Financial Services Authority Regulation Number 55/POJK.03/2016 on the Implementation of Good Corporate Governance for Commercial Banks

FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 55/POJK.03/2016
ON
THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE FOR COMMERCIAL BANKS BY THE GRACE OF THE ALMIGHTY GOD THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that with the increasing complexity of risks faced by banks, there is an increasing need for good governance practices in the banking sector; b. that in order to improve bank performance, protect the interests of stakeholders, and increase compliance with applicable laws and regulations as well as ethical values generally applicable in the banking industry, the implementation of good governance is required;
c. that the improvement of the quality of governance implementation is one of the efforts to strengthen the internal conditions of the national banking sector;
d. that in the implementation of bank governance, there are dynamics that need to be responded to proportionally in order to optimize the application of bank governance; e. that based on the considerations as referred to in letters a through d, it is necessary to establish a Financial Services Authority Regulation on the Implementation of Good Corporate Governance for Commercial Banks; Recalling:

1. Law Number 7 of 1992 on Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 on Banking (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2011 on the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);
   DECIDING:
   Establishing: FINANCIAL SERVICES AUTHORITY REGULATION ON THE IMPLEMENTATION OF GOOD CORPORATE GOVERNANCE FOR COMMERCIAL BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following definitions apply:

1. Bank means a commercial bank as referred to in Law Number 7 of 1992 on Banking as amended by Law Number 10 of 1998 on Banking, including branch offices of banks located abroad, which conduct conventional business activities.
2. Board of Directors:
   a. for Banks in the form of a Limited Liability Company (Perseroan Terbatas), means the Board of Directors as referred to in Law Number 40 of 2007 on Limited Liability Companies; b. for Banks in the form of legal entities:

1. State-Owned Enterprises (Perusahaan Umum Daerah) or Regional State-Owned Enterprises (Perusahaan Perseroan Daerah) means the Board of Directors as referred to in Law Number 23 of 2014 on Regional Government as amended several times, lastly by Law Number 9 of 2015 on Regional Government;
2. Regional Enterprises (Perusahaan Daerah) means the Board of Directors at Banks that have not yet changed their form into State-Owned Enterprises or Regional State-Owned Enterprises as referred to in Law Number 23 of 2014 on Regional Government as amended several times, lastly by Law Number 9 of 2015 on Regional Government;
   c. for Banks in the form of a Cooperative legal entity, means the management as referred to in Law Number 25 of 1992 on Cooperatives;
   d. for Banks with the status of branch offices of banks located abroad means the branch office leader and officials one level below the branch office leader.

3. Board of Commissioners:
   a. for Banks in the form of a Limited Liability Company (Perseroan Terbatas), means the Board of Commissioners as referred to in Law Number 40 of 2007 on Limited Liability Companies; b. for Banks in the form of legal entities:

1. State-Owned Enterprises (Perusahaan Umum Daerah) means the Supervisory Board as referred to in Law Number 23 of 2014 on Regional Government as amended several times, lastly by Law Number 9 of 2015 on Regional Government;
2. Regional State-Owned Enterprises (Perusahaan Perseroan Daerah) means Commissioners as referred to in Law Number 23 of 2014 on Regional Government as amended several times, lastly by Law Number 9 of 2015 on Regional Government;
3. Regional Enterprises (Perusahaan Daerah) means the Supervisory Board at Banks that have not yet changed their form into State-Owned Enterprises or Regional State-Owned Enterprises as referred to in Law Number 23 of 2014 on Regional Government as amended several times, lastly by Law Number 9 of 2015 on Regional Government;
   c. for Banks in the form of a Cooperative legal entity, means the Supervisory Board as referred to in Law Number 25 of 1992 on Cooperatives;
   d. for Banks with the status of branch offices of banks located abroad means parties appointed to carry out supervisory functions.

4. Independent Commissioner means a member of the Board of Commissioners who does not have financial, managerial, shareholding, and/or family relationships with members of the Board of Directors, other members of the Board of Commissioners and/or controlling shareholders, or relationships with the Bank that can influence the ability of the person concerned to act independently.
5. Non-Independent Commissioner means a member of the Board of Commissioners who is not an Independent Commissioner.
6. Independent Party means a party outside the Bank that does not have financial, managerial, shareholding, and/or family relationships with members of the Board of Directors, members of the Board of Commissioners and/or controlling shareholders, or relationships with the Bank that can influence the ability of the person concerned to act independently.
7. Good Governance is a method of Bank management that applies principles of transparency, accountability, responsibility, independence, and fairness.
8. Stakeholders are all parties who have direct or indirect interests in the business activities of the Bank.
9. Executive Officials are officials who are directly responsible to the Board of Directors or have significant influence on Bank policies and/or operations, including division heads, regional office heads, branch office heads, functional office heads whose position is at least equivalent to that of a branch office head, heads of risk management work units, heads of compliance work units, and heads of internal audit work units and/or other equivalent officials.

Article 2
(1) Banks are required to apply good corporate governance principles in every business activity of the Bank at all levels or tiers of the organization.
(2) The implementation of good corporate governance principles as referred to in paragraph (1) is at least manifested in:
a. the execution of duties and responsibilities of the Board of Directors and Board of Commissioners; b. the completeness and execution of duties of committees and work units that carry out internal control functions;
c. the application of compliance, internal audit, and external audit functions;
d. the application of risk management; e. the provision of funds to related parties and the provision of large funds; f. strategic plans; and g. transparency of financial and non-financial conditions.

Article 3
The Financial Services Authority conducts assessments of the implementation of Bank Good Governance.

CHAPTER II
BOARD OF DIRECTORS
First Section
Number, Composition, Criteria, and Independence of the Board of Directors
Article 4
(1) Banks are required to have Board of Directors members with a minimum of 3 (three) persons.
(2) All Board of Directors members as referred to in paragraph (1) are required to reside in Indonesia.
(3) The Board of Directors must be led by the President Director or Main Director.

Article 5
The President Director or Main Director as referred to in Article 4 paragraph (3) must come from a party independent of the controlling shareholders.

Article 6
(1) Every proposal for the replacement and/or appointment of Board of Directors members by the Board of Commissioners to the General Meeting of Shareholders (GMS) must take into account the recommendation of the remuneration and nomination committee. (2) A majority of Board of Directors members must have at least 5 (five) years of experience in operations and at least as Executive Officials of the bank. (3) Each Board of Directors member must meet the fit and proper test requirements according to the Financial Services Authority Regulation regarding the Fit and Proper Test for Key Parties of Financial Service Institutions.

Article 7
(1) Board of Directors members are prohibited from holding concurrent positions as Board of Directors members, Board of Commissioners members, or Executive Officials at banks, companies, and/or other institutions. (2) Concurrent positions as referred to in paragraph (1) do not include cases where Directors responsible for supervision over the Bank's participation in subsidiary companies, perform functional tasks as members of the Board of Commissioners at non-bank subsidiaries controlled by the Bank, provided that this does not cause the person concerned to neglect the execution of duties and responsibilities as a Board of Directors member of the Bank. (3) Board of Directors members, individually or collectively, are prohibited from holding more than 25% (twenty-five percent) of paid-up capital in other companies.

Article 8
A majority of Board of Directors members are prohibited from having family relationships up to the second degree with other Board of Directors members and/or with members of the Board of Commissioners.

Article 9
Board of Directors members are prohibited from granting general power of attorney to other parties resulting in the transfer of duties and functions of the Board of Directors.

