POJK No. 21/POJK.03/2019 on Merger, Consolidation, and Takeover of Rural Credit Banks and Sharia Rural Financing Banks

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 21 /POJK.03/2019
ON
MERGER, CONSOLIDATION, AND TAKEOVER OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS BY THE GRACE OF THE ALMIGHTY GOD, THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that to strengthen the resilience and competitiveness of the banking industry, the participation of rural credit banks and Sharia rural financing banks is required, inter alia, through merger, consolidation, and takeover; b. that current regulations regarding merger, consolidation, and takeover are deemed no longer appropriate with developments, so it is necessary to update the provisions;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation on Merger, Consolidation, and Takeover of Rural Credit Banks and Sharia Rural Financing Banks;

Recalling:

1. Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1992 Number 31, Supplement to the State Gazette of the Republic of Indonesia Number 3472) as amended by Law Number 10 of 1998 concerning Amendment to Law Number 7 of 1992 concerning Banking (State Gazette of the Republic of Indonesia Year 1998 Number 182, Supplement to the State Gazette of the Republic of Indonesia Number 3790);
2. Law Number 21 of 2008 concerning Sharia Banking (State Gazette of the Republic of Indonesia Year 2008 Number 94, Supplement to the State Gazette of the Republic of Indonesia Number 4867);
3. 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 AUTHABILITY REGULATION ON MERGER, CONSOLIDATION, AND TAKEOVER OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation:

1. Rural Credit Bank, hereinafter abbreviated as BPR, is a bank that conducts conventional business activities and does not provide payment circulation services in its operations.
2. Sharia Rural Financing Bank, hereinafter abbreviated as BPRS, is a Sharia bank that does not provide payment circulation services in its operations.
3. Merger is a legal act performed by one (1) or more BPRs or BPRSs to merge with an existing BPR or BPRS, resulting in the assets, liabilities, and equity of the merging BPR or BPRS transferring by operation of law to the receiving BPR or BPRS, and subsequently, the legal entity status of the merging BPR or BPRS ending by operation of law.
4. Consolidation is a legal act performed by two (2) or more BPRs or BPRSs to merge by establishing one (1) new BPR or BPRS, which by operation of law acquires the assets, liabilities, and equity of the consolidating BPRs or BPRSs, and the legal entity status of the consolidating BPRs or BPRSs ends by operation of law.
5. Takeover is a legal act performed by a legal entity or individual to take over shares of a BPR or BPRS, resulting in the transfer of control over such BPR or BPRS.
6. Board of Directors:
   a. for BPRs or BPRSs in the form of a limited liability company, refers to the Board of Directors as referred to in the Law concerning limited liability companies; b. for BPRs in the form of legal entities:

1. regional public enterprises or regional public limited companies, refers to the Board of Directors as referred to in the Law concerning regional government; or
2. regional enterprises, refers to the Board of Directors in BPRs that have not yet changed their legal entity status to regional public enterprises or regional public limited companies as referred to in the Law concerning regional government; or
   c. for BPRs in the form of cooperative legal entities, refers to the management as referred to in the Law concerning cooperatives.

7. Board of Commissioners:
   a. for BPRs or BPRSs in the form of a limited liability company, refers to the Board of Commissioners as referred to in the Law concerning limited liability companies; b. for BPRs in the form of legal entities:

1. regional public enterprises, refers to the Supervisory Board as referred to in the Law concerning regional government;
2. regional public limited companies, refers to Commissioners as referred to in the Law concerning regional government; or
3. regional enterprises, refers to the Supervisory Board in BPRs that have not yet changed their legal entity status to regional public enterprises or regional public limited companies as referred to in the Law concerning regional government; or
   c. for BPRs in the form of cooperative legal entities, refers to the Supervisors as referred to in the Law concerning cooperatives.

8. Sharia Supervisory Board, hereinafter abbreviated as DPS, is a board tasked with providing advice and suggestions to the Board of Directors and supervising BPRS activities to ensure compliance with Sharia principles.
9. Control is an action aimed at influencing the management and/or policies of a BPR or BPRS in any manner, whether directly or indirectly.
10. BPR or BPRS Shares are:
    a. evidence of capital contribution in the name of the holder for:

1. BPRs or BPRSs in the form of limited liability companies; or
2. BPRs in the form of legal entities:
   a) regional public enterprises; b) regional public limited companies; or c) regional enterprises; or b. other forms equivalent to shares for BPRs in the form of cooperative legal entities.

11. General Meeting of Shareholders, hereinafter abbreviated as GMS:
    a. for BPRs or BPRSs in the form of limited liability companies or BPRs in the form of regional public limited companies, refers to GMS as referred to in the Law concerning limited liability companies; b. for BPRs in the form of regional public enterprises, refers to the capital owners' meeting as referred to in the Law concerning regional government;
    c. for BPRs in the form of regional enterprises, refers to the shareholders' meeting as referred to in the Law concerning regional government; or
    d. for BPRs in the form of cooperative legal entities, refers to the members' meeting as referred to in the Law concerning cooperatives.
12. Controlling Shareholders, hereinafter abbreviated as CSP, are legal entities, individuals, and/or business groups that:
    a. hold shares of a company, BPR, or BPRS amounting to 25% (twenty-five percent) or more of the issued shares with voting rights; or b. hold shares of a company, BPR, or BPRS less than 25% (twenty-five percent) of the issued shares with voting rights but can be proven to have exercised control over the company, BPR, or BPRS, whether directly or indirectly.

Article 2
(1) Merger, Consolidation, and Takeover of BPRs or BPRSs may be conducted based on:
a. the initiative of the BPR or BPRS; or b. an order from the Financial Services Authority.
(2) Merger, Consolidation, and Takeover as referred to in paragraph (1) must obtain approval from the Financial Services Authority by referring to the requirements and procedures regulated in this Financial Services Authority Regulation.

Article 3
(1) Merger or Consolidation may be conducted between:
a. a BPR and a BPR; b. a BPR and a BPRS; or
c. a BPRS and a BPRS.
(2) Merger or Consolidation of a BPR with a BPRS as referred to in paragraph (1) letter b may only be conducted if the resulting BPR or BPRS from the Merger or Consolidation becomes a BPRS. (3) The resulting BPRS from Merger or Consolidation as referred to in paragraph (2) must settle the rights and obligations of conventional business activities no later than one (1) year from the date the Merger or Consolidation approval becomes effective. (4) The time limit for settlement as referred to in paragraph (3) may be extended if the settlement of rights and obligations of conventional business activities cannot be completed due to force majeure or other considerations acceptable to the Financial Services Authority.

Article 4
(1) Merger or Consolidation may be conducted between:
a. a BPR and a BPR, a BPR and a BPRS, or a BPRS and a BPRS, located within the same province; b. a BPR and a BPR located in different provinces, provided that the branch network of the resulting BPR from Merger or Consolidation is located within the area as regulated in the Financial Services Authority Regulation concerning business activities and branch network areas of rural credit banks based on core capital;
c. a BPR and a BPRS located in different provinces, provided that the branch network of the resulting BPRS from Merger or Consolidation is located within the same province; or
d. a BPRS and a BPRS located in different provinces, provided that the branch network of the resulting BPRS from Merger or Consolidation is located within the same province. (2) Merger or Consolidation conducted between a BPR and a BPR, a BPR and a BPRS, or a BPRS and a BPRS located within the same province as referred to in paragraph (1) letter a, including for BPRs or BPRSs resulting from Merger or Consolidation that have branch networks in the Special Capital Region of Jakarta, Bogor Regency, Bogor City, Depok City, Tangerang Regency, Tangerang City, South Tangerang City, Bekasi Regency, and Bekasi City.

Article 5
(1) One of the BPR or BPRS branches resulting from Merger or Consolidation as referred to in Article 4 must become the head office.
(2) In the event of a change of address for the head office of the resulting BPR or BPRS from Merger or Consolidation, the address change mechanism refers to the Financial Services Authority Regulation concerning rural credit banks or Sharia rural financing banks. (3) The branch network of a BPR conducting Merger or Consolidation that was established before the Financial Services Authority Regulation concerning business activities and branch network areas of rural credit banks based on core capital took effect, and is located outside the area permitted for BPRs based on business activities, may still be maintained without adjusting the area, provided it meets the provisions as referred to in Article 4. (4) For BPRs based on business activity 3 conducting Merger or Consolidation where the resulting BPR from Merger or Consolidation experiences a downgrade to a lower BPR business activity group, the branch network of the BPR that was established before the Financial Services Authority Regulation concerning business activities and branch network areas of rural credit banks based on core capital took effect, and is located outside the area permitted for BPRs based on business activities, must adjust the branch network area. (5) The area and branch network limits of BPRs must meet the provisions regarding branch network areas as regulated in the Financial Services Authority Regulation concerning business activities and branch network areas of rural credit banks based on core capital.

