (2) It is clear enough.

Article 10
It is clear enough.

Article 11
It is clear enough.

Article 12
It is clear enough.

Article 13
It is clear enough.

Article 14
It is clear enough.

Article 15
It is clear enough.

Article 16
Paragraph (1)
The form of the meeting is adjusted to the Company's needs, for example, by using teleconference technology.
Board of Directors meetings can be counted from joint meetings of the Board of Directors and the Board of Commissioners.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
It is clear enough.
Paragraph (5)
It is clear enough.
Paragraph (6)
It is clear enough.

Article 17
It is clear enough.

Article 18
Paragraph (1)
The number of Board of Commissioners includes Independent Commissioners.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
In the event that a person has served as a member of the Board of Commissioners in 4 (four) Financing Companies, the provisions as regulated in Article 9 paragraph (1) shall apply. Paragraph (5) Included in the definition of performing functional duties is if the function concerned in the Financing Company and/or the group of legal entity holding shareholders of the Company, including the Company's subsidiaries, is to perform its function as a representative of the Company's shareholders, such as members of the Board of Commissioners, or members of the Board of Directors.

Article 19
It is clear enough.

Article 20
It is clear enough.

Article 21
It is clear enough.

Article 22
It is clear enough.

Article 23
It is clear enough.

Article 24
It is clear enough.

Article 25
It is clear enough.

Article 26
It is clear enough.

Article 27
It is clear enough.

Article 28
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
Other committees that can be formed by the Board of Commissioners include:
a. risk monitoring committee; b. remuneration and nomination committee; and
c. corporate governance committee.

Article 29
It is clear enough.

Article 30
Paragraph (1)
The form of the meeting is adjusted to the Company's needs, for example, by using teleconference technology.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
It is clear enough.
Paragraph (5)
It is clear enough.
Paragraph (6)
It is clear enough.

Article 31
It is clear enough.

Article 32
It is clear enough.

Article 33
It is clear enough.

Article 34
It is clear enough.

Article 35
Paragraph (1)
It is clear enough.
Paragraph (2)
As an example, the provisions on concurrent positions of Sharia Supervisory Board (DPS) members as members of the Board of Directors, members of the Board of Commissioners, or members of the DPS in more than 4 (four) other Sharia financial institutions, namely:
A is a member of the DPS of Sharia Financing Company O.
A holds concurrent positions as:

• DPS at Financing Company P;
• DPS at Sharia Insurance Company Q;
• DPS at Sharia Commercial Bank R; and
• member of the Board of Commissioners at the Guarantee Company.

Article 36
It is clear enough.

Article 37
It is clear enough.

Article 38
It is clear enough.

Article 39
It is clear enough.

Article 40
It is clear enough.

Article 41
It is clear enough.

Article 42
It is clear enough.

Article 43
Letter a
It is clear enough.
Letter b
The term family relationship in these provisions refers to husband/wife relationships or family relationships, both vertical and horizontal, including parents-in-law, sons/daughters-in-law, and siblings-in-law.

Article 44
It is clear enough.

Article 45
It is clear enough.

Article 46
It is clear enough.

Article 47
It is clear enough.

Article 48
It is clear enough.

Article 49
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
The term license in these provisions includes, among others, Business Trade License.
Paragraph (4)
It is clear enough.
Paragraph (5)
It is clear enough.

Article 50
It is clear enough.

Article 51
It is clear enough.

Article 52
It is clear enough.

Article 53
It is clear enough.

Article 54
It is clear enough.

Article 55
It is clear enough.

Article 56
It is clear enough.

Article 57
It is clear enough.

Article 58
It is clear enough.

Article 59
It is clear enough.

Article 60
Example of a Company subject to the provisions of this Article:
PT AA Finance received a warning sanction on June 1, 2020. If within a period of 2 (two) years between June 1, 2018 – June 1, 2020, PT AA Finance had received warning sanctions a total of 4 (four) times, then the Board of Directors, Board of Commissioners, Sharia Supervisory Board (DPS), and/or controlling shareholders would not be subject to re-evaluation of competence and propriety. Furthermore, PT AA Finance received another warning sanction on August 1, 2020. If within a period of 2 (two) years between August 1, 2018 – August 1, 2020, PT AA Finance had received warning sanctions 5 (five) times, then the Board of Directors, Board of Commissioners, Sharia Supervisory Board (DPS), and/or controlling shareholders would be subject to re-evaluation of competence and propriety.

Article 61
It is clear enough.

Article 62
It is clear enough.

Article 63
It is clear enough.

Article 64
It is clear enough.

Article 65
It is clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5639