Second Section
Duties and Responsibilities of the Board of Directors
Article 10
(1) The Board of Directors is fully responsible for the management of the Bank.
(2) The Board of Directors is required to manage the Bank in accordance with the authority and responsibilities of the Board of Directors as regulated in the articles of association and applicable laws and regulations.

Article 11
The Board of Directors is required to apply good corporate governance principles in every business activity of the Bank at all levels or tiers of the organization as referred to in Article 2.

Article 12
The Board of Directors is required to follow up on findings and recommendations from the Bank's internal audit work unit, external auditors, results of Financial Services Authority supervision, and/or results of supervision by other authorities.

Article 13
In order to apply good corporate governance principles as referred to in Article 11, the Board of Directors must at least establish:
a. internal audit work unit; b. risk management work unit and risk management committee; and
c. compliance work unit.

Article 14
The Board of Directors is required to account for the execution of duties to shareholders through the General Meeting of Shareholders (GMS).

Article 15
The Board of Directors is required to disclose to employees Bank policies that are strategic in the field of human resources.

Article 16
(1) The Board of Directors is prohibited from using individual advisors and/or professional services as consultants.
(2) The use of individual advisors and/or professional services as consultants may be carried out if it meets the following requirements:
a. for projects of a special nature; b. based on clear work contracts; and
c. being an Independent Party and having qualifications to handle special projects as referred to in letter a.

Article 17
The Board of Directors is required to provide accurate, relevant, and timely data and information to the Board of Commissioners.

Article 18
(1) The Board of Directors must have guidelines and working procedures that are binding for each Board of Directors member.
(2) The guidelines and working procedures as referred to in paragraph (1) must at least include:
a. work ethics regulations; b. working hours; and
c. meeting regulations.

Article 19
Decisions made by the Board of Directors in accordance with the guidelines and working procedures are binding and become the responsibility of all Board of Directors members.

Third Section
Board of Directors Meetings
Article 20
(1) Every strategic policy and decision must be decided through Board of Directors meetings taking into account supervision according to the duties and responsibilities of the Board of Commissioners. (2) Decision-making at Board of Directors meetings as referred to in paragraph (1) must first be carried out based on deliberation for consensus. (3) In the event that deliberation for consensus as referred to in paragraph (2) is not reached, decision-making is carried out based on the majority vote. (4) The Board of Directors is required to create minutes of Board of Directors meetings as referred to in paragraph (1) and documented in accordance with applicable laws and regulations. (5) Differences of opinion (dissenting opinions) occurring in Board of Directors meetings as referred to in paragraph (1) must be clearly stated in the meeting minutes along with the reasons for the differences of opinion.

Fourth Section
Transparency Aspects of the Board of Directors
Article 21
Board of Directors members are required to disclose:
a. shareholdings reaching 5% (five percent) or more, both in the Bank concerned and in other banks and companies, located inside and outside the country; and b. financial and family relationships with other Board of Directors members, members of the Board of Commissioners and/or controlling shareholders of the Bank, in the governance implementation report as regulated in this Financial Services Authority Regulation.

Article 22
(1) Board of Directors members are prohibited from utilizing the Bank for personal, family, and/or other parties' interests that can harm or reduce the Bank's profits.
(2) Board of Directors members are prohibited from taking and/or receiving personal benefits from the Bank, other than remuneration and other facilities determined based on GMS decisions. (3) Board of Directors members are required to disclose remuneration and other facilities as referred to in paragraph (2) in the governance implementation report referring to the Financial Services Authority Regulation regarding the Implementation of Governance in the Provision of Remuneration for Commercial Banks.

CHAPTER III
BOARD OF COMMISSIONERS
First Section
Number, Composition, Criteria, and Independence of the Board of Commissioners
Article 23
(1) Banks are required to have Board of Commissioners members with a minimum of 3 (three) persons and a maximum equal to the number of Board of Directors members.
(2) Board of Commissioners members as referred to in paragraph (1) must have at least 1 (one) person residing in Indonesia.
(3) The Board of Commissioners must be led by the President Commissioner or Main Commissioner.

Article 24
(1) The Board of Commissioners must consist of Independent Commissioners and Non-Independent Commissioners.
(2) Independent Commissioners as referred to in paragraph (1) must number at least 50% (fifty percent) of the total number of Board of Commissioners members.
(3) Former Board of Directors members or Executive Officials of the Bank or parties who have relationships with the Bank, which can influence the ability of the person concerned to act independently, must undergo a waiting period (cooling off) of at least 1 (one) year before becoming Independent Commissioners at the Bank concerned. (4) The provisions as referred to in paragraph (3) do not apply to former Board of Directors members who supervised supervisory functions or Executive Officials who performed supervisory functions at that Bank.

Article 25
(1) Non-Independent Commissioners may transition to Independent Commissioners after meeting the requirements as Independent Commissioners.
(2) Non-Independent Commissioners who will transition to Independent Commissioners as referred to in paragraph (1) must undergo a waiting period (cooling off) of at least 6 (six) months. (3) The transition from Non-Independent Commissioner to Independent Commissioner must obtain approval from the Financial Services Authority.

Article 26
(1) Independent Commissioners who have served for 2 (two) consecutive terms of office may be reappointed in the next period as Independent Commissioners if:
a. the Board of Commissioners meeting assesses that the Independent Commissioner can still act independently; and b. the Independent Commissioner declares in the GMS regarding their independence. (2) The independence declaration of Independent Commissioners as referred to in paragraph (1) letter b must be disclosed in the governance implementation report.

Article 27
(1) Every proposal for the appointment and/or replacement of Board of Commissioners members to the GMS must take into account the recommendation of the remuneration and nomination committee. (2) Members of the remuneration and nomination committee who have conflicts of interest with the recommended proposal must disclose this in the recommended proposal. (3) Board of Commissioners members must meet the fit and proper test requirements according to the Financial Services Authority Regulation regarding the Fit and Proper Test for Key Parties of Financial Service Institutions.

Article 28
(1) Board of Commissioners members are prohibited from holding concurrent positions as Board of Directors members, Board of Commissioners members, or Executive Officials:
a. at financial institutions or financial companies, whether banks or non-banks; b. at more than 1 (one) non-financial institution or non-financial company, whether located inside or outside the country. (2) Concurrent positions as referred to in paragraph (1) do not include cases where:
a. Board of Commissioners members serve as Board of Directors members, Board of Commissioners members, or Executive Officials performing supervisory functions at 1 (one) non-bank subsidiary company controlled by the Bank; b. Non-Independent Commissioners perform functional tasks from the Bank's controlling shareholders in the form of legal entities within the Bank's business group; and/or
c. Board of Commissioners members hold positions in organizations or non-profit institutions.
(3) Duties in positions and functions as referred to in paragraph (2) may be carried out as long as the person concerned does not neglect the execution of duties and responsibilities as a Board of Commissioners member of the Bank.

Article 29
A majority of Board of Commissioners members are prohibited from having family relationships up to the second degree with other Board of Commissioners members and/or Board of Directors members.

Second Section
Duties and Responsibilities of the Board of Commissioners
Article 30
The Board of Commissioners is required to carry out duties and responsibilities independently.