CHAPTER II
MERGER, CONSOLIDATION, AND TAKEOVER INITIATED BY BPR OR BPRS
Section One
Requirements and Procedures for Merger or Consolidation
Article 6
(1) The Board of Directors of each BPR or BPR conducting Merger or Consolidation jointly prepares a draft of the Merger or Consolidation containing at least:
a. institutional structure and branch network:

1. minutes of the GMS containing at least:
   a) approval regarding the Merger or Consolidation plan; and b) discussion of other matters related to the Merger or Consolidation plan;
2. name, legal entity form, and location of the BPR or BPRS conducting Merger or Consolidation;
3. name, legal entity form, and location of the resulting BPR or BPRS from Merger or Consolidation;
4. reasons and explanations from each Board of Directors of the BPR or BPRS conducting Merger or Consolidation;
5. plan for the status of all BPR or BPRS branch networks operating before Merger or Consolidation, containing:
   a) name, type, and location of branch networks that will not change; b) name, type, and location of branch networks to be closed, moved, or downgraded; c) reasons for closing, relocating, or downgrading branch networks; d) plan to settle all obligations to customers and other parties; e) announcement of closing, relocating, or downgrading branch networks conducted simultaneously with the announcement of the summary of the Merger or Consolidation draft; and f) implementation of closing, relocating, or downgrading branch networks conducted simultaneously with the implementation of Merger or Consolidation;
6. plan for name change of the resulting BPR or BPRS from Consolidation and logo;
7. estimated implementation period of Merger or Consolidation;
   b. business activities:
8. business activities of each BPR or BPRS conducting Merger or Consolidation, and changes occurring during the current fiscal year, if any;
9. plan for continuation or termination of business activities of the BPR or BPRS conducting Merger or Consolidation; and
10. details of issues arising during the current fiscal year affecting the operations of the BPR or BPRS conducting Merger or Consolidation;
    c. organizational structure and shareholders:
11. human resources of the resulting BPR or BPRS from Merger or Consolidation;
12. composition and names of prospective shareholders, prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the DPS of the resulting BPR or BPRS from Merger or Consolidation, accompanied by the application forms for prospective members of the Board of Directors or Board of Commissioners;
13. method for settling the status, rights, and obligations of members of the Board of Directors, Board of Commissioners, DPS, and employees of the BPR or BPRS conducting Merger or Consolidation;
14. method for settling the rights of shareholders who disagree with the Merger or Consolidation of the BPR or BPRS;
15. salaries, honoraria, and other allowances for prospective members of the Board of Directors, Board of Commissioners, and DPS of the resulting BPR or BPRS from Merger or Consolidation;
16. disclosure of conflicts of interest between the BPR or BPRS conducting Merger or Consolidation and members of the Board of Directors, Board of Commissioners, or DPS as referred to in the Financial Services Authority Regulation concerning the application of corporate governance for rural credit banks or the application of corporate governance for Sharia rural financing banks, if any; and
17. analysis of the current financial capacity of prospective CSPs along with a 3 (three) year projection prepared by an independent consultant in the event of Merger or Consolidation accompanied by the replacement or change of CSPs, accompanied by:
    a) a statement letter stating no overdue or problematic debts; b) ownership structure of prospective CSPs; and c) application forms for prospective CSPs; d. issues and issue resolution:
18. method for settling the rights and obligations of the BPR or BPRS to debtors, creditors, and other parties; and
19. explanation of the benefits and risks that may arise from Merger or Consolidation along with mitigation of such risks;
    e. financial data:
20. financial reports and financial performance information for the last 3 (three) fiscal years from each BPR or BPRS conducting Merger or Consolidation, with criteria referring to the Financial Services Authority Regulation concerning transparency of financial conditions of rural credit banks, statutory regulations concerning transparency of financial conditions of Sharia rural financing banks, and Financial Services Authority Regulation concerning the use of public accountants and accounting firms in financial services activities;
21. financial data of the BPR or BPRS conducting Merger or Consolidation based on the position at the latest before submitting the Merger or Consolidation application; and
22. report on the condition, development, and results achieved by each BPR or BPRS conducting Merger or Consolidation;
    f. procedure for valuation and conversion of shares from each BPR or BPRS conducting Merger or Consolidation into shares of the resulting BPR or BPRS from Merger or Consolidation; g. amendment of articles of association:
23. draft amendment of articles of association for the resulting BPR or BPRS from Merger, or draft deed of establishment for the resulting BPR or BPRS from Consolidation; and
24. plan for additional paid-up capital, if any;
    h. projection of the resulting BPR or BPRS from Merger or Consolidation, including:
25. financial reports;
26. minimum capital adequacy ratio for 12 (twelve) months;
27. minimum core capital for 12 (twelve) months; and
28. health level for 12 (twelve) months with a minimum rating of sufficiently healthy or composite rating 3;
    i. business plan of the resulting BPR or BPRS from Merger or Consolidation for a period of one (1) year as referred to in the Financial Services Authority Regulation concerning business plans for rural credit banks and Sharia rural financing banks;
    j. plan for settling rights and obligations of conventional business activities no later than one (1) year for Merger or Consolidation of BPR and BPRS as referred to in Article 3 paragraph (3); and k. information technology of the resulting BPR or BPRS from Merger or Consolidation as referred to in the Financial Services Authority Regulation concerning standards for information technology services for rural credit banks and Sharia rural financing banks. (2) In the event of a change of location for the head office of the resulting BPR or BPRS from Merger or Consolidation as referred to in paragraph (1) letter a number 5), the location change mechanism refers to the Financial Services Authority Regulation concerning rural credit banks or Sharia rural financing banks. (3) The draft of Merger or Consolidation as referred to in paragraph (1) must receive approval from the Board of Commissioners of each respective BPR or BPRS.

Article 7
(1) The Board of Directors of the BPR or BPRS prepares the concept of the deed of Merger or Consolidation.
(2) The concept of the deed of Merger or Consolidation as referred to in paragraph (1) is prepared by the Board of Directors of the BPR or BPRS based on the Merger or Consolidation draft approved by the Board of Commissioners. (3) The draft amendment of articles of association for the BPR or BPRS as referred to in Article 6 paragraph (1) letter g number 1) consists of:
a. concept of the deed of amendment of articles of association, for:

1. BPRs or BPRSs in the form of limited liability companies; or
2. BPRs in the form of regional public limited companies or cooperatives; or
   b. regional regulations, for BPRs in the form of regional public enterprises.
   (4) In the event of additional paid-up capital from shareholders or CSPs of regional governments, BPRs or BPRSs in the form of limited liability companies owned by regional governments or BPRs in the form of regional public limited companies as referred to in paragraph (3) letter a submit the draft of Merger or Consolidation accompanied by documents as regulated in statutory regulations concerning regional government.

Article 8
(1) The Board of Directors of the BPR or BPRS conducting Merger or Consolidation submits a cover letter as referred to in Appendix Part A, which is an integral part of this Financial Services Authority Regulation, and documents for the preparation of the implementation of Merger or Consolidation to the Financial Services Authority as follows:
a. draft of Merger or Consolidation as referred to in Article 6 paragraph (1) signed by the Board of Directors of the BPR or BPRS; b. concept of the deed of Merger or Consolidation as referred to in Article 7 paragraph (2); and
c. checklist of completeness of documents for the preparation of the implementation of Merger or Consolidation as referred to in Appendix Part B, which is an integral part of this Financial Services Authority Regulation.
(2) The requirements for the preparation of the implementation of Merger or Consolidation as referred to in paragraph (1) must:
a. the resulting BPR or BPRS from Merger or Consolidation meet the Financial Services Authority Regulation concerning the obligation to provide minimum capital and the fulfillment of minimum core capital for rural credit banks or Sharia rural financing banks; b. the resulting BPR or BPRS from Merger or Consolidation is projected to have a health rating or composite rating of at least sufficiently healthy or composite rating 3; and
c. prospective CSPs, prospective shareholders, prospective members of the Board of Directors, and prospective members of the Board of Commissioners of the resulting BPR or BPRS from Merger or Consolidation meet:

1. the Financial Services Authority Regulation concerning the assessment of competence and propriety for key parties of financial service institutions; and
2. the Financial Services Authority Regulation concerning rural credit banks or Sharia rural financing banks.

Article 9
(1) The Financial Services Authority conducts a review of the preparation for the implementation of Merger or Consolidation submitted by the BPR or BPRS as referred to in Article 8, no later than 20 (twenty) working days from the date the complete application and required documents are received. (2) In reviewing the documents for the preparation of the implementation of Merger or Consolidation as referred to in paragraph (1), the Financial Services Authority conducts:
a. research on the completeness and accuracy of documents; b. research on the financial condition of the BPR or BPRS after Merger or Consolidation, considering at least:

1. obligation to fulfill minimum capital;
2. fulfillment of minimum core capital; and
3. health rating or composite rating of at least sufficiently healthy or composite rating 3;
   c. assessment of competence and propriety for prospective CSPs, prospective members of the Board of Directors, and/or prospective members of the Board of Commissioners, and interviews with prospective members of the DPS;
   d. research on prospective shareholders; e. research on paid-up capital approved by the GMS, in the event of additional paid-up capital; and f. research on information technology readiness. (3) In reviewing the documents for the preparation of the implementation of Merger or Consolidation as referred to in paragraph (1), the Financial Services Authority may request additional documents and/or information from the BPR or BPRS.

Article 10
(1) The Financial Services Authority notifies the BPR or BPRS in writing that the review of the documents for the preparation of the implementation of Merger or Consolidation as referred to in Article 9 paragraph (1) has been conducted, and the BPR or BPRS proceeds with the process by:
a. announcing a summary of the draft Merger or Consolidation;

b. resolve objections raised by creditors, if any; and

c. convene the General Meeting of Shareholders (RUPS).

(2) In the event that, based on the review results, the BPR or BPRS does not meet the requirements as referred to in Articles 6 through 8, the Otoritas Jasa Keuangan (OJK) notifies the BPR or BPRS in writing.

(3) The written notification as referred to in paragraph (2) is delivered simultaneously with the return of the merger or consolidation requirement documents.

Article 11

(1) The Board of Directors of the BPR or BPRS conducting the Merger or Consolidation must announce a summary of the draft Merger or Consolidation as referred to in Article 6 after obtaining written notification from the Otoritas Jasa Keuangan regarding the review results as referred to in Article 10 paragraph (1).

(2) The summary of the draft Merger or Consolidation as referred to in paragraph (1) must contain at least:

a. the name and domicile of the BPR or BPRS conducting the Merger or Consolidation, as well as the name and domicile of the resulting BPR or BPR from the Merger or Consolidation;

b. the plan for the status of the office network of the BPR or BPRS that has operated prior to the Merger or Consolidation; and

c. the names of prospective shareholders, prospective members of the Board of Directors, prospective members of the Board of Commissioners, and prospective members of the Sharia Supervisory Board (DPS) of the resulting BPR and BPR from the Merger or Consolidation.

(3) The BPR or BPRS conducting the Merger or Consolidation must announce the summary of the draft Merger or Consolidation as referred to in paragraph (1) to interested parties through at least 1 (one) newspaper and to the employees of each BPR or BPRS conducting the Merger or Consolidation through notice boards at each office and network of the BPR or BPRS no later than 30 (thirty) days before the convening of the RUPS.

Article 12

(1) Creditors may raise objections to the plan for the Merger or Consolidation to the BPR or BPRS no later than 14 (fourteen) days after the announcement date as referred to in Article 11 paragraph (3).

(2) Creditors who do not raise objections within the time period as referred to in paragraph (1) are deemed to have approved the Merger or Consolidation.

