GUIDELINES FOR ACTIVITIES OF SECURITIES RATING AGENCIES

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

COPY

FINANCIAL SERVICES AUTHORITY REGULATION OF THE REPUBLIC OF INDONESIA NUMBER 24 /POJK.04/2021

ABOUT

GUIDELINES FOR ACTIVITIES OF SECURITIES RATING AGENCIES

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that public trust and investor protection, particularly regarding securities rating, need to be enhanced through ethical and credible behavior by securities rating agencies, as well as good governance in conducting ratings; b. that based on the considerations referred to in letter a and with regard to applicable international principles and the omnibus regulatory concept, it is necessary to codify and improve existing regulations regarding securities rating agencies to make them more effective and efficient and aligned with international principles;
c. that based on the considerations referred to in letter a and letter b, it is necessary to establish a Financial Services Authority Regulation regarding Guidelines for Activities of Securities Rating Agencies;

Recalling: 1. Law Number 8 of 1995 concerning the Capital Market (State Gazette of the Republic of Indonesia Year 1995 Number 64, Supplement to the State Gazette of the Republic of Indonesia Number 3608);
2. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Supplement to the State Gazette of the Republic of Indonesia Number 5253);

DECIDING:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION REGARDING GUIDELINES FOR ACTIVITIES OF SECURITIES RATING AGENCIES.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Affiliation means:
   a. family relationship due to marriage and descent up to the second degree, both horizontally and vertically; b. relationship between a party and employees, directors, or commissioners of that party;
   c. relationship between 2 (two) companies where there is one or more members of the board of directors or board of commissioners who are the same;
   d. relationship between a company and a party, directly or indirectly, controlling or controlled by that company; e. relationship between 2 (two) companies controlled, directly or indirectly, by the same party; or f. relationship between a company and major shareholders.

2. Securities Rating Agency is an investment advisory firm in the form of a limited liability company that conducts rating activities and provides ratings.

3. Securities means securities, namely debt instruments, commercial paper, shares, bonds, certificates of indebtedness, units of participation in collective investment contracts, futures contracts over Securities, and any derivative of Securities, including Sharia Securities.

4. Party means an individual person, company, joint venture, association, or organized group.

5. Rating is an assessment regarding the ability of a Party to fully and timely meet payment obligations, expressed through a determined rating system.

6. Rating is an opinion provided by a Securities Rating Agency based on the results of the Rating.

7. Initial Rating is the result of the Rating by a Securities Rating Agency that has not yet obtained approval from the Party requesting the Rating and has not been published.

8. Rating Action is an action to determine a Rating, upgrade a Rating, downgrade a Rating, include in default category, reaffirm a Rating, or withdraw a Rating.

9. Rating Process is all stages carried out in connection with Rating Actions, including but not limited to, assignment of analysts, application of Rating Methodology, decision-making through the rating committee, interaction with the Party being rated and/or the Party whose Securities are being rated, and publication of the Rating results to the public or the Party requesting the Rating.

10. Employees of Securities Rating Agencies, hereinafter referred to as Employees, are persons working at the Securities Rating Agency, including directors and commissioners, to carry out work in a specific position or function on a full-time, part-time, or temporary basis, including persons working under employment agreements, provided that the employment agreement relates to the Rating Process.

11. Analyst is an Employee who performs analysis functions necessary to issue and/or monitor Ratings.

12. Rating Methodology is the procedure used by the Securities Rating Agency to determine Ratings as referred to in the Financial Services Authority regulations regarding licensing of Securities Rating Agencies.

Article 2

Securities Rating Agencies are required to have and apply a code of conduct in carrying out Rating activities based on this Financial Services Authority Regulation.

Article 3

Securities Rating Agencies and Employees are required to act objectively, independently, and consistently towards:
a. Parties being rated; b. Parties whose Securities are being rated; and
c. Rating users,
according to the code of conduct while upholding honesty and commitment.

Article 4

The code of conduct of Securities Rating Agencies as referred to in Article 2 and Article 3 covers at least:
a. quality and integrity of Ratings; b. independence and avoidance of conflicts of interest;
c. responsibility to investors and Parties being rated or Parties whose Securities are being rated;
d. responsibility, risk management, and training; and e. disclosure and communication with market participants.

CHAPTER II

QUALITY AND INTEGRITY OF RATINGS

Part One

Quality of the Rating Process

Article 5

Securities Rating Agencies are required to have and apply written Rating Methodologies meeting at least the following conditions:
a. accurate and systematic; b. applied consistently;
c. tested for reliability; and
d. capable of producing Ratings that can be validated objectively based on history.

Article 6

Securities Rating Agencies are required to apply Rating Process stages covering at least:
a. exposition of the Rating Methodology to the Party requesting the Rating; b. implementation of surveys, collection, and research of various information related to Rating, both qualitative and quantitative, including from or through the management of the Party being rated and/or the Party whose Securities are being rated;
c. analysis process and determination of Initial Ratings;
d. objection process by the Party being rated and/or the Party whose Securities are being rated; e. publication of Rating results; and f. monitoring and updating of published Rating results.

Article 7

(1) Securities Rating Agencies are responsible for every Rating result issued.
(2) Securities Rating Agencies are required to define the interpretation of each Rating result category and apply said categories consistently to every Party and/or Security being rated. (3) Securities Rating Agencies are required to have and apply policies and procedures to ensure that Rating results as referred to in paragraph (1) reflect:
a. all relevant data and information consistent with the Rating Methodology, and are trustworthy or originate from trustworthy sources; and b. the actual ability of the Party being rated and/or the Party whose Securities are being rated.

