FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

COPY

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 44 /POJK.05/2019

CONCERNING

AMENDMENTS TO FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 41/POJK.05/2015 CONCERNING PROCEDURES FOR APPOINTING STATUTORY ADMINISTRATORS AT FINANCIAL SERVICE INSTITUTIONS

BY THE GRACE OF GOD THE ALMIGHTY

THE COMMISSIONERS BOARD OF THE FINANCIAL SERVICES AUTHORITY,

Considering:

a. that given that statutory administrators have authority and functions as the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of financial service institutions, statutory administrators must meet the criteria and requirements that must be met by the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of financial service institutions;

b. that Financial Services Authority Regulation Number 41/POJK.05/2015 concerning Procedures for Appointing Statutory Administrators at Financial Service Institutions does not yet regulate the appointment and determination of statutory administrators that are appropriate and transparent, so it needs to be amended;

c. that based on considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Amendments to Financial Services Authority Regulation Number 41/POJK.05/2015 concerning Procedures for Appointing Statutory Administrators at Financial Service Institutions;

Recalling:

1. 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);

2. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);

3. Financial Services Authority Regulation Number 41/POJK.05/2015 concerning Procedures for Appointing Statutory Administrators at Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2015 Number 368, Supplement to the State Gazette of the Republic of Indonesia Number 5808);

DECIDES:

To establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENTS TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 41/POJK.05/2015 CONCERNING PROCEDURES FOR APPOINTING STATUTORY ADMINISTRATORS AT FINANCIAL SERVICE INSTITUTIONS.

Article I

Several provisions in Financial Services Authority Regulation Number 41/POJK.05/2015 concerning Procedures for Appointing Statutory Administrators at Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2015 Number 368, Supplement to the State Gazette of the Republic of Indonesia Number 5808) are amended as follows:

1. Provisions in points 5, 6, and 7 of Article 1 are amended so that they read as follows:

Article 1

1. The Financial Services Authority, hereinafter abbreviated as OJK, is the Financial Services Authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

2. Statutory Administrator is an individual or legal entity appointed by OJK to exercise OJK's authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

3. Financial Service Institution is a financial service institution as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

4. Commissioners Board is the commissioners board as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

5. Board of Directors is the board of directors as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Financial Service Institutions in the form of a limited liability company or equivalent to the Board of Directors for Financial Service Institutions in the form of a cooperative legal entity, joint venture, pension fund, state-owned enterprise, regional enterprise, regional state-owned enterprise, or limited partnership enterprise, or branch office/representative office of a bank located outside the country.

6. Board of Commissioners is the board of commissioners as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Financial Service Institutions in the form of a limited liability company or equivalent to the Board of Commissioners for Financial Service Institutions in the form of a cooperative legal entity, joint venture, pension fund, state-owned enterprise, regional enterprise, regional state-owned enterprise, or limited partnership enterprise, or branch office of a bank located outside the country.

7. Sharia Supervisory Board is a supervisor recommended by the National Sharia Board, Indonesian Ulema Council, who is placed in a Financial Service Institution or Sharia unit tasked with supervising business activities to ensure they are in accordance with Sharia principles.

8. Consumer is a consumer as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

2. Provisions in paragraph (2) and paragraph (5) of Article 3 are amended and the explanation of paragraph (5) of Article 3 is amended as contained in the Article-by-Article explanation in this OJK Regulation so that Article 3 reads as follows:

Article 3

(1) At the time of the appointment and determination of the use of the Statutory Administrator by OJK, then:

a. the Statutory Administrator takes over all authority and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution; and

b. the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution are declared inactive.

(2) Since the takeover of authority and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board as referred to in paragraph (1) letter a, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board:

a. are prohibited from exercising authority and functions as Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board; and

b. are required to assist the Statutory Administrator in exercising authority, functions, and duties.

(3) Inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board are prohibited from resigning while their authority and functions are taken over by the Statutory Administrator.

(4) OJK may reactivate part or all of the inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board as referred to in paragraph (1) letter b after the use of the Statutory Administrator ends.

