FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 17/POJK.04/2015

CONCERNING

THE ISSUANCE AND REQUIREMENTS FOR SHARIA-COMPLIANT SECURITIES IN THE FORM OF STOCKS

BY SHARIA-COMPLIANT ISSUERS OR SHARIA-COMPLIANT PUBLIC COMPANIES

BY THE GRACE OF THE ALMIGHTY GOD,

THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering: that in order to encourage the development of the Sharia Capital Market industry in Indonesia, it is necessary to refine regulations regarding the Issuance of Sharia-Compliant Securities by establishing a Financial Services Authority Regulation concerning the Issuance and Requirements for Sharia-Compliant Securities in the Form of Stocks by Sharia-Compliant Issuers or Sharia-Compliant Public Companies;

Considering: 1. Law Number 8 of 1995 concerning Capital Markets (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);

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
COPY

DECIDES:

To Determine: A FINANCIAL SERVICES AUTHABILITY REGULATION CONCERNING THE ISSUANCE AND REQUIREMENTS FOR SHARIA-COMPLIANT SECURITIES IN THE FORM OF STOCKS BY SHARIA-COMPLIANT ISSUERS OR SHARIA-COMPLIANT PUBLIC COMPANIES.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Sharia-Compliant Issuer is an Issuer whose articles of association state that its activities, types of business, and business management methods are based on Sharia Principles in the Capital Market.
2. Sharia-Compliant Public Company is a Public Company whose articles of association state that its activities, types of business, and business management methods are based on Sharia Principles in the Capital Market.
3. Sharia Principles in the Capital Market are Islamic legal principles in Sharia activities in the Capital Market based on the fatwa of the National Sharia Board - Indonesian Ulema Council, provided that such fatwa does not conflict with Financial Services Authority Regulations concerning the Application of Sharia Principles in the Capital Market and/or other Financial Services Authority Regulations based on the fatwa of the National Sharia Board - Indonesian Ulema Council.
4. Sharia Supervisory Board is a board responsible for providing advice and suggestions and supervising the fulfillment of Sharia Principles in the Capital Market towards Parties conducting Sharia activities in the Capital Market.
5. Capital Market Sharia Experts (hereinafter abbreviated as ASPM) are:
   a. individuals who have knowledge and experience in the field of Sharia; or b. business entities whose directors and employees have knowledge and experience in the field of Sharia, which provide advice and/or supervise the implementation of the application of Sharia Principles in the Capital Market in business activities and/or provide statements of Sharia compliance for Sharia products or services in the Capital Market.
6. General Meeting of Shareholders (hereinafter abbreviated as GMS) is an organ of an Open Company that has authority not delegated to the Board of Directors or Board of Commissioners as referred to in the Law concerning Limited Liability Companies and/or the articles of association of Open Companies.

Article 2

(1) Sharia-Compliant Issuers or Sharia-Compliant Public Companies issuing Sharia-Compliant Securities in the form of stocks must fulfill the provisions in Financial Services Authority Regulations concerning the Application of Sharia Principles in the Capital Market, this Financial Services Authority Regulation, and other capital market legislation. (2) The articles of association of Sharia-Compliant Issuers or Sharia-Compliant Public Companies issuing Sharia-Compliant Securities in the form of stocks must contain provisions that the activities, types of business, and business management methods of the Sharia-Compliant Issuer or Sharia-Compliant Public Company are conducted based on Sharia Principles in the Capital Market. (3) In the event that the activities and types of business of Sharia-Compliant Issuers or Sharia-Compliant Public Companies as referred to in paragraph (2) no longer comply with Sharia Principles in the Capital Market, the stocks of such Sharia-Compliant Issuers or Sharia-Compliant Public Companies no longer constitute Sharia-Compliant Securities. (4) In the event that the business management methods of Sharia-Compliant Issuers or Sharia-Compliant Public Companies as referred to in paragraph (2) no longer comply with Sharia Principles in the Capital Market, the Financial Services Authority may declare that the stocks of such Sharia-Compliant Issuers or Sharia-Compliant Public Companies no longer constitute Sharia-Compliant Securities.

