Issuance and Requirements for Sharia Mutual Funds

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 33 /POJK.04/2019
CONCERNING
THE ISSUANCE AND REQUIREMENTS OF SHARIA MUTUAL FUNDS BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to follow the development of investment product innovation and provide Sharia investment alternatives for investors; b. that it is necessary to adjust the Financial Services Authority Regulation Number 19/POJK.04/2015 concerning the Issuance and Requirements of Sharia Mutual Funds to encourage the development of the Sharia capital market industry in Indonesia;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Issuance and Requirements of Sharia Mutual Funds;

Recalling:

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);
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 CONCERNING THE ISSUANCE AND REQUIREMENTS OF SHARIA MUTUAL FUNDS.

CHAPTER I
GENERAL PROVISIONS

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

Sharia Mutual Fund is a mutual fund as referred to in the Capital Market Law and its implementing regulations, the management of which does not contradict Sharia principles in the capital market.
Securities are negotiable instruments, namely debt certificates, commercial paper, shares, bonds, debt certificates, units of participation in collective investment contracts, forward contracts over Securities, and any derivatives of Securities.
Sharia Securities are Securities as referred to in the Capital Market Law and its implementing regulations, the contract, management method, business activities, and/or assets underlying the contract, management method, business activities, and/or assets related to the aforementioned Securities and the issuer thereof, which do not contradict Sharia principles in the capital market.
Foreign Sharia Securities are Sharia Securities offered through a public offering abroad and/or traded on a foreign Securities exchange and meeting the provisions as regulated in this Financial Services Authority Regulation.
Sukuk are Sharia Securities in the form of certificates or proof of ownership with equal value representing an indivisible or undivided share (syuyu’/undivided share) over the underlying assets.
Issuer is the party conducting a public offering.
Public Offering is the activity of offering Securities conducted by the Issuer to sell Securities to the public based on procedures regulated in the Capital Market Law and its implementing regulations.
Investment Manager is the party whose business activity manages a portfolio of Securities for clients or manages a collective investment portfolio for a group of clients, except insurance companies, pension funds, and banks that conduct their own business activities based on statutory regulations.
Custodian Bank is a general bank that has obtained approval from the Financial Services Authority to conduct business activities as a custodian.
Unit of Participation is a unit of measurement indicating the interest portion of each party in a collective investment portfolio.
Collective Investment Contract is a contract between the Investment Manager and the Custodian Bank that binds the holders of Units of Participation, where the Investment Manager is authorized to manage the collective investment portfolio and the Custodian Bank is authorized to carry out collective custody.
Sukuk-Based Sharia Mutual Fund is a Sharia Mutual Fund that invests in Sukuk with a composition of at least 85% (eighty-five percent) of the net asset value of the Sharia Mutual Fund invested in Sukuk offered in Indonesia through a Public Offering, Sharia state securities, and/or Sukuk offered not through a Public Offering.
Foreign Sharia Securities-Based Sharia Mutual Fund is a Sharia Mutual Fund that invests at least 51% (fifty-one percent) of the net asset value of the Sharia Mutual Fund in Foreign Sharia Securities.
Sharia Securities List is the Sharia Securities List as referred to in the Financial Services Authority Regulation concerning the criteria and issuance of the Sharia Securities List.
Issuer of the Sharia Securities List is the Issuer of the Sharia Securities List as referred to in the Financial Services Authority Regulation regulating concerning the criteria and issuance of the Sharia Securities List.
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 Council - Indonesian Ulema Council, insofar as the aforementioned fatwa does not contradict the Financial Services Authority Regulation 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 Council - Indonesian Ulema Council.
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.
Sharia Expert Team is a team responsible for the Sharia compliance of Sharia products or services in the capital market issued or released by the company.
Capital Market Sharia Expert, hereinafter abbreviated as ASPM, is an individual who has knowledge and experience in the Sharia field, or a business entity whose board of directors and employees have knowledge and experience in the Sharia field, that provides advice and/or supervises the implementation of the application of Sharia Principles in the Capital Market in the company's business activities and/or provides a statement of Sharia compliance for Sharia products or services in the capital market.
Public Company is a corporation whose shares are held by at least 300 (three hundred) shareholders and has paid-up capital of at least Rp3,000,000,000.00 (three billion rupiah) or a number of shareholders and paid-up capital determined by Government Regulation.

Article 2
Sharia Mutual Funds can be in the form of:
a. Sharia Money Market Mutual Fund; b. Sharia Fixed Income Mutual Fund;
c. Sharia Equity Mutual Fund;
d. Sharia Mixed Mutual Fund; e. Sharia Protected Mutual Fund; f. Sharia Index Mutual Fund; g. Foreign Sharia Securities-Based Sharia Mutual Fund; h. Sukuk-Based Sharia Mutual Fund;
i. Sharia Mutual Fund in the form of a Collective Investment Contract whose Units of Participation are traded on an exchange;
j. Sharia Mutual Fund in the form of a limited participation Collective Investment Contract; k. Sharia Target Date Mutual Fund; and
l. other Sharia Mutual Funds as determined by the Financial Services Authority.

Article 3
Parties conducting a Public Offering of Sharia Mutual Funds must follow statutory regulations in the capital market sector regulating:
a. general provisions for submitting registration statements; and b. mutual funds, except as specifically regulated in this Financial Services Authority Regulation.

Article 4
Every party issuing shares and/or Units of Participation of Sharia Mutual Funds must comply with:
a. Sharia Principles in the Capital Market as referred to in the Financial Services Authority Regulation concerning the application of Sharia Principles in the Capital Market; b. this Financial Services Authority Regulation; and
c. statutory regulations in the capital market sector regulating mutual funds.

Article 5
Sharia Mutual Funds fulfill Sharia Principles in the Capital Market if their contract, management method, and portfolio do not contradict Sharia Principles in the Capital Market as referred to in the Financial Services Authority Regulation concerning the application of Sharia Principles in the Capital Market.

Article 6
(1) Investment Managers managing Sharia Mutual Funds must have a Sharia Supervisory Board appointed by the board of directors.
(2) The issuance of Sharia Mutual Funds must obtain a Sharia compliance statement issued by the Sharia Supervisory Board of the Investment Manager or the Sharia Expert Team.
(3) Members of the Sharia Supervisory Board and the Sharia Expert Team as referred to in paragraph (2) must hold an ASPM license from the Financial Services Authority as referred to in the Financial Services Authority Regulation concerning Capital Market Sharia Experts. (4) The Sharia Supervisory Board as referred to in paragraph (1) and paragraph (2) is responsible for supervising Sharia Mutual Funds in order to continuously fulfill Sharia Principles in the Capital Market. (5) Costs arising from the implementation of the duties of the Sharia Supervisory Board and the Sharia Expert Team as referred to in paragraph (2) become the burden of the Investment Manager.

Article 7
(1) The Sharia Supervisory Board as referred to in Article 6 paragraph (4) must compile an annual supervision report on the fulfillment of compliance with Sharia Principles in the Capital Market for the supervised Sharia Mutual Funds. (2) The report as referred to in paragraph (1) must be submitted by the Sharia Supervisory Board to the Investment Manager managing the Sharia Mutual Fund. (3) The report as referred to in paragraph (2) must at least contain:
a. the intended party; b. the report date;
c. a statement that the compiled report is in accordance with this Financial Services Authority Regulation;
d. a statement regarding the time frame and scope of supervision conducted by the Sharia Supervisory Board; e. the opinion of the Sharia Supervisory Board over the supervision conducted as referred to in letter d; and f. the signature, name of the members of the Sharia Supervisory Board, the position of the members of the Sharia Supervisory Board, and the ASPM license number. (4) The annual supervision report as referred to in paragraph (1) must be submitted by the Investment Manager managing the Sharia Mutual Fund to the Financial Services Authority, with the submission deadline coinciding with the submission of the annual financial report of the Sharia Mutual Fund.