Article 8

(1) Securities Rating Agencies are required to have and apply policies and procedures to conduct continuous and/or periodic monitoring and updating of every published Rating result through:
a. review of the ability of the Party being rated and/or the Party whose Securities are being rated to meet payment obligations; b. review if there are material facts or significant events that can influence Rating Actions;
c. review if there are significant changes to the Rating Methodology; and/or
d. review related to fulfillment of obligations in accordance with statutory provisions.
(2) Continuous and/or periodic monitoring and updating as referred to in paragraph (1) does not apply if:
a. Rating is conducted based on an agreement that only produces 1 (one) single Rating; and/or b. Rating is conducted without request from a specific Party, where the Securities Rating Agency has stated that the Securities Rating Agency has ceased Rating activities over specific Parties and/or Securities being rated.

Article 9

(1) Securities Rating Agencies are required to have a review function tasked with reviewing at least:
a. published Rating results, periodically; b. feasibility to conduct Rating over types of Parties and/or Securities being rated that are materially different from Parties and/or Securities currently being rated; and
c. Rating Methodology and its application periodically at least once every 3 (three) years.
(2) In the event that the review results as referred to in paragraph (1) letter c necessitate changes to the Rating Methodology, the Securities Rating Agency is required to make changes and report those Rating Methodology changes to the Financial Services Authority.

Article 10

(1) Securities Rating Agencies are required to:
a. assign Analysts who individually or collectively have adequate experience and expertise suitable to carry out Rating assignments and monitoring of published Rating results; b. ensure the availability and continuity of Analysts in every Rating Process;
c. have written requirements and qualifications for Analysts and apply them to ensure the continuity and quality of the Rating Process; and
d. determine Analyst competencies.
(2) In the event that Analyst assignment as referred to in paragraph (1) letter a is separated for Rating assignments and monitoring of published Rating results, the Securities Rating Agency is required to assign Analysts with adequate experience and expertise suitable to carry out respective assignments promptly.

Article 11

(1) Securities Rating Agencies are required to have:
a. a rating committee; and b. written requirements and qualifications for rating committee members to ensure the continuity and quality of Rating results. (2) The rating committee as referred to in paragraph (1) letter a is required to:
a. have clear tasks and authorities; b. act independently and objectively; and
c. apply a decision-making system regarding Rating results based on the principle that every member of the rating committee has only one vote.

Part Two

Integrity of the Rating Process

Article 12

Securities Rating Agencies and Employees are prohibited from:
a. providing certainty or guarantees, whether implicit or explicit, over Rating results before the completion of the Rating Process; b. promising or threatening Parties being rated and/or Parties whose Securities are being rated with certain Rating Actions for the purpose of obtaining payment for Rating or other services;
c. setting certain conditions or actions that must be performed by Parties being rated and/or Parties whose Securities are being rated, to produce certain Rating results; and/or
d. providing recommendations related to the business activities of Parties being rated and/or Parties whose Securities are being rated that can impact Rating results.

Article 13

(1) Securities Rating Agencies are required to:
a. have a compliance officer; and b. determine the existence, authority, and responsibility of the compliance function.
(2) The compliance officer as referred to in paragraph (1) letter a is required to:
a. act independently and objectively; b. supervise compliance with the code of conduct and statutory regulations at the Securities Rating Agency;
c. monitor the adequacy of policies and procedures of the Securities Rating Agency necessary to ensure compliance of the Securities Rating Agency and Employees with the code of conduct and statutory regulations;
d. make recommendations deemed necessary in the event of discovered or known violations of the code of conduct, or illegal acts or violations of statutory regulations, committed by Employees; e. ensure that recommendations as referred to in letter d are followed up in accordance with applicable policies and procedures; f. maintain the confidentiality of the identity of the reporter and the content of reports regarding violations as referred to in letter d; and g. administer such reports and actions taken against violations as referred to in letter d.

CHAPTER III

INDEPENDENCE AND AVOIDANCE OF CONFLICTS OF INTEREST

Part One

Policies and Procedures Related to Conflicts of Interest

Article 14

(1) Securities Rating Agencies are required to have and apply policies and procedures to identify and eliminate any conflicts of interest that occur or potentially occur, which can affect:
a. Rating Methodology; b. Rating Actions; and/or
c. analysis and decisions of the Securities Rating Agency or Employees.
(2) Policies and procedures as referred to in paragraph (1) contain at least:
a. identification of matters constituting conflicts of interest; b. procedures or mechanisms for handling conflicts of interest;
c. decision-making in handling conflicts of interest; and
d. administration and documentation of conflicts of interest.

Part Two

Prohibitions for Securities Rating Agencies

Article 15

Securities Rating Agencies are prohibited from conducting:
a. Rating based on factors irrelevant to the assessment of Parties being rated and/or Parties whose Securities are being rated; and b. Rating over Parties and/or Securities issued by a Party if that Party has an Affiliation relationship with the Securities Rating Agency.

Article 16

Securities Rating Agencies are prohibited from conducting:
a. business activities unrelated to Rating activities except business activities approved by the Financial Services Authority; and b. business activities that can cause conflicts of interest.

Article 17

Securities Rating Agencies are prohibited from owning or conducting transactions in Securities that cause conflicts of interest with Rating activities.

Part Three

Employee Independence

Article 18

(1) Securities Rating Agencies are prohibited from providing compensation to Employees involved in or having influence on the Rating Process based on the amount of Rating service fees paid by Parties being rated and/or Parties whose Securities are being rated. (2) Securities Rating Agencies are required to conduct periodic monitoring of policies, procedures, and compensation practices for Employees as referred to in paragraph (1) to ensure the objectivity of the Rating Process.