Article 31
(1) The Board of Commissioners is required to ensure that good corporate governance is implemented in every business activity of the Bank at all levels or tiers of the organization as referred to in Article 2. (2) The Board of Commissioners is required to supervise the execution of duties and responsibilities of the Board of Directors and provide advice to the Board of Directors. (3) In carrying out supervision as referred to in paragraph (2), the Board of Commissioners must direct, monitor, and evaluate the implementation of the Bank's strategic policies. (4) In carrying out supervision as referred to in paragraph (2), the Board of Commissioners is prohibited from participating in decision-making on Bank operational activities, except:
a. the provision of funds to related parties as regulated in provisions regarding maximum limits for commercial bank credit provision; and b. other matters stipulated in the Bank's articles of association or applicable laws and regulations. (5) Decision-making on Bank operational activities by the Board of Commissioners as referred to in paragraph (4) is part of the supervisory duties of the Board of Commissioners, so it does not negate the Board of Directors' responsibility for the management of the Bank.

Article 32
The Board of Commissioners is required to ensure that the Board of Directors has followed up on findings and recommendations from the Bank's internal audit work unit, external auditors, results of Financial Services Authority supervision, and/or results of supervision by other authorities.

Article 33
The Board of Commissioners is required to report to the Financial Services Authority no later than 7 (seven) working days since the discovery of:
a. violations of laws and regulations in the field of finance and banking; and/or b. conditions or estimated conditions that can endanger the continuity of the Bank's business.

Article 34
(1) In order to support the effectiveness of the execution of duties and responsibilities, the Board of Commissioners must establish at least:
a. audit committee; b. risk monitoring committee; and
c. remuneration and nomination committee.
(2) The Board of Commissioners may establish remuneration committees and nomination committees as referred to in paragraph (1) letter c separately.
(3) The appointment of committee members as referred to in paragraph (1) must be carried out by the Board of Directors based on the decision of the Board of Commissioners meeting. (4) The Board of Commissioners is required to ensure that committees established as referred to in paragraph (1) and paragraph (2) carry out their duties effectively. (5) Committees as referred to in paragraph (1) and paragraph (2) must formulate guidelines and working procedures for the committees.

Article 35
(1) The Board of Commissioners must have guidelines and working procedures that are binding for each Board of Commissioners member.
(2) The guidelines and working procedures as referred to in paragraph (1) must at least include:
a. work ethics regulations; b. working hours; and
c. meeting regulations.

Article 36
The Board of Commissioners is required to provide sufficient time to carry out duties and responsibilities optimally.

Third Section
Board of Commissioners Meetings
Article 37
(1) Board of Commissioners meetings must be held periodically at least 4 (four) times in 1 (one) year.
(2) Board of Commissioners meetings as referred to in paragraph (1) must be attended by all Board of Commissioners members physically at least 2 (two) times in 1 (one) year.
(3) In the event that Non-Independent Commissioners cannot attend Board of Commissioners meetings physically as referred to in paragraph (2), they may attend Board of Commissioners meetings through teleconference technology.

Article 38
(1) Decision-making at Board of Commissioners meetings must first be carried out based on deliberation for consensus.
(2) In the event that deliberation for consensus as referred to in paragraph (1) is not reached, decision-making at Board of Commissioners meetings is carried out based on the majority vote. (3) All decisions of the Board of Commissioners as referred to in paragraph (1) and paragraph (2) are binding on all Board of Commissioners members. (4) The Board of Commissioners is required to create minutes of Board of Commissioners meetings as referred to in paragraph (1) and documented in accordance with applicable laws and regulations. (5) Differences of opinion (dissenting opinions) occurring in Board of Commissioners meetings as referred to in paragraph (1) must be clearly stated in the meeting minutes along with the reasons for the differences of opinion.

Fourth Section
Transparency Aspects of the Board of Commissioners
Article 39
Board of Commissioners members are required to disclose:
a. shareholdings reaching 5% (five percent) or more, both in the Bank concerned and in other banks and companies, located inside and outside the country; and b. financial and family relationships with other Board of Commissioners members, Board of Directors members and/or controlling shareholders of the Bank, in the governance implementation report as regulated in this Financial Services Authority Regulation.

Article 40
(1) Board of Commissioners members are prohibited from utilizing the Bank for personal, family, and/or other parties' interests that can harm or reduce the Bank's profits.
(2) Board of Commissioners members are prohibited from taking and/or receiving personal benefits from the Bank other than remuneration and other facilities determined by the GMS. (3) Board of Commissioners members are required to disclose remuneration and other facilities determined by the GMS as referred to in paragraph (2) in the governance implementation report as regulated in this Financial Services Authority Regulation.

CHAPTER IV
COMMITTEES
First Section
Structure and Membership of Committees
Article 41
(1) The Audit Committee referred to in Article 34 paragraph (1) letter a shall consist of at least:
a. 1 (one) Independent Commissioner; b. 1 (one) Independent Party with expertise in finance or accounting; and
c. 1 (one) Independent Party with expertise in law or banking.
(2) The Audit Committee referred to in paragraph (1) shall be chaired by an Independent Commissioner who also serves as a member.
(3) Members of the Board of Directors are prohibited from becoming members of the Audit Committee referred to in paragraph (1).
(4) Independent Commissioners and Independent Parties who are members of the Audit Committee referred to in paragraph (1) shall constitute at least 51% (fifty-one percent) of the total number of Audit Committee members. (5) Members of the Audit Committee referred to in paragraph (1) must possess good integrity, ethics, and morality.

Article 42
(1) The Risk Monitoring Committee referred to in Article 34 paragraph (1) letter b shall consist of at least:
a. 1 (one) Independent Commissioner; b. 1 (one) Independent Party with expertise in finance; and
c. 1 (one) Independent Party with expertise in risk management.
(2) The Risk Monitoring Committee referred to in paragraph (1) shall be chaired by an Independent Commissioner who also serves as a member.
(3) Members of the Board of Directors are prohibited from becoming members of the Risk Monitoring Committee referred to in paragraph (1).
(4) Independent Commissioners and Independent Parties who are members of the Risk Monitoring Committee referred to in paragraph (1) shall constitute at least 51% (fifty-one percent) of the total number of Risk Monitoring Committee members. (5) Members of the Risk Monitoring Committee referred to in paragraph (1) must possess good integrity, ethics, and morality.

Article 43
(1) Former members of the Board of Directors or Executive Officers of the Bank or parties having a relationship with the Bank that could influence their ability to act independently are prohibited from serving as Independent Parties in the committees referred to in Article 41 paragraph (1) letters b and c and Article 42 paragraph (1) letters b and c at the respective Bank before undergoing a waiting period (cooling off) of at least 6 (six) months. (2) The waiting period (cooling off) of at least 6 (six) months referred to in paragraph (1) does not apply to former members of the Board of Directors who oversee supervisory functions or Executive Officers who perform supervisory functions at the said Bank.

Article 44
(1) The Remuneration and Nomination Committee referred to in Article 34 paragraph (1) letter c shall consist of at least:
a. 1 (one) Independent Commissioner; b. 1 (one) Commissioner; and
c. 1 (one) Executive Officer overseeing human resources functions or 1 (one) employee representative.
(2) The Remuneration and Nomination Committee referred to in paragraph (1) shall be chaired by an Independent Commissioner who also serves as a member.
(3) Members of the Board of Directors are prohibited from becoming members of the Remuneration and Nomination Committee referred to in paragraph (1).
(4) In the event that the Remuneration and Nomination Committee has more than 3 (three) members, the Independent Commissioner members shall constitute at least 2 (two) persons.

Article 45
In the event the Bank forms separate Remuneration and Nomination Committees as referred to in Article 34 paragraph (2), the membership of each committee must refer to the provisions referred to in Article 44.

Second Section
Concurrent Chairmanship of Committees
Article 46
The Chairperson of the committees referred to in Article 34 is prohibited from holding concurrent positions as chairperson of more than 1 (one) other committee.