CHAPTER II
ISSUANCE OF SHARES OF SHARIA MUTUAL FUNDS IN THE FORM OF A CORPORATION

Article 8
Issuers conducting a Public Offering of shares of Sharia Mutual Funds in the form of a corporation must follow statutory regulations in the capital market sector regulating:
a. general provisions for submitting registration statements; b. registration statements for the purpose of a Public Offering of mutual funds in the form of a corporation; and
c. other mutual funds in the form of a corporation,
except as specifically regulated in this Financial Services Authority Regulation.

Article 9
The articles of association of Sharia Mutual Funds in the form of a corporation must contain provisions concerning business activities and the method of managing its business based on Sharia Principles in the Capital Market.

Article 10
(1) The management contract of Sharia Mutual Funds in the form of a corporation must be subject to the Financial Services Authority Regulation concerning guidelines for management contracts of mutual funds in the form of a corporation, except as specifically regulated in this Financial Services Authority Regulation. (2) The asset storage contract of Sharia Mutual Funds in the form of a corporation must be subject to the Financial Services Authority Regulation concerning guidelines for asset storage contracts of mutual funds in the form of a corporation, except as specifically regulated in this Financial Services Authority Regulation. (3) The management contract of Sharia Mutual Funds in the form of a corporation as referred to in paragraph (1) must contain provisions concerning:
a. the Investment Manager acts as an agent (wakilin) acting in the interest of the board of directors of the Sharia Mutual Fund in the form of a corporation as the principal (muwakil) with the authority to manage the Sharia Mutual Fund in the form of a corporation; b. the contract, management method, and portfolio of the Sharia Mutual Fund in the form of a corporation do not contradict Sharia Principles in the Capital Market;
c. members of the Sharia Supervisory Board, along with their duties and responsibilities;
d. the mechanism for cleansing the assets of the Sharia Mutual Fund in the form of a corporation from elements contradicting Sharia Principles in the Capital Market; e. the word "Sharia" in the name of the Sharia Mutual Fund in the form of a corporation; f. investments of the Sharia Mutual Fund in the form of a corporation can only be in the form of:

shares offered through a Public Offering and traded on a Securities exchange in Indonesia and included in the Sharia Securities List established by the Financial Services Authority as referred to in the Financial Services Authority Regulation concerning criteria and issuance of the Sharia Securities List;
Sharia pre-emptive rights and Sharia warrants offered through a Public Offering and/or traded on a Securities exchange in Indonesia;
Sukuk offered in Indonesia through a Public Offering;
shares traded on a foreign Securities exchange included in the Sharia Securities List issued by the Issuer of the Sharia Securities List;
Sukuk offered through a Public Offering and/or traded on a foreign Securities exchange, included in the Sharia Securities List issued by the Issuer of the Sharia Securities List;
domestic Sharia asset-backed securities that have received a rating from a Securities rating company that has obtained a business license from the Financial Services Authority;
Sukuk offered not through a Public Offering that have received a rating from a Securities rating company that has obtained a business license from the Financial Services Authority;
Sharia Securities fulfilling Sharia Principles in the Capital Market issued by an international institution where the Government of the Republic of Indonesia is a member;
domestic Sharia money market instruments with a maturity of less than 1 (one) year, either in rupiah denomination or other currency denominations;
Sharia pre-emptive rights and Sharia warrants offered through a Public Offering and/or traded on a foreign Securities exchange included in the Sharia Securities List issued by the Issuer of the Sharia Securities List; and/or
other Sharia Securities determined by the Financial Services Authority; and
g. the mechanism for cleansing the assets of the Sharia Mutual Fund in the form of a corporation from the non-halal portion of dividend income received by the Sharia Mutual Fund, for those implementing such a policy. (4) The asset storage contract of Sharia Mutual Funds in the form of a corporation as referred to in paragraph (2) must contain provisions concerning:
a. the Custodian Bank acts as an agent (wakilin) acting in the interest of the board of directors of the Sharia Mutual Fund in the form of a corporation as the principal (muwakil) with the authority to carry out the storage of assets of the Sharia Mutual Fund in the form of a corporation; b. members of the Sharia Supervisory Board of the Custodian Bank or directors of the Custodian Bank or persons in charge of activities mandated by the board of directors of the Custodian Bank who have adequate knowledge and/or experience in Sharia finance, along with their duties and responsibilities;
c. the rights and obligations of the Sharia Mutual Fund in the form of a corporation and the Custodian Bank if the managed funds and/or assets of the Sharia Mutual Fund in the form of a corporation contradict Sharia Principles in the Capital Market, statutory regulations in the capital market sector regulating mutual funds, and/or the management contract between the Sharia Mutual Fund in the form of a corporation and the Investment Manager, including concerning the mechanism for cleansing the assets of the Sharia Mutual Fund in the form of a corporation from elements contradicting Sharia Principles in the Capital Market; and
d. the word "Sharia" in the name of the Sharia Mutual Fund in the form of a corporation.
(5) Provisions that must be included in the management contract and asset storage contract of Sharia Mutual Funds in the form of a corporation as referred to in paragraph (3) and paragraph (4) must be included as additional information in the prospectus of the Sharia Mutual Fund in the form of a corporation.

Article 11
Sharia Mutual Funds in the form of a corporation investing in Sharia Securities and/or Sharia money market instruments issued by 1 (one) party must have at most 20% (twenty percent) of the net asset value of the Sharia Mutual Fund in the form of a corporation at any given time.

Article 12
The provisions as referred to in Article 11 do not apply to Sharia Securities in the form of:
a. Sharia Bank Indonesia certificates; b. Sharia Securities issued by the Government of the Republic of Indonesia; and/or
c. Sharia Securities issued by an international financial institution where the Government of the Republic of Indonesia is a member.

CHAPTER III
ISSUANCE OF UNITS OF PARTICIPATION OF SHARIA MUTUAL FUNDS IN THE FORM OF A COLLECTIVE INVESTMENT CONTRACT

Article 13
Parties conducting a Public Offering of Units of Participation of Sharia Mutual Funds in the form of a Collective Investment Contract must follow:
a. statutory regulations in the capital market sector regulating the submission of registration statements; b. provisions for registration statements for the purpose of a Public Offering of mutual funds in the form of a Collective Investment Contract as referred to in the Financial Services Authority Regulation concerning mutual funds in the form of a Collective Investment Contract; and
c. statutory regulations in the capital market sector regulating other mutual funds in the form of a Collective Investment Contract,
except as specifically regulated in this Financial Services Authority Regulation.

