Financial Services Authority Regulation Number 4/POJK.04/2020 Concerning the Conduct of Securities Companies Acting as Underwriters of Securities Issuances

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 4/POJK.04/2020
CONCERNING
THE CONDUCT OF SECURITIES COMPANIES ACTING AS UNDERWRITERS OF SECURITIES ISSUANCES BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the transfer of functions, duties, and authorities for the regulation and supervision of financial services activities in the capital market sector, including the conduct of securities companies acting as underwriters of securities issuances, from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding the conduct of securities companies acting as underwriters of securities issuances, the existing statutory provisions in the capital market sector concerning the conduct of securities companies acting as underwriters of securities issuances, issued prior to the establishment of the Financial Services Authority, need to be amended into a Financial Services Authority Regulation;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Conduct of Securities Companies Acting as Underwriters of Securities Issuances;

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);

DECIDES:

To Establish: A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE CONDUCT OF SECURITIES COMPANIES ACTING AS UNDERWRITERS OF SECURITIES ISSUANCES.

CHAPTER I
GENERAL PROVISIONS

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

1. Securities Company is a party that conducts business activities as an underwriter of securities, securities broker-dealer, and/or investment manager.
2. Underwriter of Securities is a party that enters into a contract with the issuer to conduct a public offering for the benefit of the issuer with or without the obligation to purchase unsold securities.
3. Issuer is a party that conducts a Public Offering.
4. Securities are negotiable instruments, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, Participation Units of Collective Investment Contracts, futures contracts over Securities, and every derivative of Securities.
5. Co-Underwriter of Securities is an individual who acts on behalf of the interests of the Securities Company acting as an Underwriter of Securities.
6. Client is a party that uses the services of the Underwriter of Securities.

Article 2
The relationship between the Securities Company acting as an Underwriter of Securities and its clients must be based on a high level of business integrity.

CHAPTER II
OBLIGATIONS OF SECURITIES COMPANIES ACTING AS UNDERWRITERS OF SECURITIES ISSUANCES

Article 3
Securities Companies acting as Underwriters of Securities are responsible for activities in the public offering in accordance with the schedule set forth in the prospectus, at least including:
a. marketing of Securities; b. allocation of Securities; and
c. refund of payment for orders for Securities that did not receive an allocation.

Article 4
(1) In the event of insufficient purchase demand in a public offering, Securities Companies acting as Underwriters of Securities, selling agents, or affiliated parties are prohibited from selling Securities that have been purchased or will be purchased based on an underwriting contract, except through a Securities Exchange.

(2) The sale of Securities through a Securities Exchange as referred to in paragraph (1) can only be conducted if it has been disclosed in the prospectus that the Securities will be listed on the Securities Exchange.

Article 5
(1) In the event that a public offering has more than one (1) Underwriter of Securities, the Underwriters of Securities may divide tasks among themselves.
(2) The division of tasks as referred to in paragraph (1) does not relieve the Underwriters of Securities from responsibility, either individually or jointly.

Article 6
Securities Companies acting as Underwriters of Securities are responsible for the payment of public offering proceeds to the Issuer in accordance with the underwriting contract.

Article 7
Co-Underwriters of Securities involved in the securities underwriting must create records and documentation of all important matters performed in connection with underwriting activities to demonstrate that the underwriting was carried out in accordance with their professional diligence.

CHAPTER III
ADMINISTRATIVE SANCTIONS

Article 8
(1) Any party that violates the provisions as referred to in Article 2, Article 3, Article 4, Article 5 paragraph (2), Article 6, and Article 7 shall be subject to administrative sanctions.

(2) Sanctions as referred to in paragraph (1) shall also be imposed on parties that cause the occurrence of violations as referred to in paragraph (1).

(3) Sanctions as referred to in paragraph (1) and paragraph (2) shall be imposed by the Financial Services Authority.

(4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fine, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and/or g. cancellation of registration.

(5) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (4) letter a.

(6) Administrative sanctions in the form of a fine as referred to in paragraph (4) letter b may be imposed separately or together with the imposition of sanctions as referred to in paragraph (4) letters c, d, e, f, or g.

(7) The procedure for imposing administrative sanctions as referred to in paragraph (3) shall be carried out in accordance with statutory provisions.

Article 9
In addition to administrative sanctions as referred to in Article 8 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 10
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 8 paragraph (4) and specific actions as referred to in Article 9 to the public.

CHAPTER IV
CLOSING PROVISIONS

Article 11
Upon the commencement of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-30/PM/1996 concerning the Conduct of Securities Companies Acting as Underwriters of Securities Issuances, along with Regulation Number V.F.1 which is its attachment, is revoked and declared invalid.

Article 12
This Financial Services Authority Regulation shall come into force on the date of its enactment.

This copy is in accordance with the original
Deputy Director of Legal Consultation and
Harmonization of Banking Regulations 1
Legal Directorate 1
Legal Department signed
Wiwit Puspasari

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

Established in Jakarta on February 17, 2020
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on February 19, 2020
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2020 NUMBER 48

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 4/POJK.04/2020
CONCERNING
THE CONDUCT OF SECURITIES COMPANIES ACTING AS UNDERWRITERS OF SECURITIES ISSUANCES

I. GENERAL
That 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 transferred from the Minister of Finance and the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority.

In relation to the above, it is necessary to reorganize the existing regulatory structure, particularly those related to the capital market sector, by converting Capital Market Supervisory Agency and Financial Institutions regulations related to the capital market sector into Financial Services Authority Regulations. This reorganization is carried out so 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 thinking and aspects mentioned, it is necessary to replace the statutory provisions in the capital market sector regulating the conduct of Securities Companies Acting as Underwriters of Securities Issuances, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-30/PM/1996 concerning the Conduct of Securities Companies Acting as Underwriters of Securities Issuances, along with Regulation Number V.F.1 which is its attachment,

into a Financial Services Authority Regulation concerning the Conduct of Securities Companies Acting as Underwriters of Securities Issuances.

II. ARTICLE BY ARTICLE

Article 1
Clearly sufficient.

Article 2
What is meant by "high business integrity" is the good faith of the parties to implement their commitments related to the underwriting of Securities.

Article 3
Clearly sufficient.

Article 4
Clearly sufficient.

Article 5
Clearly sufficient.

Article 6
Clearly sufficient.

Article 7
Clearly sufficient.

Article 8
Clearly sufficient.

Article 9
What is meant by "specific actions" includes, among others, the postponement of the granting of license extensions for Co-Underwriters of Securities.

Article 10
Clearly sufficient.

Article 11
Clearly sufficient.

Article 12
Clearly sufficient.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6465