Article 19

Every Employee is prohibited from:
a. requesting and receiving money, gifts, or assistance from any Party engaging in business cooperation with the Securities Rating Agency; and b. participating in or influencing Rating Actions, if the Employee or close family members of the Employee:
1. own or conduct transactions in Securities issued by:
a) Parties being rated; b) Parties whose Securities are being rated; and/or c) Parties having an Affiliation relationship with Parties as referred to in letters a) and b), which can cause conflicts of interest;
2. have significant business relationships or were previously Employees with Parties being rated or Parties whose Securities are being rated within the last 6 (six) months prior to conducting Rating activities; and/or
3. have an Affiliation relationship with Parties being rated or Parties whose Securities are being rated during the Rating Process.

Article 20

Securities Rating Agencies are required to have and apply policies and procedures to review Rating and/or monitoring work performed by Analysts in cases where:
a. the Analyst ceases working for the Securities Rating Agency; and b. the said Analyst subsequently works with:
1. Parties being rated;
2. Parties whose Securities are being rated; or
3. Parties having an Affiliation relationship with Parties as referred to in numbers 1 and 2.

Article 21

Analysts and Employees responsible for or participating in the Rating Process are prohibited from:
a. conducting marketing activities for Rating services; b. conducting sales activities of Analyst research results related to Rating;
c. participating in or discussing costs or payments with any Party being rated and/or Party whose Securities are being rated; and/or
d. conducting other activities related to marketing products of the Securities Rating Agency.

CHAPTER IV

RESPONSIBILITY TO INVESTORS AND PARTIES BEING RATED OR PARTIES WHOSE SECURITIES ARE BEING RATED

Part One

Transparency and Timeliness of Rating Disclosure

Article 22

(1) Securities Rating Agencies are required to use easily understandable language when disclosing Rating results to investors and other Rating users. (2) Securities Rating Agencies are prohibited from making statements implying that the Financial Services Authority has given approval statements regarding the quality of Rating results issued.

Article 23

(1) Securities Rating Agencies are required to publish via the Securities Rating Agency's website:
a. Rating results, statements, or other opinions related to Rating results, unless otherwise determined in statutory provisions and/or Rating agreements; and b. Rating Methodology and general Rating activities and any changes thereto. (2) Rating results as referred to in paragraph (1) letter a must be delivered to Parties undergoing Rating and/or Parties whose Securities undergo Rating promptly in accordance with the Rating agreement.

Article 24

Publication of Rating results as referred to in Article 23 paragraph (1) letter a must cover at least:
a. every Rating result, including updates or withdrawal of Rating results; b. interpretation of every Rating result category, including default definition;
c. date of issuance of Rating results and date of change of Rating results;
d. key elements forming the basis for issuing Rating results, both at initial publication and update of Rating results; e. financial summary including important financial ratios forming the basis for issuing Rating results; and f. information in the event of involvement of Parties being rated, Parties whose Securities are being rated, or other Parties in the Rating Process.

Article 25

Publication of Rating Methodology and general Rating activities as referred to in Article 23 paragraph (1) letter b must cover at least:
a. information regarding procedures and assumptions that are part of the Rating Methodology; b. every change made to procedures and assumptions as referred to in letter a completely before said changes are implemented;
c. policies and procedures regarding publication and delivery of Rating results including when a Rating is withdrawn;
d. policies and procedures related to Ratings issued not based on request from a specific Party; e. history of failure rates of Parties whose Securities are being rated in meeting their obligations to owners of rated Securities across all Rating results in the same category issued by the Securities Rating Agency; and f. changes to the failure rate history as referred to in letter e for every category of Rating results issued over time.

Article 26

(1) Publication of Rating results as referred to in Article 23 paragraph (1) letter a must be implemented no later than 2 (two) working days after completion of:
a. Rating; or b. monitoring resulting in Ratings, statements, or other opinions related to Rating results including withdrawal of Rating results. (2) Publication of Rating Methodology and general Rating activities as referred to in Article 23 paragraph (1) letter b must be implemented no later than:
a. 2 (two) working days after the issuance of the license for the Securities Rating Agency; or b. 7 (seven) working days after changes to the Rating Methodology and general Rating activities.

Article 27

Securities Rating Agencies are required to disclose in Rating results in the event of:
a. limitations in historical data of Parties being rated and/or Parties whose Securities are being rated; and/or b. material adjustments to financial reports published by Parties being rated and/or Parties whose Securities are being rated.

Article 28

In conducting Rating for structured financial products, Securities Rating Agencies are required to:
a. distinguish Ratings of structured financial products from other types of Ratings, primarily through the addition of Rating identifiers; b. provide adequate information regarding loss analysis and cash flows so that investors in structured financial products can understand the basis of the Rating; and
c. disclose sensitivity analysis of structured financial product Ratings against changes in assumptions underlying the Rating Methodology used.

Article 29

(1) In the event that a Securities Rating Agency ceases to monitor published Rating results, the Securities Rating Agency is required to withdraw those Rating results. (2) Withdrawal of Rating results as referred to in paragraph (1) must:
a. be disclosed by the Securities Rating Agency to the public; b. be delivered to Parties being rated and/or Parties whose Securities are being rated; and
c. be reported by the Securities Rating Agency to the Financial Services Authority, with copies to the Stock Exchange and clearing and settlement institution, in the event that withdrawal of Rating results is conducted before the maturity of the rated Securities.
(3) Withdrawal of Rating results as referred to in paragraph (1) must show:
a. the date the Rating was last updated or monitored; and b. the reason why the Rating is no longer monitored.