(3) In the event that the creditor's objection as referred to in paragraph (1) cannot be resolved by the Board of Directors by the date the RUPS is held, the objection must be presented in the RUPS for resolution.

(4) The resolution as referred to in paragraph (3) may consist of resolving the objection or establishing a resolution scheme agreed upon with interested parties.

(5) In the event that the resolution of the objection as referred to in paragraph (3) has not been reached, the Merger or Consolidation of the BPR or BPRS cannot be implemented.

Article 13

(1) Shareholders who do not agree with the RUPS decision regarding the Merger or Consolidation may only exercise their right to request that the BPR or BPRS purchase their shares at a fair price.

(2) The exercise of the right to purchase shares at a fair price as referred to in paragraph (1) does not halt the implementation process of the Merger or Consolidation.

Article 14

(1) The draft Merger or Consolidation as referred to in Articles 6 through 13 must obtain approval from the RUPS of each BPR or BPRS conducting the Merger or Consolidation.

(2) In the event that the RUPS does not approve the draft Merger or Consolidation as referred to in paragraph (1):

a. the Merger or Consolidation process cannot be implemented; and

b. the Otoritas Jasa Keuangan issues a letter terminating the Merger or Consolidation process.

(3) The draft Merger or Consolidation approved by the RUPS as referred to in paragraph (1) is stipulated in a Deed of Merger or Consolidation made before a notary in the Indonesian language.

(4) The Deed of Merger or Consolidation as referred to in paragraph (3) must be drafted no later than 30 (thirty) days after the date of the RUPS implementation.

(5) In the event there are changes to the Articles of Association of the resulting BPR or BPR from the Merger, the changes to the Articles of Association are stated in a notarial deed in the Indonesian language.

(6) The Deed of Consolidation as referred to in paragraph (3) serves as the basis for drafting the deed of establishment of the resulting BPR or BPR from the Consolidation.

(7) The Deed of Merger or Consolidation, the deed of changes to the Articles of Association of the resulting BPR or BPR from the Merger, or the deed of establishment of the resulting BPR or BPR from the Consolidation as referred to in paragraphs (3), (5), and (6) must contain a statement regarding the effectiveness of the Merger or Consolidation license.

Article 15

(1) The Board of Directors of each BPR or BPR conducting the Merger or Consolidation jointly submits a letter of application for the Merger or Consolidation license as referred to in Appendix Part C, which is an integral part of this Otoritas Jasa Keuangan Regulation, to the Otoritas Jasa Keuangan no later than 5 (five) working days after the date of the Deed of Merger or Consolidation.

(2) In the event that the BPR or BPR does not submit the application for the Merger or Consolidation license as referred to in paragraph (1):

a. the Merger or Consolidation process cannot be implemented; and

b. the Otoritas Jasa Keuangan issues a letter terminating the Merger or Consolidation process.

(3) The letter of application to obtain the Merger or Consolidation license as referred to in paragraph (1) is attached with:

a. the minutes of the RUPS;

b. the Deed of Merger or Consolidation, and the deed of changes to the Articles of Association of the resulting BPR or BPR from the Merger or the deed of establishment of the resulting BPR or BPR from the Consolidation as referred to in Article 14 paragraphs (3) through (6);

c. proof of announcement of the summary of the draft Merger or Consolidation as referred to in Article 11 paragraph (3);

d. the latest financial performance report of the BPR or BPR in the event the application for the Merger or Consolidation license is submitted within a period of 6 (six) months or more since the submission of the cover letter and preparation documents for the implementation of the Merger or Consolidation to the Otoritas Jasa Keuangan as referred to in Article 8; and

e. a checklist of document completeness as referred to in letters a through d in accordance with Appendix Part D, which is an integral part of this Otoritas Jasa Keuangan Regulation.

Article 16

(1) The Otoritas Jasa Keuangan conducts a review of the application documents for the Merger or Consolidation license submitted by the BPR or BPR as referred to in Article 15, no later than 10 (ten) working days since the application and required documents are received in complete form.

(2) The Otoritas Jasa Keuangan grants approval for the Merger or Consolidation license application as referred to in paragraph (1) after the documents are declared complete and based on the Otoritas Jasa Keuangan review, all provisions in Article 15 paragraph (3) have been met.

(3) The Otoritas Jasa Keuangan rejects the Merger or Consolidation license application as referred to in paragraph (1) accompanied by reasons for rejection, in the event the documents are declared incomplete and/or based on the Otoritas Jasa Keuangan review, the provisions in Article 15 paragraph (3) are not met.

Article 17

(1) The resulting BPR or BPR from the Merger notifies the competent authority of the Merger after obtaining the Merger license from the Otoritas Jasa Keuangan as referred to in Article 16 paragraph (2).

(2) In the event there are changes to the Articles of Association of the resulting BPR or BPR from the Merger as referred to in paragraph (1), the resulting BPR or BPR from the Merger must submit an application for approval or notification of changes to the Articles of Association after obtaining the Merger license from the Otoritas Jasa Keuangan by attaching a copy of the Deed of Merger.

(3) The submission of the application for approval or notification of changes to the Articles of Association to the competent authority as referred to in paragraph (1) is included within a period of no later than 30 (thirty) days calculated from the date of the deed of changes to the Articles of Association of the resulting BPR or BPR from the Merger as referred to in Article 14 paragraph (5).

(4) The Board of Directors of the resulting BPR or BPR from the Consolidation must submit an application for the legal entity approval of the resulting BPR or BPR from the Consolidation to the competent authority after obtaining the Consolidation license from the Otoritas Jasa Keuangan as referred to in Article 16 paragraph (2) no later than 60 (sixty) days from the date the deed of establishment of the resulting BPR or BPR from the Consolidation is signed, by attaching a copy of the Deed of Consolidation.

Article 18

The Merger or Consolidation license for:

a. BPRs in the form of limited liability companies and regional state-owned enterprises, or BPRSs in the form of limited liability companies:

1. Merger becomes effective from:

a) the date of approval by the competent authority or the date established in the approval of the competent authority;

b) the date of receipt of the notification letter of changes to the Articles of Association by the competent authority, or the date established in the Deed of Merger; or

c) the date of receipt of the letter of changes to company data that is not a change to the Articles of Association by the competent authority, or the date established in the Deed of Merger;

2. Consolidation becomes effective from the decision of the competent authority regarding the approval of the deed of establishment of the resulting BPR or BPR from the Consolidation;

b. BPRs in the form of regional general enterprises, becomes effective from the date of approval by the Otoritas Jasa Keuangan; or

c. BPRs in the form of cooperative legal entities, becomes effective from the date of the deed of changes to the Articles of Association of the resulting BPR from the Merger or the approval of the deed of establishment of the resulting BPR from the Consolidation by the competent authority, or the date established in the Deed of Merger or Deed of Consolidation.

Article 19

The BPR or BPR that has obtained the Merger or Consolidation license is required to:

a. prepare the closing balance sheet of each BPR or BPR conducting the Merger or Consolidation;

b. prepare the opening balance sheet of the resulting BPR or BPR from the Merger or Consolidation;

c. announce the results of the Merger or Consolidation accompanied by the opening balance sheet of the resulting BPR or BPR from the Merger or Consolidation no later than 30 (thirty) days from the date the Merger or Consolidation license becomes effective as referred to in Article 18, in a newspaper and on notice boards at the offices and network offices of the resulting BPR or BPR from the Merger or Consolidation; and

d. submit a report on the implementation of the Merger or Consolidation to the Otoritas Jasa Keuangan no later than 10 (ten) working days after the announcement date accompanied by:

1. a photocopy of the deed of changes to the Articles of Association of the resulting BPR or BPR from the Merger or the deed of establishment of the resulting BPR or BPR from the Consolidation;

2. a photocopy of the approval or receipt notification from the competent authority regarding the resulting BPR or BPR from the Merger or the deed of establishment of the resulting BPR or BPR from the Consolidation as referred to in item 1);

3. proof of announcement as referred to in letter c; and

4. a report on the implementation regarding the adjustment of the status of all office networks of the BPR or BPR as referred to in Article 6 paragraph (1) letter a item 5).

Second Part
Requirements and Procedures for Takeover

Article 20

(1) The Takeover of a BPR or BPR may be conducted by an individual or legal entity through the Takeover of shares that have been issued and/or will be issued by the BPR or BPR.

(2) The party conducting the Takeover must maintain the continuity of the business of the BPR or BPR.

Article 21

(1) The Takeover of a BPR or BPR that results in the transfer of Control of the BPR or BPR, in the event share ownership meets the criteria:

a. becoming the shareholder with the largest share ownership in the BPR or BPR; or

b. share ownership does not exceed the largest shareholder but determines the management and/or policy of the BPR or BPR directly or indirectly.

(2) In the event there is a party conducting the purchase of BPR or BPR shares becoming at least 25% (twenty-five percent) but the number of shares purchased is smaller than or equal to the number of shares owned by the Principal Party (PSP), the party conducting the share purchase is only subject to:

a. assessment of competence and propriety as referred to in the Otoritas Jasa Keuangan Regulation regarding the assessment of competence and propriety for principal parties of financial service institutions; and

b. examination of the source of funds for the Takeover as referred to in the Otoritas Jasa Keuangan Regulation regarding rural credit banks or sharia rural financing banks.

(3) Changes in ownership that result in the transfer of Control of the BPR or BPR caused by inheritance or gift are not treated as a Takeover.

(4) Changes in ownership that result in the transfer of Control of the BPR or BPR caused by inheritance or gift as referred to in paragraph (3) must obtain approval from the Otoritas Jasa Keuangan through the assessment of competence and propriety mechanism as referred to in the Otoritas Jasa Keuangan Regulation regarding the assessment of competence and propriety for principal parties of financial service institutions.

Article 22

(1) The Board of Directors of the BPR or BPR being taken over and the Board of Directors or management of the legal entity conducting the Takeover of the BPR or BPR each prepare a draft Takeover plan.

(2) In the event the party conducting the Takeover of the BPR or BPR is an individual, the BPR or BPR being taken over together with the party conducting the Takeover of the BPR or BPR prepares a draft Takeover plan.