(5) In the event that OJK reactivates part of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board after the use of the Statutory Administrator ends, OJK issues a written order to the Financial Service Institution to hold a general meeting of shareholders to appoint a Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board to replace the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board that were not reactivated by OJK.

(6) In the event that OJK does not reactivate all of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board, OJK issues a written order to the Statutory Administrator to hold a general meeting of shareholders to appoint a new Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board before the use of the Statutory Administrator ends.

3. Provisions in paragraph (2) and paragraph (5) of Article 5 are amended and the explanation of paragraph (2) letter a of Article 5 is deleted as contained in the article-by-article explanation in this OJK Regulation so that Article 5 reads as follows:

Article 5

(1) OJK appoints an individual or legal entity as a Statutory Administrator.

(2) Individuals who can become Statutory Administrators as referred to in paragraph (1) must:

a. meet competency and propriety requirements equivalent to the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution in accordance with the authority and functions taken over, based on OJK's assessment; and

b. not have a conflict of interest with the Financial Service Institution to be managed, shareholders, Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution to be managed.

(3) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or employees of the Financial Service Institution that do not cause the Financial Service Institution to have problems can be appointed as Statutory Administrators.

(4) Legal entities that can become Statutory Administrators as referred to in paragraph (1) are similar Financial Service Institutions and do not have a conflict of interest with shareholders, Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution to be managed.

(5) For Statutory Administrators in the form of a legal entity, members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, and/or employees of the legal entity assigned to exercise the authority, functions, and duties of the Statutory Administrator must meet the requirements as referred to in paragraph (2).

4. Between Article 5 and Article 6, 1 (one) article is inserted, namely Article 5A so that it reads as follows:

Article 5A

(1) Fulfillment of competency and propriety requirements as referred to in Article 5 paragraph (2) letter a is done by fulfilling competency and propriety assessment factors as regulated in legislation concerning competency and propriety assessment for principal parties of financial service institutions.

(2) Fulfillment of competency and propriety requirements for prospective Statutory Administrators who take over all authority and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board at Financial Service Institutions that are not regulated in legislation concerning competency and propriety assessment for principal parties of financial service institutions as referred to in paragraph (1), is done by fulfilling the requirements for the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board applicable at each Financial Service Institution.

5. Provisions in paragraph (1) of Article 14 are amended and the explanation of Article 14 is amended as contained in the Article-by-Article explanation in this OJK Regulation so that Article 14 reads as follows:

Article 14

(1) Without prejudice to criminal provisions as regulated in Article 53 and Article 54 of Law Number 21 of 2011 concerning the Financial Services Authority, OJK has the authority to impose administrative sanctions on parties who violate provisions in Article 3 paragraph (2) and paragraph (3), Article 7 paragraph (2), and Article 13 paragraph (4) of this OJK Regulation in the form of:

a. written reprimands; and/or

b. prohibition from becoming shareholders, controllers, Board of Directors, Board of Commissioners, Sharia Supervisory Board, executive officials, and/or organs of Financial Service Institutions that assist in the implementation of the duties of the Board of Directors and/or Board of Commissioners for a maximum of 5 (five) years in the financial services sector.

(2) In addition to administrative sanctions as referred to in paragraph (1), OJK may impose additional administrative sanctions or specific actions as regulated in legislation in the financial services sector on parties who commit violations as referred to in paragraph (1).

Article II

This Financial Services Authority Regulation comes into force on the date of its enactment.

This copy is in accordance with the original

Legal Director 1

Legal Department

signed

Yuliana

In order for everyone to know it, order the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta

on December 27, 2019

CHAIRMAN OF THE COMMISSIONERS BOARD

FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA,

WIMBOH SANTOSO

Enacted in Jakarta

on December 31, 2019

MINISTER OF LAW AND HUMAN RIGHTS

REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 272

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 44 /POJK.05/2019

CONCERNING

AMENDMENTS TO FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 41/POJK.05/2015 CONCERNING PROCEDURES FOR APPOINTING STATUTORY ADMINISTRATORS AT FINANCIAL SERVICE INSTITUTIONS

I. GENERAL

The Financial Services Authority was established with the aim that all activities within the financial services sector are organized in an orderly, fair, transparent, and accountable manner, able to realize a financial system that grows sustainably and stably, and able to protect the interests of Consumers and the public.