Part Two
Handling of Confidential Information
Article 30
(1) Securities Rating Agencies are required to have and implement policies and procedures for handling confidential information or material non-public information at least:
a. prohibiting the Securities Rating Agency and Employees from using or disclosing confidential information or material non-public information other than for purposes related to Rating activities or other activities consistent with the Rating Agreement with the Rated Party and/or the Party whose Securities are rated and who has obtained approval from the Party possessing such confidential information or material non-public information; b. obligating the Securities Rating Agency and Employees to ensure that confidential information or material non-public information received from:

1. the Rated Party;
2. the Party whose Securities are rated; and/or
3. other Parties,
   is not known or utilized by other parties; and
   c. obligating the Securities Rating Agency and Employees to take all necessary actions to protect the confidential information or material non-public information held by the Securities Rating Agency from fraud, theft, misuse, or negligent disclosure.

(2) Provisions regarding the handling of confidential information or material non-public information as referred to in paragraph (1) letters a and b, except:
a. are carried out for supervisory purposes conducted by the Financial Services Authority and/or other Parties in accordance with legislation; b. are mandated by legislation; and/or
c. are used for judicial interests.

CHAPTER V
RESPONSIBILITY, RISK MANAGEMENT, AND TRAINING
Part One
Responsibility
Article 31
Members of the Board of Directors and members of the Board of Commissioners of the Securities Rating Agency are fully responsible for ensuring that the Securities Rating Agency has and implements a code of conduct based on this Financial Services Authority Regulation.

Part Two
Risk Management
Article 32
(1) Securities Rating Agencies are required to have a risk management function with the responsibility to identify, assess, monitor, and report risks arising from the business activities of the Securities Rating Agency.

(2) The risk management function as referred to in paragraph (1) is required to:
a. submit reports to the Board of Directors to assess the adequacy of the Securities Rating Agency's policies, procedures, and controls in establishing and managing risks; and b. be carried out by officials with adequate expertise and experience in managerial positions.

Part Three
Employee Training
Article 33
Securities Rating Agencies are required to have and implement policies and procedures that ensure all Employees enhance their capabilities through continuous training with relevant materials.

CHAPTER VI
DISCLOSURE AND COMMUNICATION WITH MARKET PARTICIPANTS AND HANDLING OF COMPLAINTS
Part One
Disclosure and Communication with Market Participants
Article 34
Disclosure by Securities Rating Agencies as referred to in this Financial Services Authority Regulation is required to be conducted completely, accurately, timely, and easily understood by investors, other market participants, and the public.

Article 35
(1) Securities Rating Agencies are required to disclose the code of conduct and any changes to the code of conduct on the Securities Rating Agency's website.

(2) Disclosure of changes to the code of conduct as referred to in paragraph (1) is required to be implemented no later than 7 (seven) business days after the change.

Part Two
Handling of Complaints
Article 36
(1) Securities Rating Agencies are required to establish a complaint handling function.

(2) The complaint handling function as referred to in paragraph (1) has the responsibility to establish, maintain, and implement policies and procedures for handling complaints.

(3) Policies and procedures for handling complaints as referred to in paragraph (2) are required to contain at least:
a. the complaint process system; b. the timeframe for handling complaints;
c. complaint handling procedures;
d. the work unit or party managing complaint handling; e. the results of complaint handling and follow-up actions; and f. periodic evaluation by the Board of Directors and Board of Commissioners regarding the policies and procedures for handling complaints.

CHAPTER VII
GUIDELINES FOR RATING AGREEMENTS
Article 37
(1) Securities Rating Agencies conducting Ratings upon request from a specific Party are required to create a Rating Agreement with said specific Party.

(2) The Rating Agreement as referred to in paragraph (1) is required to contain at least:
a. the name and address of the Securities Rating Agency; b. the name and address of the Party requesting the Rating;
c. the purpose and objective of the Rating;
d. the rights of the Securities Rating Agency; e. the obligations of the Securities Rating Agency; f. the timeframe for completing the Rating; g. cancellation and postponement of the Rating; h. objections;
i. confidentiality;
j. prohibition on notifying the Rating result; k. announcement of the Rating result;
l. dispute resolution;
m. termination of the agreement; and n. force majeure.

Article 38
The rights of the Securities Rating Agency in the Rating Agreement as referred to in Article 37 paragraph (2) letter d contain at least the right to:
a. obtain data and information required in the Rating process; b. obtain access to conduct reviews or field examinations of activities and/or meetings with the management of the Rated Party and/or the Party whose Securities are rated to obtain data and information required;
c. obtain written responses within an agreed timeframe after the submission of the Preliminary Rating result;
d. obtain additional material information or explanations, in the event of an objection to the Preliminary Rating result; e. obtain material facts or important events that may affect the Rating result no later than 2 (two) business days from the existence of such material facts or important events, in the event the rated Securities are issued through a public offering; and f. publish any Rating result issued against a Rating object, except:

1. for Preliminary Rating results that have not obtained approval from the Rated Party and/or the Party whose Securities are rated; or
2. otherwise determined in the Rating Agreement, provided it does not conflict with legislation.

Article 39
(1) The obligations of the Securities Rating Agency in the Rating Agreement as referred to in Article 37 paragraph (2) letter e contain at least:
a. maintaining and preserving the confidentiality of any confidential information or material non-public information related to the Rating; b. issuing a Preliminary Rating after considering all relevant, accurate, and reliable data and information;
c. providing answers to responses and objections raised by the Rated Party and/or the Party whose Securities are rated regarding the Rating result;
d. making a final decision on the Rating after considering all additional material information or explanations, in the event the Rated Party and/or the Party whose Securities are rated raise an objection; e. completing the Rating within the timeframe agreed upon in the Rating Agreement; f. conducting continuous monitoring of published Rating results and submitting Rating results based on such monitoring to the Party requesting the Rating during the period the Rating Agreement has not expired; g. monitoring published Rating results, in the event there are material facts or important events that may affect the published Rating result; h. conducting periodic monitoring of Rating results, as required by legislation;
i. submitting Rating results based on monitoring as referred to in letters g and h to the Rated Party and/or the Party whose Securities are rated or if a re-rating is conducted; and
j. publishing Rating results based on monitoring as referred to in letters g and h, without approval from the Rated Party and/or the Party whose Securities are rated.