(3) The draft Takeover plan as referred to in paragraphs (1) and (2) must contain at least:

a. institutional structure and office network:

1. the name and domicile of the BPR or BPR being taken over and the party conducting the Takeover, accompanied by the identity of the party conducting the Takeover;

2. the reasons and explanation from the party conducting the Takeover and the Board of Directors of the BPR or BPR being taken over; and

3. the estimated duration of the Takeover implementation;

b. organizational structure and shareholders:

1. the method for resolving the status, rights, and obligations of members of the Board of Directors, members of the Board of Commissioners, members of the DPS, and employees of the BPR or BPR being taken over;

2. the method for resolving the rights of shareholders who do not agree with the Takeover;

3. an analysis of the financial capability of the prospective Principal Party (PSP) currently, along with a 3 (three) year projection prepared by an independent consultant, accompanied by:

a) a statement letter of not having overdue and problematic debts; and

b) the ownership structure of the prospective PSP;

c. method for resolving the rights and obligations of the BPR or BPR being taken over to creditors and other parties;

d. financial reports and financial performance information for at least the last 2 (two) fiscal years from the party conducting the Takeover and the BPR or BPR being taken over, with criteria referring to the Otoritas Jasa Keuangan Regulation regarding transparency of the financial condition of rural credit banks, regulatory provisions regarding transparency of the financial condition of sharia rural financing banks, and the Otoritas Jasa Keuangan Regulation regarding the use of public accountants and accounting firms in financial service activities.

e. shares and funding preparation:

1. the procedure for valuation and conversion of shares from the BPR or BPR being taken over to the exchange shares if payment is made with shares;

2. the number and value of the shares of the BPR or BPR being taken over, along with the composition of shareholders after the Takeover;

3. the funding readiness of the party conducting the Takeover;

4. documents related to the source of funds for the Takeover; and

5. a stamped statement letter from the party conducting the Takeover regarding the funds used for the takeover that:

a) the source of funds used for the takeover does not originate from:

i. loans or financing facilities in any form from banks and/or other parties; and/or

ii. funds for the purpose of money laundering; and

b) the party conducting the Takeover is committed to implementing the Takeover in accordance with regulatory provisions; and

f. draft changes to the Articles of Association of the BPR or BPR being taken over.

(4) The draft Takeover plan as referred to in paragraph (1) must obtain approval from the Board of Commissioners of the BPR or BPR being taken over and the party conducting the Takeover of the BPR or BPR.

Article 23

(1) The Board of Directors of the BPR or BPR being taken over prepares a concept of the Deed of Takeover.

(2) The concept of the Deed of Takeover as referred to in paragraph (1) is prepared by the Board of Directors of the BPR or BPR based on the Takeover draft that has been approved by the Board of Commissioners.

Article 24

The Board of Directors of the BPR or BPR being taken over and the party conducting the Takeover submit the cover letter as referred to in Appendix Part E, which is an integral part of this Otoritas Jasa Keuangan Regulation, and the preparation documents for the implementation of the Takeover to the Otoritas Jasa Keuangan as follows:

a. the draft Takeover plan as referred to in Article 22, signed by the party conducting the Takeover and the Board of Directors of the BPR or BPR being taken over;

b. the concept of the Deed of Takeover as referred to in Article 23;

c. administrative requirement documents as referred to in the Otoritas Jasa Keuangan Regulation regarding the assessment of competence and propriety for principal parties of financial service institutions; and

d. a checklist of document completeness for the preparation of the implementation of the Takeover as referred to in Appendix Part F, which is an integral part of this Otoritas Jasa Keuangan Regulation.

Article 25

(1) The Otoritas Jasa Keuangan conducts a review of the preparation for the implementation of the Takeover as referred to in Article 24 no later than 10 (ten) working days since the application and required documents are received in complete form.

(2) In conducting the review of the preparation documents for the implementation of the Takeover as referred to in paragraph (1), the Otoritas Jasa Keuangan conducts research into:

a. the completeness and correctness of the documents; and

b. the source of funds used to take over the BPR or BPR.

(3) In conducting the review of the preparation documents for the implementation of the Takeover as referred to in paragraph (1), the Otoritas Jasa Keuangan may request additional documents and/or information from the BPR or BPR.

Article 26

(1) The Otoritas Jasa Keuangan notifies the BPR or BPR in writing that the review of the preparation documents for the implementation of the Takeover as referred to in Article 25 has been conducted and the BPR or BPR continues the process consisting of:

a. announcing a summary of the draft Takeover plan;

b. resolving objections raised by creditors, if any; and

c. convening the RUPS.

(2) In the event that, based on the review results, the BPR or BPR does not meet the requirements as referred to in Articles 22 through 25, the Otoritas Jasa Keuangan notifies the BPR or BPR in writing.

(3) The written notification as referred to in paragraph (2) is delivered simultaneously with the return of the Takeover requirement documents.

Article 27

(1) The Board of Directors of the BPR or BPR being taken over and the Board of Directors or management of the legal entity conducting the Takeover jointly announce a summary of the draft Takeover plan as referred to in Article 26 paragraph (1) letter a, which must contain at least:

a. the name and domicile of the BPR or BPR being taken over and the party conducting the Takeover, accompanied by the identity of the party conducting the Takeover;

b. the composition of shareholders before and after the Takeover; and

c. the estimated duration of the Takeover implementation.

(2) The BPR or BPR being taken over and the Board of Directors or management of the legal entity conducting the Takeover of the BPR or BPR announce the summary of the draft Takeover plan as referred to in paragraph (1) to interested parties through at least 1 (one) newspaper and to the employees of each BPR or BPR being taken over and employees from the legal entity conducting the Takeover of the BPR or BPR through notice boards at each office and network of the BPR or BPR no later than 30 (thirty) days before the convening of the RUPS.

Article 28

(1) Creditors may raise objections to the Takeover plan no later than 14 (fourteen) days after the announcement date as referred to in Article 27 paragraph (2).

(2) Creditors who do not raise objections within the time period as referred to in paragraph (1) are deemed to have approved the Takeover.

(3) In the event the creditor's objection as referred to in paragraph (1) cannot be resolved by the Board of Directors by the date the RUPS is held, the objection must be presented in the RUPS for resolution.

(4) The resolution as referred to in paragraph (3) may consist of resolving the objection or establishing a resolution scheme agreed upon with interested parties.

(5) In the event the resolution of the objection as referred to in paragraph (3) has not been reached, the Takeover cannot be implemented.

Article 29

(1) Shareholders who do not agree with the RUPS decision regarding the Takeover may only exercise their right to request that the BPR or BPR purchase their shares at a fair price.

(2) The exercise of the right to purchase shares at a fair price as referred to in paragraph (1) does not halt the implementation process of the Takeover.

Article 30

(1) The draft Takeover plan as referred to in Article 22 and the concept of the Deed of Takeover as referred to in Article 23 must obtain approval from:

a. the RUPS of the BPR or BPR being taken over; and

b. the party conducting the Takeover.

(2) In the event the party conducting the Takeover as referred to in paragraph (1) letter b is a legal entity, the draft Takeover plan and the concept of the Deed of Takeover must obtain approval from the General Meeting of Shareholders or equivalent.

(3) In the event the RUPS does not approve the draft Takeover plan as referred to in paragraph (1):

a. the Takeover process cannot be implemented; and

b. the Otoritas Jasa Keuangan issues a letter terminating the Takeover process.

Article 31

(1) The Board of Directors of the BPR or BPR being taken over and the party conducting the Takeover jointly submit a letter of application for the Takeover license to the Otoritas Jasa Keuangan by referring to Appendix Part G, which is an integral part of this Otoritas Jasa Keuangan Regulation.

(2) The letter of application as referred to in paragraph (1) is attached with supporting documents.

(3) The supporting documents as referred to in paragraph (2) must cover at least:

a. proof of announcement of the summary of the draft Takeover plan as referred to in Article 27 paragraph (2);

b. the minutes of the RUPS regarding the approval of the Takeover from the BPR or BPR being taken over and the party conducting the Takeover in the form of a legal entity;

---

c. a stamped letter of statement from the party conducting the Acquisition regarding the source of funds used to acquire the BPR or BPRS and the commitment to carry out the Acquisition;
d. the latest financial performance report in the event that the application for an Acquisition license is submitted within a period of 6 (six) months or more since the submission of the cover letter and preparation documents for the implementation of the Acquisition to the Financial Services Authority as referred to in Article 24; and e. a checklist of document completeness as referred to in letters a through d referring to Appendix Part H which is an inseparable part of this Financial Services Authority Regulation.

Article 32
In granting approval or rejection of the Acquisition license application as referred to in Article 31, the Financial Services Authority conducts:
a. review of the completeness and truthfulness of documents as referred to in Article 31; and b. assessment of the capability and propriety of the party conducting the Acquisition of the BPR or BPRS.

Article 33
(1) The Financial Services Authority grants approval or rejection of the Acquisition license application at the latest 10 (ten) working days after the application as referred to in Article 31 is received in complete form.

(2) In the event that the Acquisition license application as referred to in paragraph (1) is rejected, the Financial Services Authority issues written notification to the BPR or BPRS accompanied by the reasons for rejection.

Article 34
(1) The Draft Acquisition approved by the Financial Services Authority is embodied in an Acquisition deed made before a notary in the Indonesian language.
(2) In the event there are changes to the Articles of Association of the BPR or BPRS resulting from the Acquisition, the changes to the Articles of Association are stated in a notarial deed in the Indonesian language. (3) Changes to the Articles of Association of the BPR or BPRS resulting from the Acquisition as referred to in paragraph (2) are submitted to the competent authority at the latest 30 (thirty) days from the date of the notarial deed containing the changes to the Articles of Association.

Article 35
The Acquisition license as referred to in Article 33 paragraph (1) is valid for:
a. BPRs in the form of limited liability companies or regional state-owned enterprises, or BPRSs in the form of limited liability companies, since:

1. the date of approval by the competent authority or the date determined in the approval of the competent authority; or
2. the date of receipt of notification of changes to the Articles of Association by the competent authority, or the date determined in the Acquisition deed;
   b. BPRs in the form of regional public enterprises since the date of approval by the Financial Services Authority; or
   c. BPRs in the form of cooperative legal entities since the date of the deed of changes to the Articles of Association of the BPR resulting from the Acquisition from the competent authority.