Article 14
(1) The Collective Investment Contract of Sharia Mutual Funds in the form of a Collective Investment Contract must be subject to the Financial Services Authority Regulation concerning mutual funds in the form of a Collective Investment Contract, except as specifically regulated in this Financial Services Authority Regulation. (2) The Collective Investment Contract of Sharia Mutual Funds in the form of a Collective Investment Contract must contain:
a. the Investment Manager and the Custodian Bank act as agents (wakilin) acting in the interest of the holders of Units of Participation as the principals (muwakil), where the Investment Manager is authorized to manage the collective investment portfolio and the Custodian Bank is authorized to carry out collective custody; b. the contract, management method, and portfolio of the Sharia Mutual Fund in the form of a Collective Investment Contract do not contradict Sharia Principles in the Capital Market;
c. members of the Sharia Supervisory Board of the Investment Manager;
d. members of the Sharia Supervisory Board, members of the board of directors or persons in charge of activities mandated by the board of directors, who have adequate knowledge and/or experience in Sharia finance, along with their duties and responsibilities, for the Custodian Bank; e. the mechanism for cleansing the assets of the Sharia Mutual Fund in the form of a Collective Investment Contract from elements contradicting Sharia Principles in the Capital Market; f. the word "Sharia" in the name of the Sharia Mutual Fund in the form of a Collective Investment Contract issued; g. investments of the Sharia Mutual Fund in the form of a Collective Investment Contract can only be in the form of:

shares offered through a Public Offering and traded on a Securities exchange in Indonesia and included in the Sharia Securities List established by the Financial Services Authority;
Sharia pre-emptive rights and Sharia warrants offered through a Public Offering and/or traded on a Securities exchange in Indonesia;
Sukuk offered in Indonesia through a Public Offering;
shares traded on a foreign Securities exchange included in the Sharia Securities List issued by the Issuer of the Sharia Securities List;
Sukuk offered through a Public Offering and/or traded on a foreign Securities exchange, included in the Sharia Securities List issued by the Issuer of the Sharia Securities List;
domestic Sharia asset-backed securities that have received a rating from a Securities rating company that has obtained a business license from the Financial Services Authority;
Sukuk offered not through a Public Offering that have received a rating from a Securities rating company that has obtained a business license from the Financial Services Authority;
Sharia Securities issued by an international institution where the Government of the Republic of Indonesia is a member;
domestic Sharia money market instruments with a maturity of less than 1 (one) year, either in rupiah denomination or other currency denominations;
Sharia pre-emptive rights and Sharia warrants offered through a Public Offering and/or traded on a foreign Securities exchange included in the Sharia Securities List issued by the Issuer of the Sharia Securities List; and/or
other Sharia Securities determined by the Financial Services Authority;
h. the mechanism for cleansing the assets of the Sharia Mutual Fund in the form of a Collective Investment Contract from the non-halal portion of dividend income received by the Sharia Mutual Fund for those implementing such a policy; and
i. the specifics of the Sharia Mutual Fund in the form of a Collective Investment Contract formed specifically for individual investors, in the event that the Sharia Mutual Fund in the form of a Collective Investment Contract is formed specifically for individual investors.
(3) Provisions that must be included in the Collective Investment Contract of Sharia Mutual Funds in the form of a Collective Investment Contract as referred to in paragraph (2) must be included as additional information in the prospectus of the Sharia Mutual Fund in the form of a Collective Investment Contract.

Article 15
Sharia Mutual Funds in the form of a Collective Investment Contract may invest in Sharia Securities and/or Sharia money market instruments issued by 1 (one) party at most 20% (twenty percent) of the net asset value of the Sharia Mutual Fund in the form of a Collective Investment Contract at any given time.

Article 16
The provisions as referred to in Article 15 do not apply to Sharia Securities in the form of:
a. Sharia Bank Indonesia certificates; b. Sharia Securities issued by the Government of the Republic of Indonesia; and/or
c. Sharia Securities issued by an international financial institution where the Government of the Republic of Indonesia is a member.

CHAPTER IV
SHARIA MONEY MARKET MUTUAL FUNDS, SHARIA FIXED INCOME MUTUAL FUNDS, SHARIA EQUITY MUTUAL FUNDS, AND SHARIA MIXED MUTUAL FUNDS

Article 17
Parties conducting a Public Offering of Sharia Money Market Mutual Funds, Sharia Fixed Income Mutual Funds, Sharia Equity Mutual Funds, and Sharia Mixed Mutual Funds must follow:
a. the Financial Services Authority Regulation concerning guidelines for daily announcements of the net asset value of open-end mutual funds; and b. statutory regulations in the capital market sector regulating other related mutual funds, except as specifically regulated in this Financial Services Authority Regulation.

Article 18
Investment Managers managing Sharia Money Market Mutual Funds must invest in:

a. domestic Sharia money market instruments, both in rupiah denomination and other currency denominations; and/or b. Fixed-income Sharia Securities, which:

are issued with a maturity period of no more than 1 (one) year; and/or
have a remaining maturity of no more than 1 (one) year.

Article 19
Investment Managers managing Fixed-income Sharia Mutual Funds are required to invest at least 80% (eighty percent) of the net asset value in the form of Fixed-income Sharia Securities.

Article 20
Investment Managers managing Equity Sharia Mutual Funds are required to invest at least 80% (eighty percent) of the net asset value in the form of Equity Sharia Securities.

Article 21
Investment Managers managing Mixed Sharia Mutual Funds may only invest in Fixed-income Sharia Securities, Equity Sharia Securities, and/or domestic money market instruments that comply with Sharia Principles in the Capital Market with the following provisions:
a. investment in any one of these investment instruments is at most 79% (seventy-nine percent) of the net asset value; and b. the portfolio of the Sharia Mutual Fund must contain Equity Sharia Securities and Fixed-income Sharia Securities.

CHAPTER V
PROTECTED SHARIA MUTUAL FUNDS AND INDEX SHARIA MUTUAL FUNDS First Section Protected Sharia Mutual Funds

Article 22
Parties conducting a Public Offering of Protected Sharia Mutual Funds must comply with:
a. Financial Services Authority Regulations regarding guidelines for the management of protected mutual funds, guaranteed mutual funds, and index mutual funds; and b. provisions of legislation in the capital market sector regulating other related mutual funds, except as specifically regulated in this Financial Services Authority Regulation.

Article 23
The offering period and the number of shares or Investment Units offered in the Public Offering of Protected Sharia Mutual Funds are limited and not continuous.

Article 24
The Investment Manager of a Protected Sharia Mutual Fund must provide additional information in the prospectus at least covering investment policies consisting of:
a. the percentage of the net asset value of the Protected Sharia Mutual Fund to be invested in Fixed-income Sharia Securities, Sharia money market instruments, and other Sharia Securities; b. the type of Sharia Security portfolio serving as the protection basis, which is by investing in Fixed-income Sharia Securities included in the investment-worthy category, so that the value of Fixed-income Sharia Securities at maturity can at least cover the protected amount; and
c. criteria for selecting Sharia Securities and/or Sharia money market instruments.

Article 25
The portfolio of Sharia Securities of Protected Sharia Mutual Funds must have the following composition:
a. at least 70% (seventy percent) of the net asset value of the Sharia Mutual Fund must be invested in:

Fixed-income Sharia Securities issued, offered, and/or traded in Indonesia based on Indonesian legislation provisions; and/or
Fixed-income Sharia Securities traded abroad, but issued by:
a) The Government of the Republic of Indonesia; b) Indonesian legal entities that are Issuers and/or Public Companies as referred to in the Capital Market Law; c) Foreign legal entities whose majority or all shares are directly or indirectly owned by Issuers or Public Companies as referred to in letter b) and such foreign legal entities are specifically established to raise funds from abroad for the benefit of the aforementioned Issuers or Public Companies; and/or d) Foreign legal entities whose majority or all shares are directly or indirectly owned by State-Owned Enterprises;

b. at most 30% (thirty percent) of the net asset value of the Sharia Mutual Fund is invested in:

Sharia Securities in the form of shares traded on foreign stock exchanges listed in the Sharia Securities List issued by the Sharia Securities List Issuing Party; and/or
Sukuk offered through Public Offering and/or traded on foreign stock exchanges included in the Sharia Securities List issued by the Sharia Securities List Issuing Party, the information of which can be accessed from Indonesia through mass media or websites.