(2) Confidentiality as referred to in paragraph (1) letter a is excluded for supervision conducted by the Financial Services Authority and/or other Parties in accordance with legislation and/or for judicial interests.

Article 40
The timeframe for completing the Rating in the Rating Agreement as referred to in Article 37 paragraph (2) letter f contains at least:
a. initial Ratings must be completed within no later than 30 (thirty) business days from the agreement of the Rating Agreement or within a timeframe agreed upon by the Securities Rating Agency and the Party requesting the Rating; b. Ratings consisting of monitoring due to material facts or important events that may affect published Rating results as referred to in Article 39 paragraph (1) letter g must be completed within a timeframe of no later than 7 (seven) business days from the knowledge of such material facts or important events;
c. the submission of Rating results, statements, or other opinions related to Rating results based on monitoring as referred to in letter b to the Rated Party and/or the Party whose Securities are rated, no later than 2 (two) business days from the completion of the Rating;
d. Ratings consisting of periodic monitoring as referred to in Article 39 paragraph (1) letter h must be completed by the Securities Rating Agency and the Rating results based on such monitoring must be submitted to the Rated Party and/or the Party whose Securities are rated within a timeframe of no later than 10 (ten) business days from the conduct of the periodic monitoring Rating; and e. the submission of the withdrawal of the Rating result to the Rated Party and/or the Party whose Securities are rated, no later than 2 (two) business days from the withdrawal of said Rating result.

Article 41
Cancellation and postponement of the Rating in the Rating Agreement as referred to in Article 37 paragraph (2) letter g contain:
a. conditions that may cause the cancellation or postponement of the Rating; and b. published Rating results cannot be cancelled.

Article 42
Objections in the Rating Agreement as referred to in Article 37 paragraph (2) letter h contain:
a. the objection process submitted by the Party requesting the Rating can only be conducted once for initial Ratings; and b. the Rating after the objection process is final.

Article 43
Confidentiality in the Rating Agreement as referred to in Article 37 paragraph (2) letter i contains:
a. confidentiality of data and information related to the Rating; b. the obligation of each Party knowing the Rating result not to act unlawfully to maintain the confidentiality of said Rating result to other parties before said Rating result is published; and
c. exceptions to the confidentiality of data and information related to the Rating and Rating results for:

1. supervision conducted by the Financial Services Authority and/or other Parties in accordance with legislation;
2. obligations based on legislation; and/or
3. interests in judicial proceedings.

Article 44
Prohibition on notifying the Rating result in the Rating Agreement as referred to in Article 37 paragraph (2) letter j contains the prohibition for each Party knowing the Rating result not to act unlawfully to notify said Rating result to other parties before said Rating result is published.

Article 45
Force majeure in the Rating Agreement as referred to in Article 37 paragraph (2) letter n contains provisions regarding force majeure.

CHAPTER VIII
REPORTING
Article 46
(1) Securities Rating Agencies are required to submit reports to the Financial Services Authority consisting of:
a. changes in members of the Board of Directors, members of the Board of Commissioners, officials one level below the Board of Directors, and/or Analysts no later than 7 (seven) business days after the change, attaching documents:

1. data of members of the Board of Directors, members of the Board of Commissioners, officials one level below the Board of Directors, and Analysts, including:
   a) name list; b) signed curriculum vitae;
   c. photocopy of the latest formal education diploma that has been legalized;
   d. photocopy of expertise certificates in the field of Securities Rating if possessing expertise certificates in the field of Securities Rating; e. photocopy of the valid Identity Card or Passport; f. latest color passport-sized photo; and g. photocopy of the Taxpayer Identification Number Card;
2. a statement letter from members of the Board of Directors and members of the Board of Commissioners stating the fulfillment of requirements:
   a) competent to perform legal acts; b) having good ethics and morality; c) never declared bankrupt; d) never served as a manager or supervisor of a company that, based on a decision of the General Meeting of Shareholders or an equivalent organ, was declared responsible for the company's bankruptcy; e) never sentenced for committing criminal offenses; f) never committed disgraceful acts in the capital market in particular and in finance in general; g) never committed material violations of legislation in the capital market; h) having no Affiliation with fellow members of the Board of Directors, with fellow members of the Board of Commissioners, and/or between members of the Board of Directors and members of the Board of Commissioners; i) having a commitment to comply with legislation; and j) having a commitment to the development of the Rating industry in particular and the capital market in general;
3. a statement letter from each member of the Board of Directors stating not to hold concurrent positions in any capacity in other companies;
4. a statement letter from each member of the Board of Commissioners stating not to hold concurrent positions in any capacity in other companies conducting business activities as a Securities Rating Agency; and
5. a statement letter from Analysts and officials one level below the Board of Directors stating not to hold concurrent positions in any capacity in other companies and residing in Indonesia;
   b. changes in Rating Methodology as referred to in Article 9 paragraph (2) no later than 7 (seven) business days after the change, attaching the relevant change documents;
   c. withdrawal of Rating results as per Article 29 paragraph (2) letter c no later than 2 (two) business days after the Rating withdrawal;
   d. changes to the code of conduct as referred to in Article 35 paragraph (1) no later than 7 (seven) business days after the change, attaching the relevant change documents; e. changes related to:
6. organizational structure;
7. business address;
8. identity of the Securities Rating Agency;
9. articles of association;
10. permits for employing foreign labor and work permits for foreign workers; or
11. a special list related to company shareholders as referred to in the Law regarding Limited Liability Companies,
    no later than 14 (fourteen) days after the change occurs, attaching change documents; f. the agenda of the General Meeting of Shareholders, no later than 14 (fourteen) business days before the convening of the General Meeting of Shareholders; g. a summary of the minutes of the General Meeting of Shareholders, no later than 7 (seven) business days after the date of the General Meeting of Shareholders; h. annual financial reports audited by a public accountant registered with the Financial Services Authority no later than at the end of the third month after the date of the annual financial report; and
    i. periodic operational activity reports every three months (March, June, September, and December) no later than on the 15 (fifteenth) of the following month.