Third Section
Duties and Responsibilities of Committees
Article 47
(1) The Audit Committee must monitor and evaluate the planning and implementation of audits and monitor the follow-up on audit results in order to assess the adequacy of internal controls, including the adequacy of the financial reporting process. (2) In carrying out the duties referred to in paragraph (1), the Audit Committee must monitor and evaluate at least:
a. the execution of duties by the Internal Audit Unit; b. the conformity of audit implementation by public accountants with audit standards;
c. the conformity of financial reports with financial accounting standards;
d. the follow-up implementation by the Board of Directors on findings from the Internal Audit Unit, public accountants, and supervision results from the Financial Services Authority, in order to provide recommendations to the Board of Commissioners. (3) The Audit Committee must provide recommendations regarding the appointment of public accountants and accounting firms to the Board of Commissioners to be submitted to the Annual General Meeting of Shareholders (AGMS).

Article 48
The Risk Monitoring Committee must carry out at least:
a. evaluation of the conformity between risk management policies and the Bank's policy implementation; and b. monitoring and evaluation of the execution of duties by the Risk Management Committee and the Risk Management Unit, in order to provide recommendations to the Board of Commissioners.

Article 49
The Remuneration and Nomination Committee has duties and responsibilities at least:
a. regarding remuneration policy, it must:

1. evaluate remuneration policies based on performance, risk, fairness compared to peer groups, targets, and the Bank's long-term strategy, fulfillment of reserves as regulated in legislation, and potential future income of the Bank;
2. submit evaluation results and recommendations to the Board of Commissioners regarding:
   a) remuneration policies for the Board of Directors and Board of Commissioners to be submitted to the AGMS; and b) remuneration policies for employees as a whole to be submitted to the Board of Directors;
3. ensure that remuneration policies comply with regulations; and
4. conduct periodic evaluations on the application of remuneration policies;
   b. regarding nomination policy, it must:
5. formulate and provide recommendations regarding the system and procedures for selecting and/or replacing members of the Board of Directors and members of the Board of Commissioners to the Board of Commissioners to be submitted to the AGMS;
6. provide recommendations regarding candidates for members of the Board of Directors and/or candidates for members of the Board of Commissioners to the Board of Commissioners to be submitted to the AGMS; and
7. provide recommendations regarding Independent Parties who will become members of the Audit Committee as referred to in Article 41 paragraph (1) letters b and c and members of the Risk Monitoring Committee as referred to in Article 42 paragraph (1) letters b and c to the Board of Commissioners.

Fifth Section
Committee Meetings
Article 50
(1) Committee meetings are held according to the Bank's needs.
(2) Meetings of the Audit Committee and Risk Monitoring Committee may only be held if attended by at least 51% (fifty-one percent) of the total number of committee members, including 1 (one) Independent Commissioner and 1 (one) Independent Party. (3) Meetings of the Remuneration and Nomination Committee may only be held if attended by at least 51% (fifty-one percent) of the total number of committee members, including 1 (one) Independent Commissioner, and 1 (one) Executive Officer overseeing human resources or 1 (one) employee representative.

Article 51
(1) Decisions of committee meetings must first be made based on deliberation for consensus.
(2) In the event that no deliberation for consensus occurs as referred to in paragraph (1), decisions are made based on the majority vote.
(3) The results of committee meetings as referred to in paragraph (1) must be recorded in meeting minutes and documented in accordance with applicable legislation.
(4) Dissenting opinions arising in committee meetings as referred to in paragraph (1) must be clearly stated in the meeting minutes along with the reasons for the dissenting opinion.

CHAPTER V
COMPLIANCE FUNCTION, INTERNAL AUDIT, AND EXTERNAL AUDIT First Section Bank Compliance Function
Article 52
Banks must ensure compliance with Financial Services Authority regulations and other applicable legislation.

Article 53
(1) In order to ensure compliance as referred to in Article 52, the Bank must appoint 1 (one) Director overseeing the compliance function, guided by requirements and procedures as stipulated in regulations governing the implementation of the compliance function for general banks. (2) To assist in the effective execution of the duties of the Director overseeing the compliance function, the Bank must form an independent compliance unit separate from operational units. (3) The compliance unit referred to in paragraph (2) must formulate and implement work guidelines, systems, and procedures.

Second Section
Internal Audit Function
Article 54
(1) Banks must effectively implement the internal audit function, guided by requirements and procedures as stipulated in regulations governing the assignment of the compliance director and the implementation of internal audit function standards for general banks. (2) To effectively implement the internal audit function, the Bank must form an internal audit unit that is independent from operational units. (3) The internal audit unit referred to in paragraph (2) must formulate and implement work guidelines, systems, and procedures, as stipulated in regulations governing the assignment of the compliance director and the implementation of internal audit function standards for general banks.

Third Section
External Audit Function
Article 55
(1) Banks must appoint public accountants and accounting firms registered with the Financial Services Authority to execute audits of the Bank's financial reports.
(2) The appointment of public accountants and accounting firms as referred to in paragraph (1) must first obtain approval from the Annual General Meeting of Shareholders (AGMS) based on proposals submitted by the Board of Commissioners in accordance with recommendations from the Audit Committee. (3) Audits as referred to in paragraph (1) and the appointment of public accountants and accounting firms as referred to in paragraph (2) must comply with Financial Services Authority Regulations regarding Transparency and Publication of Bank Reports and regulations governing the use of services by public accountants and accounting firms.

CHAPTER VI
IMPLEMENTATION OF RISK MANAGEMENT
Article 56
Banks must effectively implement risk management, tailored to the objectives, business policies, size and complexity of business, and the Bank's capabilities, guided by requirements and procedures as contained in Financial Services Authority regulations regarding the implementation of risk management for general banks.

CHAPTER VII
PROVISION OF FUNDS TO RELATED PARTIES AND LARGE EXPOSURES
Article 57
In order to avoid Bank business failure resulting from concentration in fund provision and to enhance the independence of the Board of Directors and Board of Commissioners from potential intervention by related parties, Banks must apply prudence principles in fund provision, including by applying portfolio diversification of provided funds.

Article 58
The provision of funds to related parties and/or large exposures must be guided by regulations governing maximum limits for credit granting by general banks.

CHAPTER VIII
BANK STRATEGIC PLANS
Article 59
(1) Banks must formulate strategic plans in the form of corporate plans and business plans.
(2) The submission of corporate plans as referred to in paragraph (1) and changes to corporate plans to the Financial Services Authority must be guided by regulations governing general bank institutions. (3) The formulation and submission of business plans as referred to in paragraph (1) must be guided by Financial Services Authority regulations governing bank business plans.

CHAPTER IX
TRANSPARENCY ASPECTS OF BANK CONDITIONS
Article 60
(1) Banks must implement transparency of financial and non-financial conditions to Stakeholders.
(2) In implementing transparency of financial and non-financial conditions as referred to in paragraph (1), Banks must formulate and present reports with methods, types, and scope as contained in Financial Services Authority regulations governing transparency and publication of bank reports.

Article 61
Banks must implement transparency of information regarding bank products and the use of customer data, guided by requirements and procedures as contained in regulations governing product information transparency and customer personal data usage and Financial Services Authority regulations governing consumer protection in the financial services sector.

CHAPTER X
INTERNAL REPORTING AND CONFLICTS OF INTEREST
Article 62
In order to improve the quality of decision-making processes by the Board of Directors and the quality of supervision processes by the Board of Commissioners, Banks must ensure the availability and adequacy of internal reporting supported by adequate management information systems.