Second Section
Index Sharia Mutual Funds

Article 26
Parties conducting a Public Offering of Index Sharia Mutual Funds must comply with:
a. Financial Services Authority Regulations regarding guidelines for the management of protected mutual funds, guaranteed mutual funds, and index mutual funds; and b. provisions of legislation in the capital market sector regulating other related mutual funds, except as specifically regulated in this Financial Services Authority Regulation.

Article 27
The Public Offering of shares or Investment Units of Index Sharia Mutual Funds must be continuous or limited, both in terms of the offering period and the number of shares or Investment Units offered.

Article 28
In the event an Investment Manager intends to issue an Index Sharia Mutual Fund:
a. The Investment Manager must provide additional information in the prospectus regarding investment provisions as follows:

at least 80% (eighty percent) of the net asset value of the Index Sharia Mutual Fund must be invested in Sharia Securities that are part of the collection of Sharia Securities in the index;
investment in Sharia Securities in the index as referred to in number 1 is at least 80% (eighty percent) of all Sharia Securities in the index;
the weighting of each Sharia Security in the Index Sharia Mutual Fund is at least 80% (eighty percent) and at most 120% (one hundred twenty percent) of the weighting of each Sharia Security in the reference index; and
the degree of deviation of the performance of the Index Sharia Mutual Fund from the performance of the reference index.
b. Index Sharia Mutual Funds must use an index based on Sharia Securities available in mass media or accessible via websites.
c. The Financial Services Authority has the authority to reject Sharia Security indices to be used as the investment target of Index Sharia Mutual Funds, accompanied by reasons for rejection.

CHAPTER VI
SHARIA MUTUAL FUNDS BASED ON FOREIGN SHARIA SECURITIES

Article 29
Parties conducting a Public Offering of Sharia Mutual Funds Based on Foreign Sharia Securities must comply with:
a. Financial Services Authority Regulations regarding guidelines for the management of mutual funds in the form of corporations; b. provisions of legislation in the capital market sector regulating guidelines for the management of mutual funds in the form of Collective Investment Contracts; and
c. provisions of legislation in the capital market sector regulating other related mutual funds,
except as specifically regulated in this Financial Services Authority Regulation.

Article 30
Sharia Mutual Funds Based on Foreign Sharia Securities must invest in Foreign Sharia Securities at least 51% (fifty-one percent) of the net asset value of the Sharia Mutual Funds Based on Foreign Sharia Securities.

Article 31
(1) Foreign Sharia Securities must meet the following provisions:
a. not issued by:

The Government of the Republic of Indonesia;
Indonesian legal entities that are Issuers and/or Public Companies;
Foreign legal entities that:
a) have their majority or all shares directly or indirectly owned by Issuers or Public Companies as referred to in number 2); b) are specifically established to raise funds from abroad for the benefit of the aforementioned Issuers or Public Companies; and/or c) have their majority or all shares directly or indirectly owned by State-Owned Enterprises. b. offered through public offering abroad and/or traded on foreign stock exchanges;
c. information can be accessed from Indonesia through mass media or websites; and
d. included in the Sharia Securities List issued by the Sharia Securities List Issuing Party.
(2) Foreign Sharia Securities as referred to in paragraph (1) include:
a. shares; b. Sukuk with a maturity of 1 (one) year or more; and
c. other Securities.

Article 32
Investment Managers managing Sharia Mutual Funds Based on Foreign Sharia Securities must determine portfolio composition with the following provisions:
a. at least 51% (fifty-one percent) of the net asset value of the Sharia Mutual Funds Based on Foreign Sharia Securities as referred to in Article 30 is invested in Foreign Sharia Securities; and b. at most 49% (forty-nine percent) of the net asset value of the Sharia Mutual Funds Based on Foreign Sharia Securities is invested in domestic Sharia Securities.

Article 33
Sharia Mutual Funds Based on Foreign Sharia Securities must invest in Foreign Sharia Securities issued by issuers whose countries have become members of the International Organization of Securities Commissions (IOSCO) and have fully signed the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (IOSCO MMOU).

Article 34
Investment Managers must ensure that investors in Sharia Mutual Funds Based on Foreign Sharia Securities have understood and comprehended the product structure and investment risks in the Investment Units of Sharia Mutual Funds Based on Foreign Sharia Securities, including currency risk, high net asset value fluctuation risk, and risk of loss of investment principal.

Article 35
The initial investment value for the purchase of Sharia Mutual Funds Based on Foreign Sharia Securities is at least US$10,000 (ten thousand United States dollars) or its equivalent value.

CHAPTER VII
SHARIA MUTUAL FUNDS BASED ON SUKUK

Article 36
Parties conducting a Public Offering of Sharia Mutual Funds Based on Sukuk must comply with:
a. Financial Services Authority Regulations regarding guidelines for the management of mutual funds in the form of corporations; b. management guidelines for mutual funds in the form of Collective Investment Contracts as referred to in Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts; and
c. provisions of legislation in the capital market sector regulating other related mutual funds,
except as specifically regulated in this Financial Services Authority Regulation.

Article 37
(1) The offering period and the number of shares or Investment Units of Sharia Mutual Funds Based on Sukuk offered may be continuous or limited.
(2) The nature of the offering period and the number of shares or Investment Units of Sharia Mutual Funds Based on Sukuk offered as referred to in paragraph (1) must be included in the Sharia Mutual Funds Based on Sukuk contract.

Article 38
Sharia Mutual Funds Based on Sukuk must invest in Sukuk with a composition of at least 85% (eighty-five percent) of the net asset value of the Sharia Mutual Funds Based on Sukuk and invested in:
a. Sukuk offered in Indonesia through Public Offering; b. state Sharia securities; and/or
c. Sukuk offered not through Public Offering.

Article 39
Investment Managers managing Sharia Mutual Funds Based on Sukuk offered through Public Offering must determine portfolio composition with the following provisions: at least 85% (eighty-five percent) of the net asset value of the Sharia Mutual Funds Based on Sukuk as referred to in Article 38 is invested in:
a. Sukuk offered in Indonesia through Public Offering; b. state Sharia securities; and/or
c. Sukuk offered not through Public Offering with a maturity of 1 (one) year or more at most 15% (fifteen percent) of the net asset value of the Sharia Mutual Funds Based on Sukuk at all times with the following criteria:

have an investment-worthy rating and are rated periodically at least once every 1 (one) year; and
are included in collective custody at a depository and settlement institution.