Article 3

(1) Sharia-Compliant Issuers or Sharia-Compliant Public Companies as referred to in Article 2 paragraph (1) must have a Sharia Supervisory Board.
(2) Members of the Sharia Supervisory Board as referred to in paragraph (1) must hold an ASPM license from the Financial Services Authority as regulated in Financial Services Authority Regulations concerning Capital Market Sharia Experts. (3) Members of the Sharia Supervisory Board as referred to in paragraph (2) must be appointed by the GMS.

CHAPTER II

ISSUANCE

Article 4

(1) Registration Statements for the purpose of a Public Offering of Sharia-Compliant Securities in the form of stocks by Sharia-Compliant Issuers must comply with capital market legislation governing Registration Statements and Public Offerings, as well as this Financial Services Authority Regulation. (2) Registration Statements by Sharia-Compliant Public Companies must comply with capital market legislation governing Registration Statements, as well as this Financial Services Authority Regulation.

Article 5

Prospectuses for the purpose of Registration Statements and Public Offerings by Sharia-Compliant Issuers as referred to in Article 4 paragraph (1) or information disclosure for the purpose of Registration Statements by Sharia-Compliant Public Companies as referred to in Article 4 paragraph (2) must disclose additional information as follows:
a. articles of association containing provisions that activities, types of business, and business management methods are conducted based on Sharia Principles in the Capital Market; and b. members of the Sharia Supervisory Board, along with their duties and responsibilities.

Article 6

(1) The Sharia Supervisory Board of Sharia-Compliant Issuers or Sharia-Compliant Public Companies must prepare an annual supervision report to shareholders regarding the fulfillment of compliance with Sharia Principles in the Capital Market by the supervised Sharia-Compliant Issuer or Sharia-Compliant Public Company. (2) The report as referred to in paragraph (1) must be submitted to the Board of Directors of the Sharia-Compliant Issuer or Sharia-Compliant Public Company. (3) The report as referred to in paragraph (2) must contain at least:
a. the intended recipient; b. the date of the report;
c. a statement that the prepared report is in accordance with this Financial Services Authority Regulation and Financial Services Authority Regulations concerning Capital Market Sharia Experts;
d. a statement regarding the time frame and scope of supervision or other activities conducted by the Sharia Supervisory Board; e. a statement regarding the opinion of the Sharia Supervisory Board over the supervision or other activities conducted as referred to in letter d; and f. signatures, names, positions, and ASPM license numbers of the members of the Sharia Supervisory Board.

CHAPTER III

CHANGES IN ACTIVITIES, TYPES OF BUSINESS, AND BUSINESS MANAGEMENT METHODS

Article 7

Sharia-Compliant Issuers or Sharia-Compliant Public Companies as referred to in Article 4 may only amend the articles of association related to activities, types of business, and business management methods no longer based on Sharia Principles in the Capital Market if:
a. there is a proposal from shareholders meeting the following requirements:
1. originating from shareholders meeting requirements as regulated in the Law concerning Limited Liability Companies and Financial Services Authority Regulations concerning Plans and Implementation of General Meetings of Shareholders of Open Companies; and
2. the shareholder proposal is accompanied by:
a) explanations, considerations, and reasons for amending the articles of association related to activities, types of business, and business management methods; b) plans for activities, types of business, and business management methods after the Sharia-Compliant Issuer or Sharia-Compliant Public Company amends the articles of association; and c) methods for resolving issues for shareholders who do not agree with the amendment of the articles of association; b. the proposal as referred to in letter a has been approved by the GMS; and
c. the quorum for attendance and decisions of the GMS as referred to in letter b is implemented in accordance with Financial Services Authority Regulations concerning Plans and Implementation of General Meetings of Shareholders of Open Companies, and must be conducted with the provision that shareholders proposing the amendment of the articles of association and their affiliates are considered to have given the same decision as shareholders who did not propose the amendment of the articles of association.