(2) The annual financial report as referred to in paragraph (1) letter h is required to:
a. contain at least:

1. financial position reports;
2. profit and loss and comprehensive income reports;
3. equity change reports;
4. cash flow reports; and
5. notes to the financial statements,
   accompanied by an independent auditor's report; b. be presented in the Indonesian language;
   c. be presented comparatively with the same period of the previous year; and
   d. be prepared based on generally accepted accounting principles and accounting regulations in the capital market established by the Financial Services Authority.

(3) The operational activity report as referred to in paragraph (1) letter i is required to contain at least information:
a. details for Ratings issued upon request from a Party, accompanied by information:

1. identity of the Party requesting the Rating;
2. name of the Rated Party and/or name and total value of the rated Securities;
3. Rating result and interpretation of the Rating result; and
4. validity period of the Rating Agreement; and
   b. details for Ratings issued not upon request from a Party, accompanied by information:
5. name of the Rated Party and/or name and total value of the rated Securities;
6. Rating result and interpretation of the Rating result; and
7. data and information sources used to conduct the Rating.

Article 47
Reports as referred to in Article 46 paragraph (1) are submitted in the form of printed documents and/or copies of electronic documents.

Article 48
(1) In the event the Financial Services Authority has provided an electronic system, the reporting obligation as referred to in Article 46 paragraph (1) is required to be submitted through said electronic system.

(2) In the event the electronic system as referred to in paragraph (1) experiences technical disturbances or force majeure occurs, the reporting obligation as referred to in Article 46 paragraph (1) may be conducted in the form of printed documents and/or copies of electronic documents.

Article 49
(1) In the event the deadline for submitting reporting obligations to the Financial Services Authority as referred to in Article 46 paragraph (1) letters e, h, and i falls on a holiday, the submission of reports is required to be submitted no later than 1 (one) business day following the holiday.

(2) In the event the submission of reports exceeds the deadline as referred to in paragraph (1), the calculation of the number of days of delay in submitting reports is counted from the first day after the final submission deadline as referred to in paragraph (1).

CHAPTER IX
DOCUMENT MAINTENANCE
Article 50
Securities Rating Agencies are required to administer, store, and maintain documents including records, books, data and information, or details made or received in connection with their operational activities in the form of printed documents or electronic documents.

Article 51
Documents as referred to in Article 50 consist of at least:
a. documents related to the procedures and processes for obtaining licenses for the Securities Rating Agency; b. documents related to each Rating result issued, containing information:

1. identity of each Analyst involved in the Rating Process;
2. identity of members of the rating committee involved in the process of determining the Rating result before said Rating result is issued;
3. explanation that said Rating result was issued upon request from a Party or not upon request from a Party; and
4. date of each activity related to the determined Rating result;
   c. documents regarding the implementation of each stage of the Rating Process, including internal notes, non-public information, and working papers used as the basis for determining the Rating;
   d. documents regarding internal and external written communications, including electronic communications, received and sent by the Securities Rating Agency and Employees in connection with the initiation, Rating Agreement, and determination, monitoring, change, and withdrawal of Ratings; e. documents containing information about the types of services and products offered; f. published marketing documents; g. financial documents including:
5. annual financial reports;
6. supporting notes in the preparation of financial reports;
7. records showing the amount of income received from Parties using the services of the Securities Rating Agency to issue Ratings or monitor Ratings, including information:
   a) identity and address of each such Party; and b) Rating results determined or monitored for such Party; and h. compliance, risk management, and complaint handling reports.

Article 52
The administration, storage, and maintenance of documents in the form of printed documents or electronic documents as referred to in Article 50 and Article 51 are required to meet the provisions of legislation.

Article 53
All documents as referred to in Article 2 and Article 51 are required to be available at all times for the purposes of guidance and supervision by the Financial Services Authority.

CHAPTER X
OTHER PROVISIONS
Article 54
The submission of the Securities Rating Agency's code of conduct is conducted for the first time at the time of submitting the license application as a Securities Rating Agency.

Article 55
Securities Rating Agencies are required to provide access that allows the Financial Services Authority to easily obtain data and information related to the determination of a Rating at all times, at least:
a. supporting data for the preparation of Rating result reports; b. the name of each Analyst involved in the Rating Process;
c. the name and position of each Party involved in the Rating Process;
d. the name and position of each Party approving the Rating before said Rating is determined; and e. the Rating Methodology used in determining a Rating.

CHAPTER XI
ADMINISTRATIVE SANCTIONS
Article 56
(1) Any party violating the provisions as referred to in Article 2, Article 3, Article 5, Article 6, Article 7 paragraph (2) and paragraph (3), Article 8 paragraph (1), Article 9, Article 10, Article 11, Article 12, Article 13, Article 14 paragraph (1), Article 15, Article 16, Article 17, Article 18, Article 19, Article 20, Article 21, Article 22, Article 23, Article 24, Article 25, Article 26, Article 27, Article 28, Article 29, Article 30 paragraph (1), Article 31, Article 32, Article 33, Article 34, Article 35, Article 36 paragraph (1) and paragraph (3), Article 37, Article 46, Article 48, Article 49 paragraph (1), Article 50, Article 52, Article 53, and Article 55 shall be subject to administrative sanctions.