Article 40
(1) Investment Managers managing Sharia Mutual Funds Based on Sukuk offered not through Public Offering must determine portfolio composition with the following provisions: at least 85% (eighty-five percent) of the net asset value of the Sharia Mutual Funds as referred to in Article 38 is invested in:
a. Sukuk offered in Indonesia through Public Offering; b. state Sharia securities; and/or
c. Sukuk offered not through Public Offering with a maturity of 1 (one) year or more with the following criteria:

have an investment-worthy rating and are rated periodically at least once every 1 (one) year; and
are included in collective custody at a depository and settlement institution.
(2) Investment Managers as referred to in paragraph (1) must ensure that holders of Investment Units of Sharia Mutual Funds Based on Sukuk offered not through Public Offering understand and comprehend the product structure and investment risks thereof. (3) Investment Managers must request a written statement from holders of Investment Units of Sharia Mutual Funds Based on Sukuk offered not through Public Offering to ensure that holders of Investment Units of Sharia Mutual Funds Based on Sukuk understand and comprehend the product structure and investment risks as referred to in paragraph (2).

Article 41
(1) Investment Managers managing Sharia Mutual Funds Based on Sukuk offered not through Public Offering must submit an application for registration of the issuance of Sharia Mutual Funds Based on Sukuk offered not through Public Offering to the Financial Services Authority. (2) The registration application as referred to in paragraph (1) must be accompanied by:
a. Collective Investment Contract made with a notarial deed by a notary registered with the Financial Services Authority; and b. disclosure documents of Sharia Mutual Funds Based on Sukuk offered not through Public Offering.

Article 42
(1) Investment Managers managing Sharia Mutual Funds Based on Sukuk offered not through Public Offering who place investments in Sukuk offered not through Public Offering must submit a report on such investment placement to the Financial Services Authority at the latest 10 (ten) working days after making the investment placement. (2) Submission of the investment placement report as referred to in paragraph (1) is accompanied by supporting documents as follows:
a. disclosure documents of Sharia Mutual Funds Based on Sukuk as referred to in Article 41 paragraph (2) letter b which have contained information regarding the Sukuk issuer and the purchased Sukuk; b. due diligence results on the Sukuk issuer signed by the Board of Directors of the Investment Manager;
c. brief financial summary of the Sukuk issuer for the last 3 (three) years or since establishment if less than 3 (three) years;
d. rating results report; e. issuer info memo; and f. documents related to Sukuk issuance.

Article 43
In reviewing the registration application documents as referred to in Article 41 paragraph (1) and investment placement report documents as referred to in Article 42 paragraph (2), the Financial Services Authority may:
a. request Investment Managers managing Sharia Mutual Funds Based on Sukuk not offered through Public Offering to present; and/or b. request changes and/or additional information related to the registration application and investment placement report.

Article 44
Sukuk offered not through Public Offering as referred to in Article 40 paragraph (1) letter c consists of Sukuk issued by:
a. State-Owned Enterprises; or b. Indonesian legal entities whose majority or all shares are owned directly or indirectly by State-Owned Enterprises.

Article 45
(1) Sharia Mutual Funds Based on Sukuk that invest in Sukuk issued by 1 (one) party must have at most 50% (fifty percent) of the net asset value of the Sharia Mutual Funds Based on Sukuk at all times. (2) Provisions regarding investment limits on mutual funds in the form of corporations and mutual funds in the form of Collective Investment Contracts as referred to in Article 11 and Article 15 do not apply to Sharia Mutual Funds Based on Sukuk.

CHAPTER VIII
SHARIA MUTUAL FUNDS IN THE FORM OF COLLECTIVE INVESTMENT CONTRACTS WHOSE INVESTMENT UNITS ARE TRADED ON STOCK EXCHANGES

Article 46
Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must comply with:
a. Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges; and b. provisions of legislation in the capital market sector regulating other related mutual funds, except as specifically regulated in this Financial Services Authority Regulation.

Article 47
Investment policies of Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must refer to each type of Sharia Mutual Fund as referred to in Article 18, Article 19, Article 20, Article 21, Article 25, Article 28 letter a, Article 32, and Article 39 and meet the following provisions:
a. the composition of Sharia Securities portfolio forming Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must consist of liquid Sharia Securities; and b. the liquidity level of Sharia Securities forming the portfolio of Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must be determined jointly between the Investment Manager and the Custodian Bank.

Article 48
The prospectus of Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must meet the provisions as referred to in legislation in the capital market sector regulating guidelines for the form and content of prospectuses in the context of Public Offering of mutual funds, and must contain:
a. information that the Collective Investment Contract of Sharia Mutual Funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges must comply with Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts and Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts whose Investment Units are traded on stock exchanges; and b. information on the membership of the Sharia Supervisory Board of the Investment Manager, along with its duties and responsibilities.

CHAPTER IX
SHARIA MUTUAL FUNDS IN THE FORM OF COLLECTIVE INVESTMENT CONTRACTS WITH LIMITED PARTICIPATION

Article 49
Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation must comply with:
a. Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts with limited participation; and b. provisions of legislation in the capital market sector regulating other related mutual funds in the form of Collective Investment Contracts, except as specifically regulated in this Financial Services Authority Regulation.

Article 50
Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation are prohibited from investing in Sharia Securities portfolios based on foreign real-sector activities.

Article 51
(1) Investment provisions for each holder of Investment Units of Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation must be at least 1,000,000 (one million) Investment Units with a value of Rp1,000,000,000.00 (one billion rupiah) at initial investment. (2) In the event that Investment Units of Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation are issued using foreign currency denominations, the investment provisions for each holder of Investment Units of Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation as referred to in paragraph (1) must be at least equivalent to the value of Rp1,000,000,000.00 (one billion rupiah) using the prevailing Bank Indonesia middle exchange rate.

Article 52
Provisions regarding investment limits on Sharia Securities and/or Sharia money market instruments issued by 1 (one) party at most 20% (twenty percent) of the net asset value of Sharia Mutual Funds in the form of Collective Investment Contracts at all times do not apply to Sharia Mutual Funds in the form of Collective Investment Contracts with limited participation.

CHAPTER X
TARGET DATE SHARIA MUTUAL FUNDS

Article 53
Investment Managers managing Target Date Sharia Mutual Funds must invest their managed funds in Sharia Securities.

CHAPTER XI
MANAGEMENT OF SHARIA MUTUAL FUNDS

Article 54
The management of Sharia Mutual Funds must comply with the following provisions:
a. Financial Services Authority Regulations regarding guidelines for the management of mutual funds in the form of corporations, for Sharia Mutual Funds in the form of corporations; and/or b. Financial Services Authority Regulations regarding mutual funds in the form of Collective Investment Contracts, for Sharia Mutual Funds in the form of Collective Investment Contracts, except as specifically regulated in this Financial Services Authority Regulation.

Article 55
(1) The Board of Directors, Investment Managers, and/or Custodian Banks of Sharia Mutual Funds in the form of corporations must implement all provisions regulated in the management contract and/or wealth storage contract according to their respective functions. (2) Investment Managers and Custodian Banks of Sharia Mutual Funds in the form of Collective Investment Contracts must implement all provisions contained in the Collective Investment Contract.

Article 56
Custodian Banks must reject written instructions from Investment Managers with a copy to the Financial Services Authority if the implementation of such instructions could result in the Sharia Mutual Fund holding Securities and/or money market instruments other than Sharia Securities and/or Sharia money market instruments as referred to in Article 10 paragraph (3) letter f and Article 14 paragraph (2) letter g.