Article 8

(1) Issuers or Public Companies may only amend the articles of association related to activities, types of business, and business management methods from conventional to based on Sharia Principles in the Capital Market if:
a. there is a proposal from shareholders meeting the following requirements:
1. originating from shareholders meeting requirements as regulated in the Law concerning Limited Liability Companies and Financial Services Authority Regulations concerning Plans and Implementation of General Meetings of Shareholders of Open Companies; and
2. the shareholder proposal is accompanied by:
a) explanations, considerations, and reasons for amending the articles of association related to activities, types of business, and business management methods; b) plans for activities, types of business, and business management methods after the Sharia-Compliant Issuer or Sharia-Compliant Public Company amends the articles of association; and c) methods for resolving issues for shareholders who do not agree with the amendment of the articles of association; and b. the proposal as referred to in letter a has been approved by the GMS. (2) Sharia-Compliant Issuers or Sharia-Compliant Public Companies as referred to in paragraph (1) must appoint a Sharia Supervisory Board at the GMS regarding the amendment of the articles of association.

Article 9

The holding of a GMS with the agenda of amending the articles of association as referred to in Article 7 and Article 8 must be implemented in accordance with Financial Services Authority Regulations concerning Plans and Implementation of General Meetings of Shareholders of Open Companies.

Article 10

The notice of GMS for the purpose of amending the articles of association as referred to in Article 9 must contain information as referred to in the notice provisions of Financial Services Authority Regulations concerning Plans and Implementation of General Meetings of Shareholders of Open Companies, and additional information as follows:
a. the GMS proposal to amend the articles of association originates from shareholders; b. explanations, considerations, and reasons for amending the articles of association related to activities, types of business, and business management methods;
c. plans for activities, types of business, and business management methods after the amendment of the articles of association;
d. methods for resolving issues for shareholders who do not agree with the amendment of the articles of association; and e. an explanation that the amendment of the articles of association is only effective after obtaining GMS approval and the approval of the competent Minister.

Article 11

(1) Every shareholder who does not approve the amendment of the articles of association as referred to in Article 7 and Article 8 has the right to request the Sharia-Compliant Issuer or Sharia-Compliant Public Company, or request the Issuer or Public Company, to buy back their shares at a fair price if they do not approve the actions of the Sharia-Compliant Issuer or Sharia-Compliant Public Company or do not approve the actions of the Issuer or Public Company, which harm shareholders, with the following provisions:
a. in the event that their shares are not listed on the Stock Exchange, the buyback price must be at least equal to the fair price determined by an independent Appraiser; b. in the event that their shares are listed and traded on the Stock Exchange but have not been traded or have been temporarily suspended from trading for 90 (ninety) days, the buyback price must be at least equal to the highest price in the last 12 (twelve) months prior to the last trading day or the day trading was suspended; or
c. in the event that their shares are listed and traded on the Stock Exchange, the buyback price must be at least equal to the highest price in the last 90 (ninety) days prior to the announcement of the GMS for amending the articles of association.
(2) In the event that the shares requested for buyback as referred to in paragraph (1) exceed the limits for share repurchase by Sharia-Compliant Issuers or Sharia-Compliant Public Companies or Issuers or Public Companies as referred to in capital market legislation governing share repurchases issued by Issuers or Public Companies, the shareholders proposing the amendment of the articles of association must buy back the shares themselves or ensure that the remaining shares are bought back by third parties.

CHAPTER IV

SANCTION PROVISIONS

Article 12

(1) Without prejudice to criminal provisions in the field of Capital Markets, the Financial Services Authority has the authority to impose administrative sanctions on any party violating the provisions of this Financial Services Authority Regulation, including parties causing the violation, in the form of:
a. written warnings; b. fines, namely the obligation to pay a certain amount of money;
c. business activity restrictions;
d. business activity suspension; e. business license revocation; f. approval cancellation; and g. registration cancellation.
(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of fines as referred to in paragraph (1) letter b may be imposed independently or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 13

In addition to administrative sanctions as referred to in Article 12 paragraph (1), the Financial Services Authority may take specific actions against any party violating the provisions of this Financial Services Authority Regulation.

Article 14

The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 12 paragraph (1) and specific actions as referred to in Article 13 to the public.