Article 36
BPRs or BPRSs that have obtained an Acquisition license are required to:
a. announce the results of the Acquisition within a period of at the latest 30 (thirty) days calculated from the date the Acquisition becomes effective as referred to in Article 35 in a newspaper and on announcement boards at the office and branch network of the resulting BPR or BPRS; and b. submit a report on the implementation of the Acquisition to the Financial Services Authority at the latest 10 (ten) working days after the date of announcement accompanied by:

1. a photocopy of the deed of changes to the Articles of Association of the resulting BPR or BPRS;
2. a photocopy of the Acquisition deed;
3. a photocopy of the approval or receipt of notification from the competent authority regarding the changes to the Articles of Association as referred to in item 1); and
4. proof of announcement as referred to in letter a.

CHAPTER III
MERGER, CONSOLIDATION, AND ACQUISITION BY ORDER OF THE FINANCIAL SERVICES AUTHORITY

Article 37
(1) The Financial Services Authority may order BPRs or BPRSs to conduct a Merger or Consolidation with other BPRs or BPRSs, and an Acquisition by other parties, for BPRs or BPRSs that:
a. in 1 (one) ownership of a PSP, are determined in intensive supervision or special supervision status; b. cannot meet the minimum core capital as referred to in the Financial Services Authority Regulation regarding minimum capital provision obligations and fulfillment of minimum core capital for rural banks or sharia rural financing banks; and/or
c. based on the assessment of the Financial Services Authority, require efforts to strengthen the resilience and competitiveness of the BPR or BPRS in realizing an efficient BPR or BPRS industry.
(2) BPRs or BPRSs are required to implement the order of the Financial Services Authority as referred to in paragraph (1).
(3) The criteria as referred to in paragraph (1) letter a also applies to BPRs or BPRSs that are not in 1 (one) ownership of a PSP.
(4) Provisions regarding the implementation of Merger, Consolidation, or Acquisition as referred to in Articles 6 through 36 apply mutatis mutandis to Merger, Consolidation, or Acquisition by order of the Financial Services Authority. (5) The network area of offices of the resulting BPR or BPRS from Merger, Consolidation, or Acquisition:
a. refers to the Financial Services Authority Regulation regarding business activities and office network areas of rural banks based on core capital, for BPRs; or b. in the same province area, for BPRSs, as referred to in Article 4 and Article 5 paragraphs (3) through (5).

CHAPTER IV
POLICY TO ENCOURAGE THE IMPLEMENTATION OF MERGER OR CONSOLIDATION

Article 38
To encourage the implementation of Merger or Consolidation, the Financial Services Authority may establish policies for BPRs or BPRSs, namely:
a. extension of the target time for completion of the action plan for BPRs or BPRSs conducting a Merger or Consolidation that results in the provision of funds by the BPR or BPRS being categorized as exceeding the maximum credit limit or maximum fund disbursement limit; and/or b. extension of the time limit for the Board of Directors of BPRs or BPRSs to fulfill the obligation to hold higher-level work competency certificates for BPRs or BPRSs resulting from Merger or Consolidation that experience an increase in asset volume to at least Rp300,000,000,000.00 (three hundred billion rupiah) for 6 (six) consecutive months.

Article 39
(1) Extension of the target time for completion of the action plan regarding the provision of funds by BPRs or BPRSs categorized as exceeding the maximum credit limit or maximum fund disbursement limit as referred to in Article 38 letter a is at the latest 24 (twenty-four) months from the date the action plan is submitted to the Financial Services Authority. (2) Extension of the time limit for the Board of Directors of BPRs or BPRSs to fulfill the obligation to hold higher-level work competency certificates for BPRs or BPRSs resulting from Merger or Consolidation as referred to in Article 38 letter b is at the latest 24 (twenty-four) months from the date total assets reach Rp300,000,000,000.00 (three hundred billion rupiah).

CHAPTER V
ADDRESS FOR APPLICATIONS AND SUBMISSION OF REPORTS

Article 40
(1) Applications to obtain licenses and/or submission of reports on the implementation of Merger, Consolidation, and Acquisition are submitted by BPRs or BPRSs online through the Financial Services Authority's licensing and/or reporting system. (2) In the event that the Financial Services Authority's licensing and/or reporting system as referred to in paragraph (1) is not yet available, BPRs or BPRSs submit applications to obtain licenses and/or submission of reports on the implementation of Merger, Consolidation, and Acquisition offline to the Financial Services Authority.

Article 41
(1) Applications to obtain licenses as referred to in Article 40 paragraph (2) and correspondence, for BPRs conducting a Merger or Consolidation with BPRs, or BPRSs conducting a Merger or Consolidation with BPRSs, are submitted to:
a. the Executive Head of Banking Supervision of the Financial Services Authority c.q. Banking Licensing and Information Department for BPRs; or b. the Executive Head of Banking Supervision of the Financial Services Authority c.q. Sharia Banking Regulation and Licensing Directorate for BPRSs, with copies to the regional office of the Financial Services Authority and/or the local Financial Services Authority office. (2) Applications to obtain licenses as referred to in Article 40 paragraph (2) and correspondence, for BPRs conducting a Merger or Consolidation with BPRSs, are submitted to the Executive Head of Banking Supervision of the Financial Services Authority c.q. Sharia Banking Regulation and Licensing Directorate, with copies to the Banking Licensing and Information Department, the regional office of the Financial Services Authority and/or the local Financial Services Authority office. (3) Offline reports on the implementation of Merger or Consolidation as referred to in Article 40 paragraph (2), from BPRs or BPRSs as referred to in Article 19 letter d, are submitted to:
a. the regional office of the Financial Services Authority, for BPRs and BPRSs headquartered in the working area of the regional office of the Financial Services Authority; or b. the Financial Services Authority office, for BPRs and BPRSs headquartered in the working area of the Financial Services Authority office, with copies to the Banking Licensing and Information Department for BPRs or the Sharia Banking Regulation and Licensing Directorate for BPRSs. (4) Applications to obtain licenses as referred to in Article 40 paragraph (2) and correspondence of BPRs or BPRSs related to applications to obtain Acquisition licenses and submission of reports are addressed to:
a. the regional office of the Financial Services Authority, for BPRs and BPRSs headquartered in the working area of the regional office of the Financial Services Authority; or b. the Financial Services Authority office, for BPRs and BPRSs headquartered in the working area of the Financial Services Authority office.

CHAPTER VI
OTHER PROVISIONS

Article 42
The Financial Services Authority may establish policies based on certain considerations regarding the implementation of Merger, Consolidation, or Acquisition of BPRs or BPRSs other than those regulated in this Financial Services Authority Regulation.

CHAPTER VII
SANCTIONS

Article 43
BPRs or BPRSs that violate provisions as referred to in Article 2 paragraph (2), Article 3 paragraph (3), Article 6 paragraph (3), Article 14 paragraph (4), Article 19, and Article 36 are subject to administrative sanctions, namely:
a. written reprimand; b. downgrade of the health level of the BPR or BPRS; and/or
c. temporary suspension of part of the business activities of the BPR or BPRS.

Article 44
BPRs that violate provisions regarding office network area limitations as referred to in Article 5 paragraph (5) are subject to administrative sanctions referring to the Financial Services Authority Regulation regarding business activities and office network areas of rural banks based on core capital.

Article 45
(1) BPRs or BPRSs that violate provisions regarding report submission as referred to in Article 19 letter d or Article 36 letter b are subject to administrative sanctions in the form of written reprimands and administrative fines of Rp100,000.00 (one hundred thousand rupiah) per day of delay with a maximum total amount of Rp3,000,000.00 (three million rupiah). (2) In the event that the Financial Services Authority's licensing and/or reporting system is not yet available, the administrative sanctions as referred to in paragraph (1) only calculate working days of delay. (3) Administrative sanctions in the form of fines as referred to in paragraph (1) do not eliminate the obligation to submit reports as referred to in Article 19 letter d and Article 36 letter b.

Article 46
BPRs or BPRSs that violate provisions as referred to in Article 37 paragraph (2) are subject to administrative sanctions in the form of:
a. written reprimand; b. downgrade of health level; and/or
c. inclusion of members of the Board of Directors, members of the Board of Commissioners, and/or PSPs in the list of parties who receive a "fail" rating in the re-assessment of capability and propriety of BPRs or BPRSs as referred to in the Financial Services Authority Regulation regarding re-assessment for key parties of financial service institutions.

CHAPTER VII
TRANSITIONAL PROVISIONS

Article 47
(1) BPRs or BPRSs that are in the process of Merger, Consolidation, or Acquisition at the time this Financial Services Authority Regulation comes into force remain subject to the provisions of the Bank Indonesia Board of Directors Decision Number 32/52/KEP/DIR regarding Requirements and Procedures for Merger, Consolidation, and Acquisition of Rural Banks. (2) Provisions as referred to in Article 38, Article 39, and Article 42 apply to BPRs or BPRSs that are in the process of Merger, Consolidation, or Acquisition as referred to in paragraph (1).

CHAPTER VIII
CLOSING PROVISIONS

Article 48
At the time this Financial Services Authority Regulation comes into force, the Bank Indonesia Board of Directors Decision Number 32/52/KEP/DIR regarding Requirements and Procedures for Merger, Consolidation, and Acquisition of Rural Banks, is revoked and declared invalid.

Article 49
This Financial Services Authority Regulation comes into force on the date of its promulgation.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Yuliana

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

Established in Jakarta on 11 September 2019
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on 13 September 2019
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 164

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 21 /POJK.03/2019
REGARDING
MERGER, CONSOLIDATION, AND ACQUISITION
OF RURAL BANKS AND
SHARIA RURAL FINANCING BANKS

I. GENERAL
One of the steps that can be taken to strengthen the resilience and competitiveness of the BPR and BPRS industry is through Merger, Consolidation, and Acquisition. Merger, Consolidation, and Acquisition can be conducted based on the initiative of the BPR or BPRS or based on an order from the Financial Services Authority.

The requirements for conducting Merger, Consolidation, and Acquisition are currently considered no longer appropriate, so harmonization with the latest statutory regulations is required.

In addition, the implementation mechanism for Merger or Consolidation contained in the currently applicable regulations has obstacles, namely the submission of license applications to the Financial Services Authority and the competent authority is done simultaneously, causing problems for the Financial Services Authority in conducting the process of granting Merger or Consolidation licenses. Therefore, it is necessary to adjust the mechanism to obtain legal certainty and ease for BPRs or BPRSs conducting Merger or Consolidation.