Article 57
In the event that Sharia Mutual Funds hold Securities and/or money market instruments other than Sharia Securities and/or Sharia money market instruments as referred to in Article 10 paragraph (3) letter f and Article 14 paragraph (2) letter g, which are not caused by the actions of the Investment Manager and Custodian Bank, the Investment Manager must sell them as soon as possible at the latest 10 (ten) working days since:
a. shares are no longer listed in the Sharia Securities List with the provision that the price difference between the selling price and the fair market value at the time they were still listed in the Sharia Securities List can be calculated in the net asset value of the Sharia Mutual Fund; and/or b. Securities other than shares and/or money market instruments no longer comply with Sharia Principles in the Capital Market, with the provision that the price difference between the selling price and the fair market value at the time they still complied with Sharia Principles in the Capital Market can be calculated in the net asset value of the Sharia Mutual Fund.

Article 58
In the event that the actions of the Investment Manager and Custodian Bank result in the portfolio of Sharia Mutual Funds holding Securities and/or money market instruments other than Sharia Securities and/or Sharia money market instruments as referred to in Article 10 paragraph (3) letter f and Article 14 paragraph (2) letter g, the Financial Services Authority has the authority to:
a. prohibit Investment Managers from selling new Investment Units and/or new shares of Sharia Mutual Funds;

b. prohibit Investment Managers and Custodian Banks from transferring Sharia Mutual Fund assets except for the purpose of:

cleansing Sharia Mutual Fund assets of elements contrary to Sharia Principles in the Capital Market; and/or
paying for repurchase requests of Participation Units and/or shares of Sharia Mutual Funds.
c. require Investment Managers and Custodian Banks, jointly and severally, to purchase portfolios contrary to Sharia Principles in the Capital Market at acquisition price within the timeframe determined by the Financial Services Authority;
d. require Investment Managers, on behalf of Sharia Mutual Funds, to sell or transfer assets of Sharia Mutual Funds that are contrary to Sharia Principles in the Capital Market, with the provision that any capital gain from the sale price over the last fair market value while still meeting Sharia Principles in the Capital Market must be separated from the calculation of the net asset value of the Sharia Mutual Fund and treated as funds that cannot be recognized as the net asset value of the Sharia Mutual Fund; and/or e. require Investment Managers to announce to the public the prohibitions and/or obligations established by the Financial Services Authority as referred to in letters a, b, and c, in 2 (two) daily newspapers in Indonesian with national circulation at the expense of the Investment Manager and Custodian Bank no later than the end of the 2nd (second) working day after receipt of the letter from the Financial Services Authority.

Article 59
(1) In the event that Investment Managers and/or Custodian Banks do not fulfill their obligations as referred to in Article 58, the Financial Services Authority has the authority to replace the Investment Manager, Custodian Bank, or order the dissolution of the Sharia Mutual Fund. (2) In the event that Investment Managers and Custodian Banks do not dissolve the Sharia Mutual Fund as referred to in paragraph (1), the Financial Services Authority has the authority to dissolve the Sharia Mutual Fund.

CHAPTER XII
FUNDS THAT CANNOT BE RECOGNIZED AS NET ASSET VALUE OF SHARIA MUTUAL FUNDS

Article 60
Cleansing of Sharia Mutual Fund assets from funds that cannot be recognized as the net asset value of Sharia Mutual Funds is carried out against the following fund sources:
a. giro services and/or interest on cash placements in conventional bank accounts; b. capital gains from the sale of Securities and/or money market instruments other than Securities and/or Sharia money market instruments, the sale of which exceeds 10 (ten) working days since:

shares are no longer listed in the Sharia Securities List; and/or
Securities other than shares and/or money market instruments no longer meet Sharia Principles in the Capital Market;
c. capital gains from the sale of Securities and/or money market instruments other than Securities and/or Sharia money market instruments as referred to in Article 58;
and/or d. other non-halal income.

Article 61
Funds that cannot be recognized as the net asset value of Sharia Mutual Funds must be used and distributed for the benefit of the community and public interest that do not contradict Sharia principles.

Article 62
The use and distribution of funds that cannot be recognized as the net asset value of Sharia Mutual Funds must obtain approval from the Sharia Supervisory Board of the respective Investment Manager.

Article 63
Funds that cannot be recognized as the net asset value of Sharia Mutual Funds are prohibited from being utilized for:
a. the interests of Investment Managers and/or Custodian Banks; b. activities containing elements contrary to Sharia principles; and/or
c. distribution to parties affiliated with Investment Managers and/or Custodian Banks.

Article 64
Custodian Banks must disclose information regarding funds that cannot be recognized as the net asset value of Sharia Mutual Funds as referred to in Article 60 in the charity fund source and use report and notes to the financial statements in the annual financial report of the Sharia Mutual Fund.

CHAPTER XIII
INFORMATION DISCLOSURE RELATED TO ZAKAT

Article 65
(1) Investment Managers must include in the Collective Investment Contract and disclose in the prospectus information regarding the existence or non-existence of zakat deductions on the assets of Sharia Mutual Funds they manage. (2) In the event that Investment Managers perform zakat deductions, the information included in the Collective Investment Contract and disclosed in the prospectus as referred to in paragraph (1) must at least contain the method of zakat collection, the calculation basis, and the body or zakat collection agency designated to distribute the zakat. (3) The implementation of zakat deductions as referred to in paragraph (2) must be carried out in accordance with regulations governing zakat.

Article 66
In the event that Investment Managers perform zakat deductions, Custodian Banks must include information disclosure in the annual financial report of the Sharia Mutual Fund regarding the implementation of zakat deductions as regulated in Article 65 paragraph (2).

CHAPTER XIV
DISSOLUTION OF SHARIA MUTUAL FUNDS

Article 67
Provisions regarding the dissolution and liquidation of Sharia Mutual Funds in the form of Collective Investment Contracts must follow the Financial Services Authority Regulation regarding mutual funds in the form of Collective Investment Contracts, unless specifically regulated in this Financial Services Authority Regulation.

Article 68
Sharia Mutual Funds in the form of Collective Investment Contracts must be dissolved if any of the following occur:
a. within a period of 90 (ninety) trading days, the Sharia Mutual Fund in the form of Collective Investment Contracts whose registration statement has become effective has managed funds of less than IDR 10,000,000,000.00 (ten billion rupiah); b. within a period of 120 (one hundred twenty) trading days after its registration statement becomes effective, having managed funds of less than IDR 10,000,000,000.00 (ten billion rupiah), for Protected Sharia Mutual Funds, Index Sharia Mutual Funds, and Sharia Mutual Funds in the form of Collective Investment Contracts formed specifically for individual investors;
c. ordered by the Financial Services Authority in accordance with regulations in the capital market sector;
d. the total net asset value of the Sharia Mutual Fund in the form of Collective Investment Contracts is less than IDR 10,000,000,000.00 (ten billion rupiah) for 120 (one hundred twenty) consecutive trading days; and/or e. Investment Managers and Custodian Banks have agreed to dissolve the Sharia Mutual Fund in the form of Collective Investment Contracts.

Article 69
In the event that a Sharia Mutual Fund in the form of Collective Investment Contract formed specifically for individual investors is dissolved due to conditions as referred to in Article 68 letter b, the Investment Manager must:
a. submit a report of such conditions to the Financial Services Authority and announce the plan to dissolve the Sharia Mutual Fund to Participation Unit holders in at least 1 (one) daily newspaper in Indonesian with national circulation, no later than 2 (two) trading days since the end of the period as referred to in Article 68 letter b; b. instruct the Custodian Bank no later than 2 (two) trading days since the end of the period as referred to in Article 68 letter b, to pay the liquidation proceeds due to Participation Unit holders, with the provision that the calculation is done proportionally from the net asset value at the time of dissolution but must not be smaller than the initial net asset value (par price), and the funds are received by Participation Unit holders no later than 7 (seven) trading days since the end of the period as referred to in Article 68 letter b; and
c. dissolve the Sharia Mutual Fund within a period of no later than 10 (ten) trading days since the end of the period as referred to in Article 68 letter b, and submit a report on the dissolution of the Sharia Mutual Fund to the Financial Services Authority no later than 10 (ten) trading days since the Sharia Mutual Fund was dissolved, accompanied by:

the deed of dissolution of the Sharia Mutual Fund from a notary registered with the Financial Services Authority; and
the dissolution financial report of the Sharia Mutual Fund audited by an accountant registered with the Financial Services Authority, if the Sharia Mutual Fund has managed funds.