CHAPTER V

TRANSITIONAL PROVISIONS

Article 15

(1) The obligation for members of the Sharia Supervisory Board to hold an ASPM license as referred to in Article 3 paragraph (2) for 2 (two) years since this Financial Services Authority Regulation takes effect may be replaced by individuals meeting the requirements as referred to in Article 29 paragraph (1) of Financial Services Authority Regulations concerning Capital Market Sharia Experts, provided that such individuals report to the Financial Services Authority no later than 6 (six) months since the taking effect of the Financial Services Authority Regulation concerning Capital Market Sharia Experts. (2) Individuals who have submitted reports to the Financial Services Authority as referred to in paragraph (1) may become members of the Sharia Supervisory Board even without holding an ASPM license as referred to in Article 3 paragraph (2) for a maximum of 2 (two) years since the taking effect of the Financial Services Authority Regulation concerning Capital Market Sharia Experts.

CHAPTER VI

CLOSING PROVISIONS

Article 16

Upon the taking effect of this Financial Services Authority Regulation, Number 2 of Regulation Number IX.A.13, Appendix of the Decision of the Chairman of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-181/BL/2009 dated June 30, 2009 concerning the Issuance of Sharia-Compliant Securities is repealed and declared invalid.

Article 17

This Financial Services Authority Regulation takes effect on the date of enactment.

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

Established in Jakarta on November 3, 2015

CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Enacted in Jakarta on November 10, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 268

A copy in accordance with the original
Director of Law 1
Department of Law

signed

Sudarmaji

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EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 17/POJK.04/2015

CONCERNING

THE ISSUANCE AND REQUIREMENTS FOR SHARIA-COMPLIANT SECURITIES IN THE FORM OF STOCKS

BY SHARIA-COMPLIANT ISSUERS OR SHARIA-COMPLIANT PUBLIC COMPANIES

I. GENERAL

In order to develop the Sharia Capital Market so that it can grow stably and sustainably, the development of adequate market infrastructure is required. One important infrastructure is the availability of clear, understandable, and implementable regulations so that the regulations become market-friendly. Furthermore, given that Sharia-Compliant Securities have special characteristics, regulations corresponding to the characteristics of each type of Security are required.

The dynamic development of the Sharia Capital Market necessitates refinements to Regulation Number IX.A.13, Appendix of the Decision of the Chairman of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-181/BL/2009 dated June 30, 2009 concerning the Issuance of Sharia-Compliant Securities, considering that such regulation governs the issuance of various types of Sharia-Compliant Securities. Given these conditions, specific provisions appropriate for each type of Sharia-Compliant Security are required. This aligns with common practice and international standards. This Financial Services Authority Regulation is one of 5 (five) regulations derived from Regulation Number IX.A.13, Appendix of the Decision of the Chairman of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-181/BL/2009 dated June 30, 2009 concerning the Issuance of Sharia-Compliant Securities, but specifically governs the issuance of Sharia-Compliant Securities in the form of stocks, while simultaneously refining existing provisions in Regulation Number IX.A.13.

The main refinements to the regulations on the issuance of Sharia-Compliant Securities in the form of stocks include the regulation of the Sharia Supervisory Board and the regulation of changes from conventional Issuers to Sharia-Compliant Issuers.

II. ARTICLE BY ARTICLE

Article 1

Sufficiently clear.

Article 2

Paragraph (1)
Sufficiently clear.

Paragraph (2)
The term "business activities" includes, among others, financial services, plantations, basic industries, trade, tourism, transportation, telecommunications, mass media, and information technology. The term "types of business" includes, among others, banking financial services, insurance, financing, trade of pharmaceutical products, telecommunications products, and consumer goods. The term "business management methods" refers to how Issuers or Public Companies conduct business activities, including the acquisition and management of resources and assets, production processes and products in the form of goods or services, and legal relationships with third parties, which must not conflict with Sharia principles.

Paragraph (3)
Sufficiently clear.

Paragraph (4)
Sufficiently clear.

Article 3

Sufficiently clear.