In order to protect the interests of Consumers, OJK can take actions deemed necessary, including appointing and determining the use of Statutory Administrators. The appointment of Statutory Administrators is carried out when the management of a Financial Service Institution is deemed detrimental to the interests of Consumers, so that a manager who can represent the interests of OJK and Consumers is needed.

In principle, Statutory Administrators exercise OJK's authority in the form of efforts to preserve the continuity of the Financial Service Institution's business, takeover of all authority and functions of the Financial Service Institution's management, cancellation or termination of agreements, and transfer of asset or business portfolios from the Financial Service Institution.

In order for the authority to appoint and use Statutory Administrators to be carried out with good governance, Financial Services Authority Regulation Number 41/POJK.05/2015 concerning Procedures for Appointing Statutory Administrators at Financial Service Institutions (POJK Statutory Administrator) was issued on December 21, 2015.

This regulation contains among others the parties who can be appointed as Statutory Administrators, the mechanism for appointing Statutory Administrators, the duties, authority, and rights of Statutory Administrators, as well as the accountability of Statutory Administrators and the termination of the use of Statutory Administrators.

As time goes by, improvements are needed for the POJK Statutory Administrator specifically regarding the mechanism for appointing Statutory Administrators and the fulfillment of competency and propriety requirements for prospective Statutory Administrators. In this regard, it is necessary to issue a POJK amendment to the POJK Statutory Administrator to perfect the provisions in the aforementioned POJK.

II. ARTICLE-BY-ARTICLE EXPLANATION

Article I

Point 1

Article 1

Clear enough.

Point 2

Article 3

Paragraph (1)

Letter a

The takeover of all authority and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution applies from the date the term of office of the Statutory Administrator determined by OJK begins.

Letter b

The term "inactive" refers to the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board still holding office but unable to carry out their duties, functions, and authorities as Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

The declaration of inactivity is established with a decision of the Commissioners Board communicated to the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

Paragraph (2)

Letter a

Clear enough.

Letter b

Assistance that must be provided by inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board to the Statutory Administrator includes:

1. providing all information and explanations regarding the business of the Financial Service Institution; and

2. obtaining documents and explanations from other parties.

Paragraph (3)

Clear enough.

Paragraph (4)

Clear enough.

Paragraph (5)

The term "general meeting of shareholders" refers to the general meeting of shareholders as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Financial Service Institutions in the form of a limited liability company or equivalent to the general meeting of shareholders for Financial Service Institutions in the form of a cooperative legal entity, joint venture, pension fund, state-owned enterprise, regional enterprise, regional state-owned enterprise, or limited partnership enterprise.

Paragraph (6)

Clear enough.

Point 3

Article 5

Paragraph (1)

Clear enough.

Paragraph (2)

Letter a

Clear enough.

Letter b

The term "conflict of interest" refers to the conflict of interest provisions in each respective financial services sector.

Paragraph (3)

Clear enough.

Paragraph (4)

The term "similar Financial Service Institution" refers to a Financial Service Institution that has the same business field. Examples of similar Financial Service Institutions include common commercial banks, common securities companies, common life insurance companies, common financing companies, or common pension funds.

Paragraph (5)

Clear enough.

Point 4

Article 5A

Clear enough.

Point 5

Article 14

Paragraph (1)

Executive officials are officials who are directly responsible to members of the Board of Directors or have significant influence on the policy and/or operations of the Financial Service Institution.

Organs of the Financial Service Institution that assist in the implementation of the duties of the Board of Directors and/or Board of Commissioners are parties that have functions assisting the Board of Directors and/or Board of Commissioners as regulated in the governance provisions of the Financial Service Institution, for example audit committees and work units that oversee compliance functions.

Paragraph (2)

Additional administrative sanctions or specific actions include, among others, re-evaluating the principal parties of the Financial Service Institution.

Article II

Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6451