CHAPTER XV
REPORTING

Article 70
Provisions regarding reporting obligations for mutual funds in the form of corporations as referred to in regulations in the capital market sector governing mutual funds in the form of corporations mutatis mutandis apply to Sharia Mutual Funds in the form of corporations.

Article 71
Provisions regarding reporting obligations for mutual funds in the form of Collective Investment Contracts as referred to in regulations in the capital market sector governing mutual funds in the form of Collective Investment Contracts mutatis mutandis apply to Sharia Mutual Funds in the form of Collective Investment Contracts.

CHAPTER XVI
ADMINISTRATIVE SANCTIONS

Article 72
(1) Any party that violates provisions as referred to in Article 3, Article 4, Article 6, Article 7 paragraph (1), paragraph (2), and paragraph (4), Article 8, Article 9, Article 10, Article 11, Article 13, Article 14, Article 15, Article 17, Article 18, Article 19, Article 20, Article 21, Article 22, Article 24, Article 25, Article 26, Article 28 letters a and b, Article 29, Article 30, Article 31, Article 32, Article 33, Article 34, Article 36, Article 37 paragraph (2), Article 38, Article 39, Article 40, Article 41 paragraph (1), Article 42, Article 45 paragraph (1), Article 46, Article 47, Article 48, Article 49, Article 50, Article 51, Article 53, Article 54, Article 55, Article 56, Article 57, Article 61, Article 62, Article 63, Article 64, Article 65, Article 66, Article 67, Article 68, Article 69, Article 70, and Article 71, shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) shall also be 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. fines, 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) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with regulations.
(6) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without being preceded by the imposition of administrative sanctions in the form of a written warning as referred to in paragraph (4) letter a. (7) Administrative sanctions in the form of fines as referred to in paragraph (4) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g.

Article 73
In addition to administrative sanctions as referred to in Article 72 paragraph (4), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 74
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 72 paragraph (4) and specific actions as referred to in Article 73 to the public.

CHAPTER XVII
TRANSITIONAL PROVISIONS

Article 75
Investment Managers that have managed Sharia Mutual Funds must adjust their Collective Investment Contracts as referred to in this Financial Services Authority Regulation no later than 1 (one) year after this Financial Services Authority Regulation takes effect.

Article 76
Sharia Mutual Funds Based on Sukuk that have invested in Sukuk issued by 1 (one) party exceeding 50% (fifty percent) of the net asset value before the implementation of this Financial Services Authority Regulation must adjust the composition of their investment portfolio based on this Financial Services Authority Regulation no later than 1 (one) year after this Financial Services Authority Regulation takes effect.

Article 77
The obligation to disclose information about funds that cannot be recognized as the net asset value of Sharia Mutual Funds as referred to in Article 60 in the charity fund source and use report and notes to the financial statements in the annual financial report of Sharia Mutual Funds takes effect for the annual financial reports of Sharia Mutual Funds for the fiscal year 2019.

Article 78
Sharia Mutual Funds that have been issued before this Financial Services Authority Regulation takes effect but update their Collective Investment Contracts and prospectuses after this Financial Services Authority Regulation takes effect, then the obligation to disclose the mechanism for cleansing assets of Sharia Mutual Funds from non-halal parts of dividend income received by Sharia Mutual Funds for those implementing cleansing policies must follow the provisions of this Financial Services Authority Regulation.

CHAPTER XVIII
CLOSING PROVISIONS

Article 79
Upon the implementation of this Financial Services Authority Regulation, Financial Services Authority Regulation Number 19/POJK.04/2015 on the Issuance and Requirements for Sharia Mutual Funds (State Gazette of the Republic of Indonesia Year 2015 Number 270, Supplement to the State Gazette of the Republic of Indonesia Number 5759) is repealed and declared invalid.

Article 80
This Financial Services Authority Regulation takes effect on the date of its promulgation.
To ensure 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.

Established in Jakarta on December 13, 2019
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on December 18, 2019
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 239

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 33 /POJK.04/2019
ON
THE ISSUANCE AND REQUIREMENTS FOR SHARIA MUTUAL FUNDS

I. GENERAL
In order to encourage the development of the Sharia capital market industry in Indonesia, it is necessary to improve Financial Services Authority Regulation Number 19/POJK.04/2015 on the Issuance and Requirements for Sharia Mutual Funds. The improvement of this Financial Services Authority Regulation is carried out in order to follow the development of investment product innovations, thereby accommodating new types of mutual fund products, and to standardize the use of funds that cannot be recognized as the net asset value of Sharia Mutual Funds regarding the cleansing of Sharia Mutual Fund assets from elements contrary to Sharia Principles in the Capital Market. With the improvement of this Financial Services Authority Regulation, it is expected to increase legal certainty and trust among stakeholders of Sharia Mutual Funds.

The following are some main points of the revision of the Financial Services Authority Regulation regarding the issuance and requirements for Sharia Mutual Funds, including improvements to provisions regarding Sharia Mutual Funds Based on Sukuk and Sharia Mutual Funds in the form of Limited Participation Collective Investment Contracts, the addition of new types of Sharia Mutual Funds, namely Target Date Sharia Mutual Funds, regulations regarding the use of funds that cannot be recognized as the net asset value of Sharia Mutual Funds, and regulations regarding zakat deductions on the assets of Sharia Mutual Funds.

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
Paragraph (1)
The Sharia Supervisory Board of the Investment Manager may consist of 1 (one) member appointed by the board of directors.

Paragraph (2)
Clear enough.

Paragraph (3)
Clear enough.

Paragraph (4)
What is meant by "supervision of Sharia Mutual Funds in the context of fulfilling Sharia Principles in the Capital Market on an ongoing basis" is the supervision of the fulfillment of Sharia Principles in the Capital Market carried out until the dissolution of the Sharia Mutual Fund.

Paragraph (5)
Clear enough.

Article 7
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Letter a
What is meant by "targeted party" is the party using the services of the Sharia Supervisory Board.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
Clear enough.

Paragraph (4)
Clear enough.

Article 8
Clear enough.

Article 9
Clear enough.

Article 10
Paragraph (1)
Clear enough.

Paragraph (2)
Clear enough.

Paragraph (3)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
Number 1
Clear enough.

Number 2
What is meant by "sharia warrant" is a Security issued by a company that gives the right to Security holders to subscribe to Sharia shares of that company at a certain price after 6 (six) months or more since the Security in question was issued.

Number 3
Examples of Sukuk offered in Indonesia through a Public Offering include corporate Sukuk and regional Sukuk.

Number 4
Clear enough.

Number 5
Clear enough.

Number 6
Clear enough.

Number 7
Examples of Sukuk offered not through a Public Offering include medium term notes syariah and commercial paper syariah.

Number 8
Clear enough.