Article 4

Paragraph (1)
Upon the taking effect of this Financial Services Authority Regulation, capital market legislation governing Registration Statements and Public Offerings includes, among others:
a. Regulation Number IX.A.3, Appendix of the Decision of the Chairman of the Capital Market Supervisory Board Number: KEP-44/PM/1996 dated January 17, 1996 concerning Procedures for Requesting Changes and/or Additional Information on Registration Statements; b. Regulation Number IX.C.2, Appendix of the Decision of the Chairman of the Capital Market Supervisory Board Number: KEP-51/PM/1996 dated January 17, 1996 concerning Guidelines on the Form and Content of Prospectuses for Public Offerings;
c. Regulation Number IX.A.8, Appendix of the Decision of the Capital Market Supervisory Board Number: KEP-41/PM/2000 dated October 27, 2000 concerning Initial Prospectuses and Info Memos;
d. Regulation Number IX.C.1, Appendix of the Decision of the Capital Market Supervisory Board Number: KEP-42/PM/2000 dated October 27, 2000 concerning Guidelines on the Form and Content of Registration Statements for Public Offerings; e. Regulation Number IX.C.3, Appendix of the Decision of the Capital Market Supervisory Board Number: KEP-43/PM/2000 dated October 27, 2000 concerning Guidelines on the Form and Content of Short Prospectuses for Public Offerings; f. Regulation Number IX.A.6, Appendix of the Decision of the Capital Market Supervisory Board Number: KEP-06/PM/2001 dated March 8, 2001 concerning Restrictions on Stocks Issued Prior to Public Offerings; g. Regulation Number IX.A.2, Appendix of the Decision of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-122/BL/2009 dated May 29, 2009 concerning Procedures for Registration for Public Offerings; h. Regulation Number IX.A.1, Appendix of the Decision of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-690/BL/2011 dated December 30, 2011 concerning General Provisions on the Submission of Registration Statements; and
i. Regulation Number IX.A.7, Appendix of the Decision of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-691/BL/2011 dated December 30, 2011 concerning Ordering and Allocation of Securities in Public Offerings.

Paragraph (2)
Upon the taking effect of this Financial Services Authority Regulation, capital market legislation governing Registration Statements includes, among others:
a. Regulation Number IX.B.1, Appendix of the Decision of the Capital Market Supervisory Board Number: KEP-49/PM/1996 dated January 17, 1996 concerning Guidelines on the Form and Content of Registration Statements for Public Companies; and b. Regulation Number IX.A.1, Appendix of the Decision of the Capital Market Supervisory Board and Financial Institutions Body Number: KEP-690/BL/2011 dated December 30, 2011 concerning General Provisions on the Submission of Registration Statements.

Article 5

Sufficiently clear.

Article 6

Paragraph (1)
Sufficiently clear.

Paragraph (2)
Sufficiently clear.

Paragraph (3)
Letter a
Sufficiently clear.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
The term "other activities" conducted by the Sharia Supervisory Board includes, among others:

1. providing advice and suggestions to the Board of Directors and Board of Commissioners of companies conducting activities in the Capital Market regarding matters related to Sharia aspects; or
2. conducting periodic reviews of the application of Sharia Principles in the Capital Market to the company's business activities.

Letter e
Sufficiently clear.

Letter f
Sufficiently clear.

Article 7

Sufficiently clear.

Article 8

Paragraph (1)
The term "conventional" means not stated in the articles of association that activities, types of business, and business management methods are implemented based on Sharia Principles in the Capital Market.

Paragraph (2)
Sufficiently clear.

Article 9

Sufficiently clear.

Article 10

Letter a
Sufficiently clear.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Letter e
The term "Minister" refers to the minister responsible for law and human rights.

Article 11

Paragraph (1)
Sufficiently clear.

Paragraph (2)
Upon the taking effect of this Financial Services Authority Regulation, capital market legislation governing the repurchase of shares issued by Issuers or Public Companies is Regulation Number XI.B.2, Appendix of the Decision of the Chairman of Bapepam and LK Number: KEP-105/BL/2010 dated April 13, 2010 concerning the Repurchase of Shares Issued by Issuers or Public Companies.

Article 12

Sufficiently clear.

Article 13

The term "specific actions" includes, among others:
a. postponement of the issuance of effectiveness statements, for example, effectiveness statements for mergers or consolidations; and b. postponement of the issuance of statements by the Financial Services Authority that there are no further comments on documents submitted to the Financial Services Authority for the purpose of capital increases through Preemptive Rights of Open Companies.

Article 14

Sufficiently clear.

Article 15

Sufficiently clear.

Article 16

Sufficiently clear.

Quite clear.
Article 17
Quite clear.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5757