In the Acquisition process, there are differences in interpretation in the implementation of Acquisitions, both those resulting in changes to Control and those not resulting in changes to Control, compared to the share purchase process. Due to these differences in interpretation, it is necessary to align understanding of the Acquisition process by formulating a clearer definition of Acquisition.

In light of these matters, it is necessary to establish regulations that serve as the basis for the mechanism and procedures for Merger, Consolidation, and Acquisition in a Financial Services Authority Regulation.

II. ARTICLE BY ARTICLE

Article 1
Clear enough.

Article 2
Clear enough.

Article 3
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Clear enough.
Paragraph (4)
Force majeure conditions include fires, mass riots, war, armed conflict, sabotage, and natural disasters such as earthquakes or floods, which are certified by officials of the competent authority from the local region. Other considerations that can be accepted by the Financial Services Authority include the remaining rights and obligations from conventional business activities that still need to be settled being insignificant.

Article 4
Clear enough.

Article 5
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
BPRs based on business activities refer to the Financial Services Authority Regulation regarding business activities and office network areas of rural banks based on core capital. Example:
BPR "A" in BPRKU group 2 headquartered in Pati Regency, Central Java Province, and having a branch office in Kudus Regency, conducts a Consolidation with BPR "B" in BPRKU group 2 headquartered in Magelang Regency and having a branch office in Magelang Regency. The result of the Consolidation of the two BPRs is BPR "C" in BPRKU group 2 headquartered in Magelang Regency. The branch offices owned by BPR "A" and BPR "B" before the Financial Services Authority Regulation regarding business activities and office network areas of BPRs based on core capital came into force, can continue to operate in the original regency areas as branch offices of BPR "C" even though they are in several different regency areas. Paragraph (4) Clear enough. Paragraph (5) Clear enough.

Article 6
Paragraph (1)
Letter a
Item 1)
Letter a)
Clear enough.

Letter b)
Discussion of other matters related to the plan for Merger or Consolidation includes:

1. share ownership composition and names of prospective shareholders of the resulting BPR or BPRS from the Merger or Consolidation; or
2. prospective members of the Board of Directors, prospective members of the Board of Commissioners of the BPR or BPRS, and prospective members of the DPS of the resulting BPR or BPRS from the Merger or Consolidation.
   Item 2)
   The legal entity form of the BPR conducting the Merger or Consolidation must be the same.
   Item 3)
   The legal entity form of the resulting BPR or BPRS from the Merger or Consolidation must correspond to the initial legal entity form.
   The name of the resulting BPR or BPRS from the Merger uses the name of one of the BPRs or BPRSs receiving the Merger, while the name of the resulting BPR or BPRS from the Consolidation uses a new name. Item 4) Clear enough. Item 5) Clear enough. Item 6) Clear enough. Item 7) Estimated implementation time starts from the initial process until the Merger or Consolidation license becomes effective. Letter b Item 1) Business activities are the main activities of BPRs or BPRSs, including fund collection, fund disbursement, fund placement, or other activities that have obtained approval from or have been reported to the Financial Services Authority. Item 2) Clear enough. Item 3) Clear enough. Letter c Item 1) Clear enough. Item 2) The format of the questionnaire refers to the Financial Services Authority Regulation regarding the assessment of capability and propriety for key parties of financial service institutions. Item 3) Resolution methods include handling mechanisms as regulated in statutory regulations. Item 4) Resolution methods include handling mechanisms as regulated in statutory regulations. Item 5) Clear enough. Item 6) Disclosure of conflicts of interest is conducted against the original BPR or BPRS and the resulting BPR or BPRS from the Merger or Consolidation. Item 7) Letter a) Clear enough. Letter b) Clear enough. Letter c) The format of the questionnaire refers to the Financial Services Authority Regulation regarding the assessment of capability and propriety for key parties of financial service institutions.

Letter d
Item 1)
Resolution methods include resolution in the General Meeting of Shareholders (GMS).
The resolution of rights and obligations becomes the obligation of the resulting BPR or BPRS from the Merger or Consolidation, and must be stated in written form, such as a letter of statement or notarial deed. Item 2) Clear enough. Letter e Item 1) Fiscal year is the year starting from January to December. Financial Reports and financial performance information:

1. for BPRs or BPRSs having total assets of at least Rp10,000,000,000.00 (ten billion rupiah) are audited first by a public accountant registered with the Financial Services Authority; or
2. for BPRs or BPRSs having total assets of less than Rp10,000,000,000.00 (ten billion rupiah) are accounted for by the Board of Directors in the GMS.
   Item 2)
   Financial data includes:
   a. financial position reports (balance sheets); b. income statements;
   c. statements of changes in equity;
   d. calculations of minimum capital provision obligations (KPMM); and e. financial ratios of BPRs or BPRSs as ratios in the health level assessment.
   Item 3)
   Reports regarding the condition, development, and results achieved from each BPR or BPRS that will conduct a Merger or Consolidation can be made in summary form, including explanations regarding the achievement of targets set by the BPR or BPRS up to the final position before the submission of the Merger or Consolidation. Letter f In the procedures for assessment and share conversion, the fair value of shares of the BPR or BPRS merging and the fair value of shares of the BPR or BPRS receiving the Merger, or the fair value of shares of the BPR or BPRS consolidating, are determined to establish the share exchange ratio for share conversion purposes. Letter g Clear enough. Letter h Clear enough. Letter i Clear enough. Letter j Clear enough. Letter k Clear enough. Paragraph (2) Clear enough. Paragraph (3) Clear enough.

Article 7
Paragraph (1)
Clear enough.
Paragraph (2)
Approval from the Board of Commissioners can be signed by:
a. the lead commissioner; or b. 1 (one) or more members of the Board of Commissioners representing the BPR or BPRS as regulated in the Articles of Association.

Paragraph (3)
Clear enough.
Paragraph (4)
Clear enough.

Article 8
Clear enough.

Article 9
Paragraph (1)
Clear enough.
Paragraph (2)
Letter a
Clear enough.
Letter b
Item 1)
Clear enough.
Item 2)
Clear enough.
Item 3)
The composite rating or health level rating refers to statutory regulations regarding procedures for assessing the health level of rural banks or the health level assessment system for rural banks based on sharia principles. Letter c Clear enough. Letter d Investigation into:

1. prospective shareholders to meet the requirements for parties who can become shareholders of BPRs or BPRSs; or
2. existing prospective shareholders in the event there are no new prospective shareholders,
   refers to the Financial Services Authority Regulation regarding rural banks or sharia rural financing banks.
   Letter e
   Investigation of capital deposits refers to the Financial Services Authority Regulation regarding:
3. rural banks or sharia rural financing banks; and
4. minimum capital provision obligations and fulfillment of minimum core capital for rural banks or sharia rural financing banks.
   Letter f
   Clear enough.
   Paragraph (3)
   Clear enough.

Article 10
Clear enough.

Article 11
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Interested parties include creditors, the public, and other business partners of the BPR or BPRS to be aware of the plan for Merger or Consolidation and to submit objections in the event of harmed interests.

Article 12
Clear enough.

Article 13
Paragraph (1)
Fair prices can be based on valuation from an independent appraiser.

Paragraph (2)
Clearly stated.

Article 14
Paragraph (1)
General Meeting of Shareholders (GMS) approval includes:
a. the appointment of candidates for Directors and candidates for Commissioners, which becomes effective after the approval of the Financial Services Authority (OJK) as a result of the review of the preparation documents for the implementation of the Merger or Consolidation as referred to in Article 9 paragraph (2) letter c; and b. the effectiveness of the increase in paid-up capital, if there is an increase in capital contributions.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Paragraph (6)
Clearly stated.

Paragraph (7)
The statement regarding the effectiveness of the Merger or Consolidation permit is adjusted to the limitations as referred to in the provisions of legislation regarding the legal entity status of the BPR or BPRS conducting the Merger or Consolidation.

Article 15
Clearly stated.

Article 16
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Example of rejection of a Merger or Consolidation application:
Differences between the draft deed of Merger or Consolidation and the deed of Merger or Consolidation that may cause the application for a Merger or Consolidation permit to not be processed include, among others:
a. the draft amendment to the Articles of Association of the BPR or BPRS resulting from the Merger or the draft deed of establishment of the BPR or BPRS resulting from the Consolidation; b. the business plan of the BPR or BPRS resulting from the Merger or Consolidation for a period of 1 (one) year as referred to in the Financial Services Authority Regulation regarding the business plan of rural credit banks and sharia rural financing banks; and
c. the names of the prospective Acquiring Party (PSP) and shareholders, candidates for Directors, candidates for Commissioners, and candidates for the Sharia Supervisory Board (DPS) of the BPR or BPRS resulting from the Merger or Consolidation.

Article 17
Paragraph (1)
The competent agencies for:
a. BPR or BPRS with the legal entity status of a limited liability company or regional state-owned enterprise are the Ministry of Law and Human Rights; b. BPR with the legal entity status of a regional public enterprise is the regional government according to the location of the BPR; and
c. BPR with the legal entity status of a cooperative is, among others, the Ministry of Cooperatives and Small and Medium Enterprises.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Article 18
Clearly stated.

Article 19
Letter a
The closing balance sheet position is on the same day the Merger or Consolidation permit becomes effective.

Letter b
The opening balance sheet position is 1 (one) day after the closing balance sheet position.

Letter c
Clearly stated.

Letter d
Clearly stated.

Article 20
Paragraph (1)
Clearly stated.

Paragraph (2)
The continuity of the business of the BPR or BPRS is carried out, among others, by maintaining the health level of the BPR or BPRS which must not be lower than before the BPR or BPRS was taken over.