Number 9
What is meant by "Sharia money market instruments" includes, for example, Sharia Bank Indonesia Certificates.

Number 10
Clear enough.

Number 11
Clear enough.

Letter g
What is meant by "non-halal part of dividend income" is the result of multiplying the dividend received by the cleansing factor.
Cleansing factor is the result of dividing non-halal income by total income in the Issuer's Financial Report.
Example calculation:
PT. XYZ Tbk has net income of IDR 118,000,000.00 (one hundred eighteen million rupiah), other operating income of IDR 121,000.00 (one hundred twenty-one thousand rupiah), interest income of IDR 4,000,000.00 (four million rupiah), and other insurance claim income of IDR 500,000 (five hundred thousand rupiah). Then the cleansing factor obtained is as follows:
Non-halal income
= interest income + other insurance claim income = IDR 4,000,000.00 + IDR 500,000.00 = IDR 4,500,000.00 Total Income = net income + other operating income = IDR 118,000,000.00 + IDR 121,000.00 + IDR 4,000,000.00 + IDR 500,000.00 = IDR 122,621,000.00

Cleansing Factor
= Non-halal Income / Total Income
= 4,500,000.00 / 122,621,000.00
= 3.67%

Sharia Mutual Fund Saham Amanah has a stock portfolio in PT. XYZ Tbk, and receives dividend distribution results of IDR 10,000.00 (ten thousand rupiah).
Then the non-halal part of dividend income is as follows:
Non-halal part
= Dividend Received × Cleansing Factor
= IDR 10,000.00 × 3.67%
= IDR 367.00
Thus, the Investment Manager needs to separate the non-halal part of dividend income amounting to IDR 367.00 (three hundred sixty-seven rupiah) into funds that cannot be recognized as the net asset value of the Sharia Mutual Fund.

Paragraph (4)
Clear enough.

Paragraph (5)
Clear enough.

Article 11
Clear enough.

Article 12
Clear enough.

Article 13
Clear enough.

Article 14
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
The Board of Directors at a Custodian Bank which is a branch of a foreign bank is the highest leadership at that foreign bank branch.

Letter e
Clear enough.

Letter f
Clear enough.

Letter g
Clear enough.

Letter h
Clear enough.

Letter i
What is meant by "Sharia Mutual Fund in the form of Collective Investment Contract formed specifically for individual investors" is a Sharia Mutual Fund in the form of Collective Investment Contract formed specifically for individual investors without involving institutional investors.

Paragraph (3)
Clear enough.

Article 15
Clear enough.

Article 16
Clear enough.

Article 17
Clear enough.

Article 18
Letter a
Examples of Sharia money market instruments include Sharia Bank Indonesia Certificates.

Letter b
Examples of Sharia fixed-income Securities include Sukuk, both offered through Public Offering and not through Public Offering, and Sharia asset-backed securities with fixed cash flows.

Article 19
Clear enough.

Article 20
Clear enough.

Article 21
Clear enough.

Article 22
Clear enough.

Article 23
Clear enough.

Article 24
Clear enough.

Article 25
Clear enough.

Article 26
Clear enough.

Article 27
Clear enough.

Article 28
Letter a
Number 1
Clear enough.

Number 2
Clear enough.

Number 3
Clear enough.

Number 4
In practice, the degree of deviation is also known as tracking error.

Letter b
Clear enough.

Letter c
Clear enough.

Article 29
Clear enough.

Article 30
Clear enough.

Article 31
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Examples of other Securities include islamic real estate investment trusts (iREITS), islamic asset backed securities, and depository receipts whose shares do not contradict Sharia principles.

Article 32
Clear enough.

Article 33
In practice, signing fully is also known as full signatory.

Article 34
Clear enough.

Article 35
Clear enough.

Article 36
Clear enough.

Article 37
Clear enough.

Article 38
Clear enough.

Article 39
Clear enough.

Article 40
Clear enough.

Article 41
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
What is meant by "disclosure document" is any written information in the context of the offering of Sharia Mutual Funds Based on Sukuk offered not through a Public Offering, with the aim for other parties to purchase Participation Units of the Sharia Mutual Funds Based on Sukuk.

Article 42
Paragraph (1)
Clear enough.

Paragraph (2)
Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clear enough.

Letter d
Clear enough.

Letter e
Clear enough.

Letter f
Examples of documents related to Sukuk issuance include Sukuk issuance agreements and other related agreements.

Article 43
Clear enough.

Article 44
Clear enough.

Article 45
Paragraph (1)
Sharia Mutual Funds Based on Sukuk can only invest in Sukuk, both offered through Public Offering and not through Public Offering.

Paragraph (2)
Clear enough.

Article 46
Clear enough.

Article 47
Letter a
What is meant by "liquid" includes, for example, a higher frequency of Security transactions compared to the average frequency of transactions of similar Securities, for example, shares compared to shares.

Letter b
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
Clear enough.

Article 58
Clear enough.

Article 59
Clear enough.

Article 60
Funds that cannot be recognized as the net asset value of Sharia Mutual Funds include funds from non-halal sources and funds that are not the right of the Sharia Mutual Fund.
Examples of non-halal funds include interest income.
Examples of funds that are not the right of the Sharia Mutual Fund include income from late payment penalties on Sukuk returns.

Letter a
Clear enough.

Letter b
Clear enough.

Letter c
Clearly stated.

Letter d
The term "other non-halal income" refers to:

funds derived from sanctions/fines (ta’zir) received by the Sharia Mutual Fund; or
funds resulting from the purification of the non-halal portion of dividend income received by the Sharia Mutual Fund, for those implementing such a policy.

Article 61
Examples of the use and distribution of funds that cannot be recognized as the net asset value of Sharia Mutual Funds for the benefit of the community and public interest, which do not conflict with Sharia principles, include:
a. disaster victim relief; b. support facilities for Islamic educational institutions;
c. mosques/musallas and their support facilities;
d. construction of public facilities with social impact; e. socialization, education, and literacy of the Sharia capital market, economy, and finance for the general public; f. scholarships for outstanding and/or less fortunate students; g. productive activities for the needy (duafa); and h. assistance to the poor and destitute. The distribution of funds that cannot be recognized as the net asset value of Sharia Mutual Funds may be conducted by handing them over to Sharia financial institutions, either distributed through zakat, infak, and sedekah management bodies or other social institutions, or distributed directly by the Investment Manager.

Article 62
Clearly stated.

Article 63
Letter a
Examples of the interests of the Investment Manager and/or Custodian Bank include:

product marketing and/or building corporate image;
education and training for employees of the Investment Manager and/or Custodian Bank;
tax payments; and
corporate social responsibility obligations.

Letter b
Clearly stated.

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

Article 64
Clearly stated.

Article 65
Clearly stated.

Article 66
Clearly stated.

Article 67
Clearly stated.

Article 68
Clearly stated.

Article 69
Clearly stated.

Article 70
Clearly stated.

Article 71
Clearly stated.

Article 72
Clearly stated.

Article 73
The term "specific actions" includes, among others, the postponement of the issuance of an effectiveness statement for a registration statement in the context of the Public Offering of Sharia Mutual Funds.

Article 74
Clearly stated.

Article 75
Clearly stated.

Article 76
Clearly stated.

Article 77
Clearly stated.

Article 78
Clearly stated.

Article 79
Clearly stated.

Article 80
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6434

Issuance and Requirements for Sharia Mutual Funds

Lineage: Amended

Timeline