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

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

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

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

(6) Administrative sanctions in the form of a fine as referred to in paragraph (4) letter b may be imposed separately

separately or jointly with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g.
(7) The procedure for imposing sanctions as referred to in paragraph (3) shall be carried out in accordance with the provisions of applicable legislation.

Article 57
In addition to administrative sanctions as referred to in Article 56 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 58
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 56 paragraph (4) and specific actions as referred to in Article 57 to the public.

CHAPTER XII
TRANSITIONAL PROVISIONS

Article 59
Securities Rating Agencies are required to adjust their code of conduct in accordance with this Financial Services Authority Regulation and submit it to the Financial Services Authority no later than 6 (six) months after this Financial Services Authority Regulation comes into force.

CHAPTER XIII
FINAL PROVISIONS

Article 60
Upon the coming into force of this Financial Services Authority Regulation:
a. Financial Services Authority Regulation Number 51/POJK.04/2015 concerning the Code of Conduct of Securities Rating Agencies (State Gazette of the Republic of Indonesia Year 2015 Number 402, Supplement to the State Gazette of the Republic of Indonesia Number 5820); b. Financial Services Authority Regulation Number 52/POJK.04/2015 concerning Guidelines for Rating Agreements (State Gazette of the Republic of Indonesia Year 2015 Number 403, Supplement to the State Gazette of the Republic of Indonesia Number 5821);
c. Financial Services Authority Regulation Number 57/POJK.04/2015 concerning Reports by Securities Rating Agencies (State Gazette of the Republic of Indonesia Year 2015 Number 408, Supplement to the State Gazette of the Republic of Indonesia Number 5826);
d. Financial Services Authority Regulation Number 58/POJK.04/2015 concerning Document Maintenance by Securities Rating Agencies (State Gazette of the Republic of Indonesia Year 2015 Number 409, Supplement to the State Gazette of the Republic of Indonesia Number 5827); and e. Financial Services Authority Regulation Number 59/POJK.04/2015 concerning Publications by Securities Rating Agencies (State Gazette of the Republic of Indonesia Year 2015 Number 410, Supplement to the State Gazette of the Republic of Indonesia Number 5828), are repealed and declared invalid.

Article 61
This Financial Services Authority Regulation comes into force on the date of its promulgation.

This copy is in accordance with the original
Director of Legal Affairs 1
Legal Department signed
Mufli Asmawidjaja

To ensure that everyone knows it, order the promulgation of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 1, 2021
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on December 3, 2021
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2021 NUMBER 263

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 24 /POJK.04/2021
CONCERNING
GUIDELINES FOR THE ACTIVITIES OF SECURITIES RATING AGENCIES

I. GENERAL
Securities Rating Agencies play an important role in the issuance of Rating-able Securities, namely by establishing Ratings and monitoring the Ratings that have been published, which are used by investors in making investment decisions. That in order to increase investor protection and public trust, particularly regarding Securities Rating, it is necessary to be enhanced through the ethical, credible behavior of Securities Rating Agencies and good governance in conducting ratings.

As regulated in Article 6 of Law Number 21 of 2011 concerning the Financial Services Authority, the Financial Services Authority has the authority to regulate and supervise financial business activities in the capital market sector, one of which is Securities Rating Agencies. As an effort to regulate and supervise the activities of Securities Rating Agencies, the Financial Services Authority has issued several regulations, namely:

1. OJK Regulation Number 38/POJK.04/2018 concerning Licensing of Securities Rating Agencies;
2. OJK Regulation Number 51/POJK.04/2015 concerning the Code of Conduct of Securities Rating Agencies;
3. OJK Regulation Number 52/POJK.04/2015 concerning Guidelines for Rating Agreements;
4. OJK Regulation Number 57/POJK.04/2015 concerning Reports by Securities Rating Agencies;
5. OJK Regulation Number 58/POJK.04/2015 concerning Document Maintenance by Securities Rating Agencies;
6. OJK Regulation Number 59/POJK.04/2015 concerning Publications by Securities Rating Agencies.

Based on the considerations as described above and by considering applicable international principles and the omnibus regulation concept, the Financial Services Authority needs to codify and refine existing regulations regarding Securities Rating Agencies to be more effective and efficient and in line with international principles by establishing a Financial Services Authority Regulation concerning Guidelines for the Activities of Securities Rating Agencies. The main provisions in this Financial Services Authority Regulation include, among others:

1. regarding the quality and integrity of the Rating Process, independence and avoidance of conflicts of interest, responsibility to investors and the Rated Party or the Party whose Securities are rated, governance, risk management, and Employee training, as well as disclosure and communication with market participants;
2. reporting and document maintenance by Securities Rating Agencies; and
3. other provisions, administrative sanctions, transitional provisions, and final provisions.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Clear enough.

Article 3
Clear enough.

Article 4
Clear enough.

Article 5
Clear enough.

Article 6
Clear enough.

Article 7
Clear enough.

Article 8
Paragraph (1)
What is meant by periodic monitoring and updating is monitoring and updating carried out in accordance with the provisions of applicable legislation. Paragraph (2) Clear enough.

Article 9
Clear enough.

Article 10
Paragraph (1)
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Determination of Analyst competence by considering among others the level of education, experience in the Rating industry sector, and experience in analyzing specific industry sectors. Paragraph (2) Clear enough.

Article 11
Clear enough.

Article 12
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Recommendations related to the business activities of the Rated Party and/or the Party whose Securities are rated, among others company structure, assets and liabilities, business operations, investment plans, funding sources, business combinations, and structured financial product design. Structured financial products include among others asset-backed Securities and real estate investment funds.

Article 13
Clear enough.

Article 14
Paragraph (1)
Conflicts of interest that can affect the Rating Methodology, Rating Actions, and/or analysis and decisions of the Securities Rating Agency and Employees, include among others:
a. The Securities Rating Agency and Employees are paid based on the Rating issued. b. The Securities Rating Agency and Employees are paid by the Rated Party and/or the Party whose Securities are rated to provide services other than Rating.
c. providing initial indications or similar indications of Rating results to the Rated Party and/or the Party whose Securities are rated before the Rating Process is completed.
d. having an Affiliation relationship with the Rated Party and/or the Party whose Securities will be rated.
Paragraph (2)
Clear enough.

Article 15
Clear enough.

Article 16
Letter a
The mechanism for granting approval by the Financial Services Authority is carried out after first obtaining a request from the Securities Rating Agency to conduct other business activities. Letter b Business activities that can cause conflicts of interest include among others providing consulting services.

Article 17
Clear enough.

Article 18
Clear enough.

Article 19
Letter a
Clear enough.
Letter b
Close family refers to parties who have a family relationship due to marriage and descent.
Number 1
The Securities referred to do not include collective investment schemes that have Securities issued by the Rated Party and/or the Party whose Securities are rated. Number 2 Examples of significant business relationships include among others Employees having a business that supplies raw materials to the Rated Party or the Party whose Securities are rated. Number 3 Clear enough.

Article 20
Clear enough.

Article 21
Clear enough.

Article 22
Paragraph (1)
Disclosure of Rating results includes among others the nature and limitations of the Rating and the risk if using the Rating as a recommendation for making investment decisions and/or opinions on the fairness value of Securities and/or the value of the Party given the Rating. Examples of other Rating users include among others the Rated Party, the Party whose Securities are rated, and Securities underwriters. Paragraph (2) Clear enough.

Article 23
Clear enough.

Article 24
Clear enough.

Article 25
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Clear enough.
Letter e
History of failure rates is known as the term historical default rate.
Letter f
Clear enough.

Article 26
Clear enough.

Article 27
Clear enough.

Article 28
Clear enough.

Article 29
Paragraph (1)
Rating withdrawal is known as the term rating withdrawal. Rating withdrawal is the cessation of monitoring of Rating results, which among others is caused by the fact that the rated Securities have been fully paid off. Paragraph (2) Clear enough. Paragraph (3) Clear enough.

Article 30
Paragraph (1)
Letter a
Purposes other than those related to Rating activities include disclosing confidential information and/or material non-public information to other Employees who are not involved in that Rating activity. Letter b Clear enough. Letter c Clear enough. Paragraph (2) Clear enough.

Article 31
Clear enough.

Article 32
Clear enough.

Article 33
What is meant by relevant material includes among others:
a. the code of conduct of the Securities Rating Agency; b. legislation related to the Rating industry;
c. Rating Methodology;
d. policies and procedures for managing conflicts of interest; and/or e. policies and procedures for handling confidential information or material non-public information.

Article 34
Clear enough.

Article 35
Clear enough.

Article 36
Clear enough.

Article 37
Paragraph (1)
Certain parties include among others the Rated Party or the Party whose Securities are rated.
Paragraph (2)
Clear enough.

Article 38
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Additional material information or explanations are additional information or explanations that can affect the Initial Rating result.
Letter e
Clear enough.
Letter f
Clear enough.

Article 39
Clear enough.

Article 40
Clear enough.

Article 41
Clear enough.

Article 42
Clear enough.

Article 43
Clear enough.

Article 44
Clear enough.

Article 45
Clear enough.

Article 46
Paragraph (1)
Letter a
Submission of change reports does not need to be accompanied by documents if they have already been submitted to the Financial Services Authority in the process of assessing the competence and propriety of members of the board of directors and/or the board of commissioners. Number 1 Clear enough. Number 2 Letter a) Clear enough. Letter b) Clear enough. Letter c) Clear enough. Letter d) Clear enough. Letter e) Clear enough. Letter f) Clear enough. Letter g) What is meant by "never committed material violations" includes among others never committing violations that resulted in members of the board of directors and members of the board of commissioners being subject to administrative sanctions in the form of license revocation, approval cancellation, and/or registration cancellation by the Financial Services Authority within the last 5 (five) years. Letter h) Clear enough. Letter i) Clear enough. Letter j) Clear enough. Number 3 Clear enough. Number 4 Clear enough. Number 5 Clear enough. Letter b Clear enough. Letter c Clear enough. Letter d Clear enough. Letter e Changes related to the identity of the Securities Rating Agency include among others changes in name and logo. Letter f Clear enough. Letter g Clear enough. Letter h Clear enough. Letter i Clear enough. Paragraph (2) Clear enough. Paragraph (3) Clear enough.

Article 47
Clear enough.

Article 48
Clear enough.

Article 49
Clear enough.

Article 50
Clear enough.

Article 51
Clear enough.

Article 52
Clear enough.

Article 53
Clear enough.

Article 54
Clear enough.

Article 55
Clear enough.

Article 56
Clear enough.

Article 57
What is meant by specific actions includes among others actions by the Financial Services Authority to order the Securities Rating Agency to adjust the Securities Rating Agency's code of conduct.

Article 58
Clear enough.

Article 59
Clear enough.

Article 60
Clear enough.

Article 61
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6742