Article 21
Paragraph (1)
Letter a
Example:
BPR “W” has shareholders:
A: 30%
B: 50%
C: 20%
“C” purchases 30% of “B”’s shares, becoming 50%. The purchase of these shares constitutes a Share Takeover resulting in a change of Control because the number of shares owned by “C” exceeds the number of shares owned by the next largest shareholder, which is “A” (30%), so the final share composition in BPR “W” becomes as follows:
A: 30%
B: 20%
C: 50%

Letter b
Example:
BPRS “X” has shareholders:
A: 60%
B: 20%
C: 20%
“B” purchases 10% of “A”’s shares, becoming 30%, and “A” remains the largest shareholder.
Based on the examination results, it is known that:

1. there is an agreement between “A” as the majority shareholder and “B”, or in the form of other documents showing that “A” gives its voting rights to “B”; and/or
2. the supervisor has confidence supported by written evidence,
   so that “B” has the authority to determine strategic policies, including regarding operational activities of BPRS “X”.
   The purchase of these shares constitutes a Share Takeover resulting in a change of Control even though “B” does not become the largest shareholder because it is proven that “B” determines the management and/or policies of BPRS “X”.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Article 22
Paragraph (1)
Management includes, among others, management for the party conducting the Takeover in the form of a cooperative legal entity or foundation.

Paragraph (2)
Clearly stated.

Paragraph (3)
Letter a
Number 1)
Clearly stated.

Number 2)
Clearly stated.

Number 3)
The estimated implementation period starts from the initial process until the Takeover permit becomes effective.

Letter b
Number 1)
Settlement methods include, among others, handling mechanisms as regulated in the provisions of legislation.

Number 2)
Settlement methods include, among others, handling mechanisms as regulated in the provisions of legislation.

Number 3)
Clearly stated.

Letter c
Clearly stated.

Letter d
Financial statements and financial performance information of the party to conduct the Takeover for legal entities other than banks, in accordance with the provisions of legislation.

Letter e
Number 1)
In the procedures for valuation and share conversion, the fair value of the shares of the BPR or BPRS to be taken over and the fair value of the exchange shares are established to determine the share exchange ratio in the context of share conversion.

Number 2)
Clearly stated.

Number 3)
Clearly stated.

Number 4)
Documents of the source of funds for the Takeover may include account balances and documents underlying the account balances.

Number 5)
Clearly stated.

Letter f
Clearly stated.

Paragraph (4)
Clearly stated.

Article 23
Paragraph (1)
The draft deed of Takeover is formulated in a notarial deed format.

Paragraph (2)
Clearly stated.

Article 24
Clearly stated.

Article 25
Paragraph (1)
Clearly stated.

Paragraph (2)
Letter a
Clearly stated.

Letter b
The investigation of the source of funds used to take over the BPR or BPRS refers to the Financial Services Authority Regulation regarding:

1. rural credit banks or sharia rural financing banks; and
2. the obligation to provide minimum capital adequacy and meet minimum core capital for rural credit banks or sharia rural financing banks.

Paragraph (3)
Clearly stated.

Article 26
Clearly stated.

Article 27
Paragraph (1)
The estimated implementation period starts from the initial process until the Takeover permit becomes effective.

Paragraph (2)
Interested parties, among others, creditors and other business partners of the BPR or BPRS and the legal entity conducting the Takeover, are to be informed of the Takeover plan and may submit objections if there are interests that are harmed.

Article 28
Clearly stated.

Article 29
Clearly stated.

Article 30
Clearly stated.

Article 31
Paragraph (1)
Clearly stated.

Paragraph (2)
Clearly stated.

Paragraph (3)
Letter a
Clearly stated.

Letter b
One of the agendas contained in the GMS minutes is information regarding the existence or non-existence of objections submitted by creditors and the settlement of objections in the event that objections are submitted.

Letter c
Clearly stated.

Letter d
Clearly stated.

Letter e
Clearly stated.

Article 32
Clearly stated.

Article 33
Clearly stated.

Article 34
Clearly stated.

Article 35
Clearly stated.

Article 36
Clearly stated.

Article 37
Paragraph (1)
Letter a
Clearly stated.

Letter b
Clearly stated.

Letter c
Based on the assessment of the Financial Services Authority, in the event that the BPR or BPRS cannot meet the provisions of legislation within the specified time limit, including regarding institutional structure, governance, and standards for information technology implementation.

Paragraph (2)
Clearly stated.

Paragraph (3)
Clearly stated.

Paragraph (4)
Clearly stated.

Paragraph (5)
Clearly stated.

Article 38
Letter a
Clearly stated.

Letter b
Competency certificates at a higher level refer to the Financial Services Authority Regulation regarding competency certification for directors and commissioners of rural credit banks and sharia rural financing banks.

Article 39
Clearly stated.

Article 40
Clearly stated.

Article 41
Clearly stated.

Article 42
Certain considerations include, among others, the results of studies in the context of policy setting regarding office network locations or efforts to support central and regional government policies, while still paying attention to the principle of prudence.

Article 43
Clearly stated.

Article 44
Clearly stated.

Article 45
Clearly stated.

Article 46
Clearly stated.

Article 47
Clearly stated.

Article 48
Clearly stated.

Article 49
Clearly stated.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6383

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 21 /POJK.03/2019
REGARDING
MERGER, CONSOLIDATION, AND TAKEOVER OF RURAL CREDIT BANKS AND SHARIA RURAL FINANCING BANKS

Part A
Example of Letter for Submission of Preparation Documents for Implementation of Merger or Consolidation

Number : … [date, month, year]
Type : …
Attachments : …
Subject : ...

To:
…
…

Hereby we submit documents for the preparation of the implementation of:

1. Merger of BPR/BPRS 1) … into BPR/BPRS 2) … ; or
2. Consolidation 1) between BPR/BPRS 1)… and BPR/BPRS 1)… into BPR/BPRS 2)
   ... .

In this regard, we attach the following documents:

1. Draft Merger/Consolidation 1);
2. Draft deed of Merger/Consolidation 1); and

CC:
KR/KOJK 1)

Notes:

1. Choose one.
2. Name of the BPR/BPRS resulting from the Merger or Consolidation.

3. Checklist of completeness of preparation documents for the implementation of Merger/Consolidation 1).

This is for your information.

Board of Directors

1. BPR/BPRS 1) …
2. BPR/BPRS 1) …
3. etc.

Part B
CHECKLIST OF COMPLETENESS OF PREPARATION DOCUMENTS FOR IMPLEMENTATION OF MERGER/CONSOLIDATION 2)

IDENTITY OF BPR/BPRS 2)
Name : …
Location : …
Application number and date : …

No. Description Check 1) Notes

1. Letter for submission of preparation documents for implementation of Merger/Consolidation 2)
2. Draft Merger/Consolidation 2) signed by the Board of Directors and has received approval from the Board of Commissioners of each BPR/BPRS 2), at least containing:
   a. Institutional Structure and Office Network

1. Minutes of the General Meeting of Shareholders (GMS)
   a. approval regarding the plan for Merger/Consolidation 2) b. discussion of other matters related to the Merger/Consolidation plan 2)
2. Name, legal entity status, and location of the BPR/BPRS 2) conducting the Merger/Consolidation 2)
3. Name, legal entity status, and location of the BPR/BPRS 2) resulting from the Merger/Consolidation 2)
4. Reasons and explanations from each Board of Directors of the BPR/BPRS 2) conducting the Merger/Consolidation 2)
5. Estimated status of all office networks of the BPR/BPRS 2) that have operated before the Merger/Consolidation 2)
   a) name, type, and location of office networks that do not undergo changes; b) name, type, and location of office networks to be closed, relocated, or downgraded; c) reasons for closing, relocating, or downgrading office networks; d) plan for settling all obligations to customers and other parties; e) announcement of closing, relocation, or downgrading of office networks conducted simultaneously with the announcement of the summary of the draft Merger/Consolidation 2); and f) implementation of closing, relocation, or downgrading of office networks conducted simultaneously with the implementation of the Merger/Consolidation 2).
6. Plan for changing the name and logo of the BPR/BPRS 2) resulting from the Consolidation 2)
7. Estimated implementation period for the Merger/Consolidation 2)
   b. Business Activities
8. Business activities of each BPR/BPRS 2) conducting the Merger/Consolidation 2), and changes that occurred during the current fiscal year, if any
9. Plan for continuing or terminating business activities of the BPR/BPRS 2) conducting the Merger/Consolidation 2)
10. Details of problems arising during the current fiscal year that affect the activities of the BPR/BPRS 2) conducting the Merger/Consolidation 2)
    c. Organizational Structure and Shareholders
11. Human resources of the BPR/BPRS 2) resulting from the Merger/Consolidation 2)
12. Composition and names of prospective shareholders, candidates for Directors, candidates for Commissioners, and candidates for the DPS of the BPR/BPRS 2) resulting from the Merger/Consolidation 2), accompanied by the candidate form for Directors or Commissioners of the BPR/BPRS 2)
13. Method for settling the status, rights, and obligations of Directors, Commissioners, DPS members, and employees of the BPR/BPRS 2) conducting the Merger/Consolidation 2)
14. Method for settling the rights of shareholders who do not agree to the Merger/Consolidation 2)
15. Salaries, honoraria, and other allowances for candidates for Directors, candidates for Commissioners, and candidates for the DPS of the BPR/BPRS 2) resulting from the Merger/Consolidation 2)
16. Disclosure of conflicts of interest between the BPR/BPRS 2) conducting the Merger/Consolidation 2) and Directors, Commissioners, or DPS members, if any
17. Analysis of the financial capability of the prospective PSP, current and projected for the next 3 (three) years, prepared by an independent consultant in the event of a Merger/Consolidation 2) accompanied by the replacement or change of the PSP, completed with:
    a) statement letter of not having overdue and problematic debts; b) ownership structure of the prospective PSP of the BPR/BPRS 2); and c) candidate form for the prospective PSP of the BPR/BPRS 2). d. Problems and Problem Settlement
18. Method for settling the rights and obligations of the BPR/BPRS 2) to debtors, creditors, and other parties
19. Explanation regarding the benefits and risks that may arise due to the Merger/Consolidation 2) along with mitigation of such risks
    e. Financial Data
20. Financial statements and financial performance information for the last 3 (three) fiscal years from each BPR/BPRS 2) conducting the Merger/Consolidation 2)
21. Financial data of the BPR/BPRS 2) conducting the Merger/Consolidation 2) based on the position at the latest before submitting the application for the Merger/Consolidation 2)
22. Report regarding the condition, development, and results achieved by each BPR/BPRS 2) conducting the Merger/Consolidation 2)
    f. Procedures for valuation and share conversion of each BPR/BPRS 2) conducting the Merger/Consolidation 2) against the Shares of the BPR/BPRS 2) resulting from the Merger/Consolidation 2) g. Amendment to Articles of Association
23. Draft amendment to the Articles of Association of the BPR/BPRS 2) resulting from the Merger or draft deed of establishment of the BPR/BPRS 2) resulting from the Consolidation
24. Plan for increasing paid-up capital, if any
    h. Projection of the BPR/BPRS 2) resulting from the Merger/Consolidation 2), including:
25. financial statements;
26. minimum capital adequacy ratio for 12 (twelve) months;
27. minimum core capital for 12 (twelve) months; and
28. health level for 12 (twelve) months with the lowest predicate of fairly healthy or composite rating 3
    i. Business plan of the BPR/BPRS 2) resulting from the Merger/Consolidation 2) for a period of 1 (one) year
    j. Action plan for settling rights and obligations from conventional business activities at the latest 1 (one) year for the Merger or Consolidation of the BPR/BPRS 2) k. Information technology of the BPR/BPRS 2) resulting from the Merger/Consolidation 2)