Article 63
In the event of a conflict of interest, members of the Board of Directors, members of the Board of Commissioners, and Executive Officers are prohibited from taking actions that could harm the Bank or reduce the Bank's profits and must disclose conflicts of interest in every decision.

CHAPTER XI
CORPORATE GOVERNANCE IMPLEMENTATION REPORTS AND ASSESSMENT OF CORPORATE GOVERNANCE IMPLEMENTATION First Section Corporate Governance Implementation Reports
Article 64
(1) Banks must formulate corporate governance implementation reports at the end of each fiscal year.
(2) The corporate governance implementation report as referred to in paragraph (1) must cover at least:
a. the scope of Corporate Governance as referred to in Article 2 paragraph (2) and the results of the Bank's self-assessment of the implementation of the Bank's Corporate Governance; b. share ownership by members of the Board of Directors as well as financial relationships and family relationships of members of the Board of Directors with other members of the Board of Directors, members of the Board of Commissioners, and/or controlling shareholders of the Bank as referred to in Article 21;
c. share ownership by members of the Board of Commissioners as well as financial relationships and family relationships of members of the Board of Commissioners with members of the Board of Directors, other members of the Board of Commissioners, and/or controlling shareholders of the Bank as referred to in Article 39;
d. frequency of Board of Commissioners meetings; e. the number of deviations (internal fraud) that occurred and resolution efforts by the Bank; f. the number of legal issues and resolution efforts by the Bank; g. transactions containing conflicts of interest; h. buy-back of Bank shares and/or bonds; and
i. provision of funds for social activities and political activities, both nominal amounts and recipients of funds.
(3) The corporate governance implementation report as referred to in paragraph (1) related to the application of remuneration refers to Financial Services Authority Regulations regarding the Implementation of Corporate Governance in Providing Remuneration for General Banks. (4) Further provisions regarding the procedures for formulating corporate governance implementation reports are further regulated in Financial Services Authority Circular Letters.

Article 65
(1) Banks must submit the corporate governance implementation report as referred to in Article 64 to the Financial Services Authority and Bank shareholders no later than 4 (four) months after the end of the fiscal year. (2) The corporate governance implementation report as referred to in paragraph (1) must be published on the Bank's website no later than 4 (four) months after the end of the fiscal year. (3) A Bank is considered late in submitting the corporate governance implementation report and/or publishing the corporate governance implementation report on its website if the Bank submits and/or publishes the report beyond the final deadline for submission as referred to in paragraph (1) and/or the final deadline for publication on the website as referred to in paragraph (2) but has not exceeded 1 (one) month since the final deadline for submission of the corporate governance implementation report. (4) A Bank is considered not to have submitted the corporate governance implementation report and/or published the corporate governance implementation report on its website if the Bank has not submitted and/or published the report within the delay period as referred to in paragraph (3).

Article 66
Submission of the corporate governance implementation report to the Financial Services Authority as referred to in Article 65 paragraph (1) letter a is addressed to:
a. the Department of Supervision of the relevant Bank for Banks headquartered or branch offices of banks located outside the country situated in the Special Capital Region of Jakarta Province; or b. the Regional Office of the Financial Services Authority or the local Financial Services Authority Office according to the area where the Bank's headquarters is located.

Second Section
Self-Assessment by Banks on Corporate Governance Implementation
Article 67
(1) Banks must conduct a self-assessment on the implementation of the Bank's Corporate Governance covering matters as regulated in Article 2 paragraph (2) at least 2 (two) times in 1 (one) year. (2) The results of the Bank's self-assessment on the implementation of Corporate Governance as referred to in paragraph (1) constitute an inseparable part of the corporate governance implementation report.

Article 68
(1) In order to assess the implementation of Corporate Governance as referred to in Article 3, the Financial Services Authority may conduct assessments or evaluations of the results of the Bank's self-assessment on the implementation of Corporate Governance as referred to in Article 67 paragraph (1). (2) Based on the results of the Bank's self-assessment or evaluation as referred to in paragraph (1), the Financial Services Authority may request the Bank to submit an action plan containing improvement steps that must be implemented by the Bank with specific time targets. (3) If necessary, the Financial Services Authority may request the Bank to adjust the action plan as referred to in paragraph (2) and/or conduct special examinations on the results of improvements in Corporate Governance implementation already carried out by the Bank.

CHAPTER XII
IMPLEMENTATION OF CORPORATE GOVERNANCE AT BRANCH OFFICES OF BANKS LOCATED OUTSIDE THE COUNTRY
Article 69
(1) Branch offices of banks located outside the country must fulfill provisions regarding the implementation of Corporate Governance as regulated in this Financial Services Authority Regulation. (2) The implementation of the Board of Commissioners' functions and committee formation must be adjusted to the organizational structure applicable to the Bank. (3) Adjustments as referred to in paragraph (2) must fulfill all functions required in the implementation of Corporate Governance as regulated in this Financial Services Authority Regulation.

Article 70
The Financial Services Authority is authorized to request adjustments to the organizational structure of branch offices of banks located outside the country to ensure the implementation of Corporate Governance in accordance with this Financial Services Authority Regulation.

CHAPTER XIII
SANCTIONS
First Section
Sanctions for Corporate Governance Implementation
Article 71
Banks that do not fulfill the provisions as referred to in Article 2 paragraph (1), Article 4, Article 5, Article 6 paragraph (2), Article 7 paragraph (1), Article 7 paragraph (3), Article 8, Article 9, Article 10 paragraph (2), Article 11, Article 12, Article 13, Article 14, Article 15, Article 16 paragraph (1), Article 17, Article 18, Article 20 paragraph (1), Article 20 paragraph (2), Article 20 paragraph (4), Article 20 paragraph (5), Article 21, Article 22, Article 23, Article 24 paragraph (1), Article 24 paragraph (2), Article 24 paragraph (3), Article 26 paragraph (2), Article 27 paragraph (2), Article 28 paragraph (1), Article 29, Article 30, Article 31 paragraph (1), Article 31 paragraph (2), Article 31 paragraph (3), Article 31 paragraph (4), Article 32, Article 33, Article 34 paragraph (1), Article 34 paragraph (3), Article 34 paragraph (4), Article 34 paragraph (5), Article 35, Article 36, Article 37 paragraph (1), Article 37 paragraph (2), Article 38 paragraph (1), Article 38 paragraph (4), Article 38 paragraph (5), Article 39, Article 40, Article 41 paragraph (3), Article 41 paragraph (5), Article 42 paragraph (3), Article 42 paragraph (5), Article 43 paragraph (1), Article 44 paragraph (3), Article 45, Article 46, Article 47, Article 48, Article 49, Article 51 paragraph (1), Article 51 paragraph (3), Article 51 paragraph (4), Article 52, Article 53 paragraph (2), Article 53 paragraph (3), Article 55 paragraph (2), Article 62, Article 63, Article 67 paragraph (1), Article 69 paragraph (1) and/or Article 69 paragraph (3) shall be subject to administrative sanctions, including:
a. written reprimand; b. downgrade of the Corporate Governance factor rating in health level assessments;
c. suspension of certain business activities;
d. dismissal of members of the Board of Directors and/or members of the Board of Commissioners of the Bank and the appointment and elevation of temporary replacements for members of the Board of Directors and/or members of the Board of Commissioners until the AGMS or equivalent body appoints permanent replacements for members of the Board of Directors and/or members of the Board of Commissioners with the approval of the Financial Services Authority; and/or e. listing of members of the Board of Directors and/or members of the Board of Commissioners, employees, and shareholders of the Bank in the Unfit List through the capability and propriety assessment mechanism.

Article 72
(1) Banks that do not fulfill the provisions as referred to in Article 52 and/or Article 53 paragraph (1) shall be subject to sanctions as referred to in regulations regarding the implementation of the compliance function for general banks. (2) Banks that do not fulfill the provisions as referred to in Article 54 shall be subject to sanctions as referred to in regulations regarding the assignment of the compliance director and the implementation of internal audit function standards for general banks. (3) Banks that do not fulfill the provisions as referred to in Article 55 paragraph (1) and Article 55 paragraph (3) shall be subject to sanctions as referred to in regulations regarding procedures for using services by public accountants and accounting firms for institutions supervised by the Financial Services Authority.

Article 73
Banks that do not fulfill provisions related to the implementation of risk management as referred to in Article 56 shall be subject to sanctions as regulated in Financial Services Authority Regulations regarding the Implementation of Risk Management for General Banks.

Article 74
Banks that do not fulfill provisions related to the implementation of prudence principles in providing funds to related parties and/or large exposures as referred to in Article 57 and Article 58 shall be subject to sanctions as regulated in provisions regarding maximum limits for credit granting by general banks.

Article 75
Banks that do not fulfill provisions related to the formulation of strategic plans as referred to in Article 59 paragraph (1) shall be subject to sanctions as regulated in provisions governing general bank institutions and Financial Services Authority Regulations regarding Bank Business Plans.

Article 76
(1) Banks that do not meet the provisions regarding transparency of financial and non-financial conditions as referred to in Article 60 shall be subject to sanctions as regulated in the Financial Services Authority Regulation regarding Transparency and Publication of Bank Reports. (2) Banks that do not meet the provisions regarding transparency of information concerning bank products and the use of bank customer data as referred to in Article 61 shall be subject to sanctions as regulated in provisions regarding transparency of bank product information and use of customer personal data and provisions regarding consumer protection in the financial services sector.

Second Section
Reporting Sanctions

Article 77
(1) Banks that are late in submitting the corporate governance implementation report as referred to in Article 65 paragraph (3) shall be subject to administrative sanctions in the form of a fine of Rp1,000,000.00 (one million rupiah) per day of delay. (2) Banks that are late in publishing the corporate governance implementation report as referred to in Article 65 paragraph (3) shall be subject to administrative sanctions in the form of a fine of Rp1,000,000.00 (one million rupiah) per day of delay. (3) Banks that do not submit the corporate governance implementation report as referred to in Article 65 paragraph (4) shall be subject to administrative sanctions in the form of a fine of Rp100,000,000.00 (one hundred million rupiah) and a written warning from the Financial Services Authority. (4) Banks that do not publish on the Bank's website as referred to in Article 65 paragraph (4) shall be subject to administrative sanctions in the form of a fine of Rp100,000,000.00 (one hundred million rupiah) and a written warning from the Financial Services Authority. (5) Banks that submit reports deemed to be incorrect and/or significantly incomplete as referred to in Article 64 shall be subject to administrative sanctions in the form of a fine of Rp250,000,000.00 (two hundred fifty million rupiah) and administrative sanctions including:
a. reduction in health level in the form of a reduction in the management factor rating in the health level assessment; b. suspension of certain business activities;
c. dismissal of Bank management and subsequently appointing and appointing temporary replacements until the General Meeting of Shareholders or the Cooperative Members' Meeting appoints permanent replacements with the approval of the Financial Services Authority; and/or
d. listing of management members, employees, and Bank shareholders in the Unfit List through the mechanism for assessing competence and propriety.
(6) The imposition of administrative sanctions in the form of fines as referred to in paragraph (5) is carried out after the Bank has been given 2 (two) warning letters by the Financial Services Authority with a grace period of 7 (seven) working days for each warning and the Bank does not correct the report within a period of 7 (seven) working days after the last warning letter.

CHAPTER XIV
TRANSITIONAL PROVISIONS

Article 78
For Independent Commissioners who have served for 2 (two) consecutive terms or more at the time this Financial Services Authority Regulation comes into force, compliance with the provisions as referred to in Article 26 is carried out at the time they are appointed again as Independent Commissioners.

CHAPTER XV
CLOSING PROVISIONS

Article 79
Further provisions of this Financial Services Authority Regulation are regulated in a Circular Letter of the Financial Services Authority.

Article 80
With the coming into force of this Financial Services Authority Regulation, then:
a. Bank Indonesia Regulation Number 8/4/PBI/2006 dated 30 January 2006 concerning the Implementation of Good Corporate Governance for Commercial Banks (State Gazette of the Republic of Indonesia Year 2006 Number 6, Supplement to the State Gazette of the Republic of Indonesia Number 4600); and b. Bank Indonesia Regulation Number 8/14/PBI/2006 dated 5 October 2006 concerning Amendments to Bank Indonesia Regulation Number 8/4/PBI/2006 concerning the Implementation of Good Corporate Governance for Commercial Banks (State Gazette of the Republic of Indonesia Year 2006 Number 71, Supplement to the State Gazette of the Republic of Indonesia Number 4640), are repealed and declared invalid.

Article 81
This Financial Services Authority Regulation comes into force on the date of its promulgation.
In order that everyone knows it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Determined in Jakarta on 7 December 2016
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY, signed
MULIAMAN D. HADAD
Promulgated in Jakarta on 9 December 2016
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2016 NUMBER 286 Copy in accordance with the original Legal Director 1 Ministry of Law signed Yuliana

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 55 /POJK.03/2016
CONCERNING
THE IMPLEMENTATION OF CORPORATE GOVERNANCE
FOR COMMERCIAL BANKS

I. GENERAL
The very rapid development of the banking industry is generally accompanied by increasingly complex bank business activities, resulting in an increase in bank risk exposure. The implementation of Corporate Governance in the banking industry has become more important at this time and in the future, given that the risks and challenges faced by the banking industry will increase. In order to improve bank performance, protect the interests of Stakeholders, and increase compliance with laws and regulations and ethical values (code of conduct) that are generally applicable in the banking industry, Banks are required to carry out their business activities based on the principles of Good Corporate Governance. The implementation of Corporate Governance in the banking industry must always be based on 5 (five) basic principles. First, transparency, which is openness in presenting material and relevant information and openness in carrying out the decision-making process. Second, accountability, which is the clarity of functions and the implementation of accountability of the Bank's organs so that management runs effectively. Third, responsibility, which is the conformity of Bank management with laws and regulations and principles of healthy Bank management. Fourth, independence, which is the professional management of the Bank without influence or pressure from any party. Fifth, fairness, which is justice and equality in fulfilling the rights of Stakeholders arising from agreements and laws and regulations. In order to implement these five basic principles, Banks are required to refer to various provisions and minimum requirements and guidelines related to the implementation of Corporate Governance. In efforts to improve and increase the quality of Corporate Governance implementation, Banks are required to periodically conduct self-assessments of the adequacy of Corporate Governance implementation and prepare implementation reports so that if there are still deficiencies, corrective actions can be taken immediately. Furthermore, in facing the development of the banking industry and the increasingly complex financial system, it is necessary to regulate the implementation of Bank Corporate Governance in order to encourage bank resilience and strengthen the stability of the financial services sector.

II. ARTICLE BY ARTICLE

Article 1
It is clear enough.

Article 2
Paragraph (1)
The implementation of Good Corporate Governance principles in every bank business activity, including during the formulation of vision, mission, strategic plans, policy implementation, and internal supervision steps at all levels or levels of the organization. Paragraph (2) Letter a The implementation of duties and responsibilities of the Board of Directors and Board of Commissioners refers to the Bank's Articles of Association and laws and regulations, including provisions governing the implementation of duties and responsibilities thereof. Letter b The formation of committees is intended, among other things, to facilitate the smoothness of supervision duties by the Board of Commissioners, while the formation of work units that carry out control functions such as internal audit work units, compliance work units, and bank risk management work units is intended, among other things, to support control duties by the Board of Directors. Letter c It is clear enough. Letter d It is clear enough. Letter e The term "related parties" refers to related parties as referred to in provisions governing maximum credit limits for commercial banks. Letter f Strategic plans include corporate plans and business plans. Letter g Transparency includes the aspect of disclosure of qualitative and quantitative bank information to Stakeholders.

Article 3
It is clear enough.

Article 4
It is clear enough.

Article 5
The term "controlling shareholder" refers to controlling shareholders as referred to in provisions governing the assessment of competence and propriety for principal parties of financial service institutions. Independence assessment is based on relevant connections in management, ownership and/or financial relationships, and family relationships with controlling shareholders.

Article 6
Paragraph (1)
It is clear enough.
Paragraph (2)
The term "majority" refers to more than 50% (fifty percent) of the total number of Board of Directors members.
The definition of bank in this paragraph does not include rural credit banks and sharia rural credit banks.
Paragraph (3)
It is clear enough.

Article 7
Paragraph (1)
The term "bank" in this paragraph refers to commercial banks, sharia commercial banks, rural credit banks, and sharia rural credit banks, both within and outside the country. Paragraph (2) The term "non-bank subsidiary controlled by the Bank" refers to Bank subsidiaries that do not carry out bank business activities and whose financial reports must be consolidated with the Bank's financial reports. Paragraph (3) The term "other companies" includes, among other things, other companies outside the relevant Bank, such as bank financial institutions, non-bank financial institutions, financing institutions, or other companies.

Article 8
The term "family relationship up to the second degree" refers to both vertical and horizontal relationships, including in-laws, sons/daughters-in-law, and siblings-in-law, so that family includes:

1. biological/step/adopted parents;
2. biological/step/adopted siblings together with husband or wife;
3. biological/step/adopted children;
4. biological/step/adopted grandparents;
5. biological/step/adopted grandchildren;
6. biological/step/adopted siblings of parents together with husband or wife;
7. husband or wife;
8. in-laws;
9. siblings-in-law;
10. husband or wife of biological/step/adopted children;
11. grandparents of husband or wife;
12. husband or wife of biological/step/adopted grandchildren; and/or
13. biological/step/adopted siblings of husband or wife together with husband or wife.
    The term "majority" refers to more than 50% (fifty percent) of the total number of Board of Directors members.

Article 9
The term "other parties" refers to 1 (one) employee or more or other persons.

Article 10
It is clear enough.

Article 11
It is clear enough.

Article 12
The term "other authorities" includes, but is not limited to, payment system supervisory authorities and supervisory authorities over parent banks.

Article 13
Letter a
The term "internal audit work unit" refers to internal audit work units as regulated in provisions regarding the assignment of the compliance director and the implementation of internal audit function standards for commercial banks. Letter b The term "risk management work unit and risk management committee" refers to risk management work units and risk management committees as regulated in Financial Services Authority provisions regarding the implementation of risk management for commercial banks. Letter c The term "compliance work unit" refers to a work unit tasked with assisting the implementation of the director's function overseeing compliance as regulated in provisions regarding the implementation of compliance functions for commercial banks.

Article 14
It is clear enough.

Article 15
It is clear enough.

Article 16
Paragraph (1)
It is clear enough.
Paragraph (2)
Letter a
Projects categorized as special include, among other things, information technology projects or public relations development projects that have criteria such as specific time targets. Letter b Clear work contracts must at least cover the scope of work, responsibilities and duration of work, as well as costs. Letter c It is clear enough.

Article 17
Accurate, relevant, and timely data and information are needed in relation to the duties and responsibilities of the Board of Commissioners to supervise the implementation of duties and responsibilities of the Board of Directors and to control the implementation of Bank policies.

Article 18
Paragraph (1)
It is clear enough.
Paragraph (2)
Letter a
It is clear enough.
Letter b
It is clear enough.
Letter c
Meeting regulations include, among other things, meeting agendas, quorum requirements, decision-making, and members' rights in the event of differences of opinion in decision-making and meeting minutes.

Article 19
It is clear enough.

Article 20
Paragraph (1)
The term "strategic policies and decisions" refers to Bank decisions that can significantly affect the Bank's finances and/or have a continuous impact on budgets, human resources, organizational structure, and/or third parties. The term "paying attention to supervision according to the duties and responsibilities of the Board of Commissioners" refers to the Board of Commissioners' participation in decision-making limited to:
a. provision of funds to related parties as regulated in provisions regarding maximum credit limits for commercial banks; and b. other matters stipulated in the Bank's Articles of Association or laws and regulations. Paragraph (2) It is clear enough. Paragraph (3) It is clear enough. Paragraph (4) It is clear enough. Paragraph (5) It is clear enough.

Article 21
It is clear enough.

Article 22
Paragraph (1)
It is clear enough.
Paragraph (2)
Personal profit does not include, among other things, cases where Board of Directors members as bank customers receive reasonable interest income or remuneration.
Paragraph (3)
It is clear enough.

Article 23
It is clear enough.

Article 24
Paragraph (1)
The existence of Independent Commissioners is intended to encourage the creation of a more objective work climate and environment and place fairness and equality among various interests, including minority shareholders' interests and other stakeholders. Paragraph (2) For example, if the number of Board of Commissioners members is 3 (three), the number of Independent Commissioners is at least 2 (two). Paragraph (3) The term "cooling off period" refers to the interval between the effective end of the relevant position as a Board of Directors member or Executive Officer or other relationship with the Bank, and the effective appointment of the relevant person as an Independent Commissioner. Paragraph (4) Examples of directors overseeing supervision functions are directors overseeing compliance functions or directors overseeing risk management functions. Examples of Executive Officers overseeing supervision work units are Executive Officers in charge of internal audit, compliance, and risk management.

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)
Letter a
The term "non-bank subsidiary controlled by the Bank" refers to Bank subsidiaries that do not carry out bank business activities and whose financial reports must be consolidated with the Bank's financial reports. Letter b The term "Bank shareholders in the form of a legal entity" refers to controlling shareholders in the form of a legal entity as referred to in provisions governing the assessment of competence and propriety, including the Central Government and Local Governments or other institutions that are controlling shareholders of the Bank. Included in the definition of carrying out functional duties is when the relevant function at the Bank and/or the legal entity shareholder's business group, including Bank subsidiaries, is to carry out its function as a representative of the Bank shareholder, such as Board of Directors members, Board of Commissioners members, or Executive Officers. Letter c It is clear enough. Paragraph (3) It is clear enough.

Article 29
The term "family relationship up to the second degree" refers to both vertical and horizontal relationships, including in-laws, sons/daughters-in-law, and siblings-in-law, so that family includes:

1. biological/step/adopted parents;
2. biological/step/adopted siblings together with husband or wife;
3. biological/step/adopted children;
4. biological/step/adopted grandparents;
5. biological/step/adopted grandchildren;
6. biological/step/adopted siblings of parents together with husband or wife;
7. husband or wife;
8. in-laws;
9. siblings-in-law;
10. husband or wife of biological/step/adopted children;
11. grandparents of husband or wife;
12. husband or wife of biological/step/adopted grandchildren; and/or
13. biological/step/adopted siblings of husband or wife together with husband or wife.
    The term "majority of Board of Commissioners members" refers to more than 50% (fifty percent) of the total number of Board of Commissioners members.

Article 30
The term "independent" refers to the implementation of duties objectively and free from pressure and interests of any party.

Article 31
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
The term "operational activities" refers to fund provision, treasury, fund mobilization, and other operational activities.
Letter a
It is clear enough.
Letter b
Stipulations in the Articles of Association regarding other matters whose decision-making requires the involvement of the Board of Commissioners are directed towards matters that are strategic and affect the continuity of the Bank's business. Paragraph (5) It is clear enough.

Article 32
The term "other authorities" includes, but is not limited to, payment system supervisory authorities and supervisory authorities over parent banks.

Article 33
It is clear enough.

Article 34
It is clear enough.

Article 35
Paragraph (1)
It is clear enough.
Paragraph (2)
Letter a
It is clear enough.
Letter b
It is clear enough.
Letter c
Meeting regulations include, among other things, meeting agendas, quorum requirements, decision-making, and members' rights in the event of differences of opinion in decision-making, as well as meeting minutes.

Article 36
The indicator of providing sufficient time is reflected, among other things, by attendance according to working hours established in the rules of procedure and attendance levels in meetings.

Article 37
Paragraph (1)
The form of meetings is adjusted to the Bank's needs, among other things, can be done by using teleconference technology.
Paragraph (2)
Efforts should be made so that all Board of Commissioners members can attend physically at meetings for the purpose of evaluating or setting strategic policies and evaluating the realization of the Bank's business plan. Paragraph (3) It is clear enough.

Article 38
It is clear enough.

Article 39
It is clear enough.

Article 40
Paragraph (1)
It is clear enough.
Paragraph (2)
Personal profit does not include, among other things, cases where Board of Commissioners members as bank customers receive reasonable interest income or remuneration.
Paragraph (3)
It is clear enough.

Article 41
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
It is clear enough.
Paragraph (5)
The term "having good integrity" includes, among other things, not being included as a party prohibited from being a principal party, among other things, not listed in the Unfit List, and not having non-performing loans or financing, supported by a personal statement letter.

Article 42
Paragraph (1)
It is clear enough.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.
Paragraph (4)
It is clear enough.
Paragraph (5)
The term "having good integrity" includes, among other things, not being included as a party prohibited from being a principal party, among other things, not listed in the Unfit List, and not having non-performing loans or financing, supported by a personal statement letter.

Article 43
Paragraph (1)
The term "cooling off period" refers to the interval between the effective end of the relevant position as a Board of Directors member or Executive Officer or other relationship with the Bank, and the effective appointment of the relevant person as an Independent Party member of the committee. Paragraph (2) Examples of directors overseeing supervision functions are directors overseeing compliance functions or directors overseeing risk management functions. Examples of Executive Officers overseeing supervision work units are Executive Officers in charge of internal audit, compliance, and risk management.

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
Letter a
It is clear enough.
Letter b
The term "risk management committee and risk management work unit" refers to risk management committees and risk management work units as referred to in Financial Services Authority provisions governing the implementation of risk management for commercial banks.

Article 49
Letter a
Number 1)
The term "performance" refers to financial performance, Bank performance, business unit performance, and individual performance.
The term "reserves" refers to reserves as referred to in the Law on Limited Liability Companies.
Number 2)
It is clear enough.
Number 3)
It is clear enough.
Number 4)
Evaluation of remuneration policies and their implementation is an inseparable part of the Bank's risk management framework.
Letter b
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
Paragraph (1)
The implementation of bank financial report audits is intended, among other things, to improve reporting quality and the fairness of presenting the Bank's financial conditions. Paragraph (2) It is clear enough. Paragraph (3) It is clear enough.

Article 56
It is clear enough.

Article 57
It is clear enough.

Article 58
It is clear enough.

Article 59
Paragraph (1)
The term "corporate plan" refers to a comprehensive long-term strategic plan containing formulations of direction in order to achieve Bank goals.
The term "business plan" refers to business plans as referred to in Financial Services Authority provisions governing bank business plans.
Paragraph (2)
It is clear enough.
Paragraph (3)
It is clear enough.

Article 60
Paragraph (1)
The term "financial and non-financial conditions" includes, among other things, the development of the Bank's and business group's business, management, ownership, strategy and management policies, and management reports. Paragraph (2) It is clear enough.

Article 61
It is clear enough.

Article 62
It is clear enough.

Article 63
The term "conflict of interest" includes, among other things, differences between the Bank's economic interests and the economic interests of...

individual shareholders, members of the Board of Directors, members of the Board of Commissioners, Executive Officers, and/or parties related to the Bank.
The provisions in this Article are essentially intended so that members of the Board of Directors, members of the Board of Commissioners, and Executive Officers do not participate in making decisions in situations and conditions where there is a conflict of interest. However, in cases where decisions must still be made, the aforementioned parties are required to prioritize the Bank's economic interests and prevent the Bank from losses that may arise or the possibility of reduced Bank profits, and are required to disclose conflict of interest conditions in every decision. In this regard, granting special treatment to certain parties outside of procedures and regulations falls under the category of conflicts of interest that cause losses to the Bank or reduce Bank profits, including the granting of interest rates that do not comply with procedures and regulations.

Article 64
Paragraph (1)
Clearly stated.
Paragraph (2)
Letter a
Clearly stated.
Letter b
Clearly stated.
Letter c
Clearly stated.
Letter d
Clearly stated.
Letter e
Deviations (internal fraud) in these provisions are limited to deviations related to Bank operations and significantly affecting the Bank's financial conditions.

Letter f
Legal issues in these provisions include civil legal issues and criminal legal issues.
Letter g
Clearly stated.
Letter h
Clearly stated.
Letter i
Clearly stated.
Paragraph (3)
Clearly stated.
Paragraph (4)
Clearly stated.

Article 65
Paragraph (1)
Submission of governance implementation reports to shareholders prioritizes controlling shareholders, while for other shareholders, it is based on considerations of efficiency levels and the importance level of each Bank. Paragraph (2) Clearly stated. Paragraph (3) Clearly stated. Paragraph (4) Clearly stated.

Article 66
Clearly stated.

Article 67
Paragraph (1)
The self-assessment period is 2 (two) times per year, referring to the assessment period of the health level of Universal Banks.

Paragraph (2)
Clearly stated.

Article 68
Clearly stated.

Article 69
Paragraph (1)
The implementation of the same provisions between branches of banks located outside the country with Banks headquartered in Indonesia is due to the principles and scope of application of Governance being universal for every type of bank. Paragraph (2) Clearly stated. Paragraph (3) Clearly stated.

Article 70
Clearly stated.

Article 71
Clearly stated.

Article 72
Clearly stated.

Article 73
Clearly stated.

Article 74
Clearly stated.

Article 75
Clearly stated.

Article 76
Clearly stated.

Article 77
Paragraph (1)
What is meant by "day" is a working day.
Paragraph (2)
Banks subject to administrative sanctions in the form of fines in this paragraph are not subject to late penalties as referred to in paragraph (1).
Paragraph (3)
Clearly stated.
Paragraph (4)
Clearly stated.

Article 78
Clearly stated.

Article 79
Clearly stated.

Article 80
Clearly stated.

Article 81
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5980 ---