3. Draft deed of Merger/Consolidation 2) based on the draft Merger/Consolidation 2) which has been approved by the Board of Commissioners and signed by each Board of Directors of the BPR/BPRS 2)

Board of Directors

1. BPR/BPRS 2) …
2. BPR/BPRS 2) …
3. etc.

Notes:

1. Yes = √ No = X
2. Choose one.

CC:
KR/KOJK

Notes:

1. Choose one.
2. Name of the BPR/BPRS resulting from the Merger or Consolidation.
3. Submitted in the event that the BPR/BPRS conducts a Merger.
4. Submitted in the event that the BPR/BPRS conducts a Consolidation.

Part C
Example of Letter for Application for Permit for Merger or Consolidation

Number : … [date, month, year]
Type : …
Attachments : …
Subject : ...

To:
…
…

Hereby we apply for a permit:

1. Merger of BPR/BPRS 1) … into BPR/BPRS 2) … ; or
2. Consolidation 1) between BPR/BPRS 1)… and BPR/BPRS 1)… into BPR/BPRS 2)
   ... .

In this regard, we attach the following documents:

1. Minutes of the General Meeting of Shareholders (GMS);
2. Deed of Merger/Consolidation 1);
3. Deed of Amendment to Articles of Association for the BPR/BPRS 1) resulting from the Merger 3);
4. Deed of Establishment for the BPR/BPRS 1) resulting from the Consolidation 4);
5. Proof of announcement of the summary of the draft Merger/Consolidation 1);
6. Financial performance report of the BPR/BPRS 1) latest, in the event that the application for the permit for Merger or Consolidation is submitted within a period of 6 (six) months or more since the submission of preparation documents for the implementation of the Merger/Consolidation 1); and
7. Checklist of completeness of documents for the application for the permit for Merger/Consolidation 1).

This is for your information.

Board of Directors

1. BPR/BPRS 1) …
2. BPR/BPRS 1) …
3. etc.

Notes:

1. Choose one.
2. Submitted in the event that the BPR/BPRS conducts a Merger.
3. Submitted in the event that the BPR/BPRS conducts a Consolidation.
4. Yes = √ No = X

Part D
CHECKLIST OF COMPLETENESS OF DOCUMENTS FOR APPLICATION FOR PERMIT FOR MERGER/CONSOLIDATION 1)

IDENTITY OF BPR/BPRS 1)
Name : …
Location : …
Application number and date : …

No. Description Check 4) Notes

1. Letter for application for Permit for Merger/Consolidation 1)
2. Minutes of the General Meeting of Shareholders (GMS)
3. Deed of Merger/Consolidation 1)
4. Deed of Amendment to Articles of Association for the BPR/BPRS 1) resulting from the Merger 2)
5. Deed of Establishment for the BPR/BPRS 1) resulting from the Consolidation 3)
6. Proof of announcement of the summary of the draft Merger/Consolidation 1)
7. Financial performance report of the BPR/BPRS 1) latest, in the event that the application for the permit for Merger or Consolidation is submitted within a period of 6 (six) months or more since the submission of preparation documents for the implementation of the Merger/Consolidation 1)

Board of Directors

1. BPR/BPRS 1) …
2. BPR/BPRS 1) …
3. etc.

Notes:

1. Choose one.
2. The party conducting the Takeover.

Part E
Example of Letter for Submission of Preparation Documents for Implementation of Takeover

Number : … [date, month, year]
Type : …
Attachments : …
Subject : ...

To:
…
…

Hereby we submit documents for the preparation of the implementation of the Takeover of BPR/BPRS 1) … by … 2)

In this regard, we attach the following documents:

1. Draft Takeover signed by the party conducting the Takeover and the Board of Directors of the BPR/BPRS 1) being taken over;
2. Draft deed of Takeover;
3. Administrative requirement documents as referred to in the Financial Services Authority Regulation regarding the assessment of capability and propriety for principal parties of financial service institutions; and
4. Checklist of completeness of preparation documents for the implementation of the Takeover.

This is for your information.

Party Conducting the Takeover
Board of Directors of BPR/BPRS 1) …
... ...

Part F
CHECKLIST OF COMPLETENESS OF DOCUMENTS FOR PREPARATION OF IMPLEMENTATION OF TAKEOVER

IDENTITY OF BPR/BPRS 1)
Name : …
Location : …
Application number and date : …

No. Description Check 2) Notes

1. Letter for submission of preparation documents for implementation of the Takeover
2. Draft Takeover signed by the party conducting the Takeover and the Board of Directors of the BPR/BPRS 1) being taken over, and has received approval from the Board of Commissioners of the BPR/BPRS 1) being taken over and the party conducting the Takeover, at least containing:
   a. Institutional Structure and Office Network

1. Name and location of the BPR/BPRS 1) to be taken over and the party conducting the Takeover, accompanied by the identity of the party conducting the Takeover
2. Reasons and explanations from the party conducting the Takeover and the Board of Directors of the BPR/BPRS 1) to be taken over
3. Estimated implementation period for the Takeover
   b. Organizational Structure and Shareholders
4. Method for settling the status, rights, and obligations of Directors, Commissioners, DPS members, and employees of the BPR/BPRS 1) to be taken over
5. Method for settling the rights of shareholders who do not agree to the Takeover
6. Analysis of the financial capability of the prospective PSP, current and projected for the next 3 (three) years, prepared by an independent consultant, completed with:
7. statement letter of not having overdue and problematic debts; and
8. ownership structure of the prospective PSP of the BPR/BPRS 1).
   c. Method for settling the rights and obligations of the BPR/BPRS 1) to be taken over to creditors and other parties
   d. Financial statements and financial performance information for at least the last 2 (two) fiscal years from the party conducting the Takeover and the BPR/BPRS 1) to be taken over e. Shares and Funding Preparation
9. Procedures for valuation and share conversion of the BPR/BPRS 1) to be taken over against the exchange shares if payment is made with shares
10. Number and value of the Shares of the BPR/BPRS 1) to be taken over along with the composition of shareholders after the Takeover
11. Readiness of funding from the party conducting the Takeover
12. Documents related to the source of funds for the Takeover
13. Notarized statement letter from the party conducting the Takeover regarding the funds used to take over, stating that:
    a) the source of funds used to take over the BPR/BPRS 1) does not originate from:
    i. loans or financing facilities in any form from banks and/or other parties; and/or
    ii. funds for the purpose of money laundering; and
    b) the party conducting the Takeover commits to implementing the Takeover in accordance with the provisions of legislation f. Draft amendment to the Articles of Association of the BPR/BPRS 1) being taken over

3. Draft deed of Takeover based on the draft Takeover which has been approved by the Board of Commissioners and signed by the Board of Directors of the BPR/BPRS 1)

Party Conducting the Takeover
Board of Directors of BPR/BPRS 1) …
... ...

Notes:

1. Choose one.
2. Yes = √ No = X

Notes:

1. Choose one.
2. The party taking over.

Part G
Example of Letter for Application for Permit for Takeover

Number : ... [date, month, year]
Type : …
Attachments : …
Subject : ...

To:
...
...

Hereby we apply for a permit for the Takeover of BPR/BPRS 1) ... by ...
2)

In this regard, we attach the following documents:

1. Proof of announcement of the summary of the draft Takeover;
2. Minutes of the General Meeting of Shareholders (GMS) regarding the approval of the Takeover from the BPR or BPRS being taken over and the party conducting the Takeover in the form of a legal entity;
3. Notarized statement letter from the party conducting the Takeover regarding the source of funds used to take over the BPR or BPRS and the commitment to implement the Takeover of the BPR or BPRS;
4. Latest financial performance report, in the event that the application for the permit for Takeover is submitted within a period of 6 (six) months or more since the submission of preparation documents for the implementation of the Takeover; and
5. Checklist of completeness of documents for the application for the permit for Takeover.

This is for your information.

Party Conducting the Takeover
Board of Directors of BPR/BPRS 1) …
... ...

Part H
CHECKLIST OF COMPLETENESS OF DOCUMENTS FOR APPLICATION FOR PERMIT FOR TAKEOVER

IDENTITY OF BPR/BPRS 1)
Name : ...
Location : ...
Application number and date : ...

No. Description Check 2) Notes

1. Letter for application for permit for Takeover
2. Proof of announcement of the summary of the draft Takeover
3. Minutes of the General Meeting of Shareholders (GMS) regarding the approval of the Takeover from the BPR/BPRS 1) being taken over and the party conducting the takeover in the form of a legal entity
4. Notarized statement letter from the party conducting the Takeover regarding the source of funds used to take over the BPR/BPRS 1) and the commitment to implement the Share Takeover of the BPR/BPRS 1)
5. Latest financial performance report, in the event that the application for the permit for Takeover is submitted within a period of 6 (six) months or more since the submission of preparation documents for the implementation of the Takeover

Notes:

1. Choose one.
2. Yes = √ No = X

Party Conducting the Takeover
Board of Directors of BPR/BPRS 1) …
... ...

This copy is in accordance with the original
Director of Law 1
Legal Department signed
Yuliana

Determined in Jakarta on 11 September 2019

CHAIRMAN OF THE BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
OF THE REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO