FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 52 /POJK.04/2015

CONCERNING

GUIDELINES FOR RATING AGREEMENTS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, since December 31, 2012, the functions, duties, and authorities for the regulation and supervision of financial service activities in the Capital Market sector, including Securities Rating Companies, have shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that in order to provide clarity and certainty regarding the regulation of rating agreements, regulations concerning Guidelines for Rating Agreements issued prior to the establishment of the Financial Services Authority need to be converted into a Financial Services Authority Regulation;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Guidelines for Rating Agreements;

A COPY

Considering:

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

DECIDING:
To establish:
A FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING GUIDELINES FOR RATING AGREEMENTS.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Securities Rating Company is an Investment Advisor in the form of a Limited Liability Company that conducts rating activities and provides ratings.
2. Rating is an opinion regarding the ability to meet payment obligations on time by a Party:
   a. as an entity (company rating); and/or b. related to Securities issued by the Party being rated (instrument rating).
3. Initial Rating is the result of a rating by a Securities Rating Company that has not yet obtained approval from the Party requesting the rating and has not been published.

CHAPTER II

GUIDELINES FOR RATING AGREEMENTS

Article 2

A Securities Rating Company that conducts a rating upon the request of a specific Party is required to create a rating agreement with said Party.

Article 3

A Securities Rating Company that, upon the request of a Party, conducts a rating on specific Securities and/or on the Party issuing such specific Securities, is required to create a rating agreement that contains at least the following matters:
a. name and address of the Securities Rating Company; b. name and address of the Party requesting the rating;
c. purpose and objectives of the rating;
d. rights and obligations of the Securities Rating Company; e. rights and obligations of the Party requesting the rating; f. time frame for completing the rating; g. cancellation and postponement of the rating process; h. objections;
i. confidentiality;
j. prohibition on notifying rating results; k. announcement of rating results;
l. dispute resolution; and
m. contract termination.

Article 4

(1) The rights of the Securities Rating Company as referred to in Article 3 letter d contain at least the following matters:
a. obtaining data and information necessary in the rating process, including through field reviews and meetings with related parties; b. obtaining access to conduct field reviews and/or examinations of activities and/or meetings with the management of the party referred to in order to obtain necessary information;
c. obtaining additional material information and/or explanations, namely additional information and/or explanations that can affect the Initial Rating result, in the event of an objection to the Initial Rating result; and
d. publishing every Rating issued against a Rating Object, except:

1. against the Initial Rating result that has not obtained approval from the Party requesting the rating and/or the Party being rated; or
2. otherwise determined in the rating agreement, provided it does not conflict with applicable legislation.

(2) The obligations of the Securities Rating Company as referred to in Article 3 letter d contain at least the following matters:
a. completing the rating at the time agreed upon in the rating agreement; b. maintaining and keeping confidential any information related to the rating that is confidential, except for the purpose of supervision conducted by the Financial Services Authority and/or other Parties in accordance with applicable legislation and/or for judicial interests;
c. providing answers to responses and objections raised by the Party requesting the rating regarding the Rating result;
d. issuing an Initial Rating after carefully considering all relevant, accurate, and reliable data and information; e. making a final decision on the Rating after carefully considering all relevant information and additional explanations, in the event the rated Party raises an objection; f. conducting continuous reviews of published rating results and transmitting the review result Rating to the Party requesting the rating during the period the rating agreement has not ended; g. conducting periodic reviews of rating results, as required by applicable legislation; h. completing the review of published rating results in the event of material facts or important events that can affect the published rating results, at the latest 7 (seven) days since the knowledge of the material fact or important event;
i. publishing the review results as referred to in letters g and h, without approval from the Party requesting the rating and/or the Party being rated; and
j. issuing a new Rating if there is a change in Rating from the review process as referred to in letter h or if a re-rating is conducted.

Article 5

(1) The rights of the Party requesting the rating as referred to in Article 3 letter e, regarding specific Securities and/or the Party issuing specific Securities, contain at least the following matters:
a. obtaining the Initial Rating result from the Securities Rating Company; b. submitting a written objection to the Securities Rating Company against the Initial Rating result in the event there is additional material information and/or explanations not previously disclosed; and
c. obtaining the rating result at the time agreed upon in the rating agreement.

(2) The obligations of the Party requesting the rating regarding specific Securities and/or the Party issuing specific Securities contain at least the following matters:
a. providing a written response within the agreed time frame after receiving the Initial Rating result as referred to in Article 5 paragraph (1) letter a; b. submitting to the Securities Rating Company all data and information necessary for the rating;
c. providing access to the Securities Rating Company to conduct field reviews of activities and/or meetings with the management of the party referred to in order to obtain necessary information;
d. submitting material additional information and/or explanations in the event of raising an objection to the Initial Rating result; e. submitting to the Securities Rating Company material information that can affect the rating result at the latest 2 (two) working days since the existence of the material information or fact, in the event the rated Securities are issued through a Public Offering; and f. approving the Securities Rating Company to publish every Rating issued against a Rating Object in the rating agreement, except against the rating results as referred to in Article 4 paragraph (1) letter d.

Article 6

The time frame for completing the rating as referred to in Article 3 letter f must contain the following matters:
a. the initial rating process must be completed within a maximum of 30 (thirty) working days since the rating agreement was agreed upon; b. the rating process for the purpose of review due to material facts or important events that can affect the published rating results must be completed within a maximum of 7 (seven) working days since the knowledge of the material fact or important event referred to, and transmitting the new rating result, statement, or other opinion related to the rating result to the party requesting the rating, at the latest 2 (two) working days since the completion of the rating process; and
c. the rating process for the purpose of periodic review must be completed within a maximum of 10 (ten) working days since the periodic review was conducted, and the publication of its rating result must be carried out at the latest 2 (two) working days since the completion of the rating process.

Article 7

The cancellation and postponement of the rating process as referred to in Article 3 letter g must contain the following matters:
a. conditions allowing for the cancellation or postponement of the rating process; and b. Published Ratings cannot be cancelled.

Article 8

Objections as referred to in Article 3 letter h must contain the following matters:
a. the objection process submitted by the party requesting the rating can only be conducted once for the initial rating; and b. The Rating after the objection process is final.

Article 9

Confidentiality as referred to in Article 3 letter i must contain the following matters:
a. confidentiality of data and information related to the rating; b. every Party who knows the Rating result unlawfully is required to maintain the confidentiality of said Rating result to other Parties before said Rating result is published; and
c. confidentiality of data and information related to the rating, and the Rating result referred to, does not apply for the purpose of supervision conducted by Bapepam and LK and/or other Parties in accordance with applicable legislation and/or for judicial interests.

Article 10

The prohibition on notifying rating results as referred to in Article 3 letter j must contain provisions that every Party who knows the Rating result unlawfully is prohibited from notifying said Rating result to other Parties before said Rating result is published.

CHAPTER III

SANCTION PROVISIONS

Article 11

(1) Without prejudice to criminal provisions in the Capital Market sector, the Financial Services Authority has the authority to impose administrative sanctions on any party that violates the provisions of this Financial Services Authority Regulation, including parties causing the violation, consisting of:
a. written warning; b. fine, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business license; f. cancellation of approval; and g. cancellation of registration.

(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g can be imposed with or without prior imposition of an administrative sanction in the form of a written warning as referred to in paragraph (1) letter a.

(3) Administrative sanctions in the form of a fine as referred to in paragraph (1) letter b can be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 12

In addition to administrative sanctions as referred to in Article 11 paragraph (1), the Financial Services Authority can take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 13

The Financial Services Authority can announce the imposition of administrative sanctions as referred to in Article 11 paragraph (1) and certain actions as referred to in Article 12 to the public.

CHAPTER IV

CLOSING PROVISIONS

Article 14

At the time this Financial Services Authority Regulation takes effect, the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number Kep-152/BL/2009 dated June 22, 2009 concerning Guidelines for Rating Agreements along with Regulation Number V.H.4 which is its appendix, are repealed and declared invalid.

Article 15

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

In order for everyone to know it, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.

Established in Jakarta on December 23, 2015

CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY

signed

MULIAMAN D. HADAD

Promulgated in Jakarta on December 29, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 403

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

signed

Sudarmaji

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 52 /POJK.04/2015

CONCERNING

GUIDELINES FOR RATING AGREEMENTS

I. GENERAL

Since December 31, 2012, the functions, duties, and authorities for the regulation and supervision of financial service activities in the Capital Market, Insurance, Pension Fund, Financing Institutions, and Other Financial Service Institutions sectors have shifted from the Minister of Finance and the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority.

In light of the above, it is necessary to restructure existing regulations, particularly those related to the Capital Market sector, by converting Bapepam and LK Regulations related to the Capital Market sector into Financial Services Authority Regulations. The restructuring is intended to ensure that there are Financial Services Authority Regulations related to the Capital Market sector that are consistent with Financial Services Authority Regulations in other sectors.

Based on the background and aspects mentioned, it is necessary to convert Bapepam and LK Regulations, namely Regulation Number V.H.4, Appendix of the Decision of the Chairman of Bapepam and LK Number Kep-152/BL/2009 concerning Guidelines for Rating Agreements, dated June 22, 2009.

II. ARTICLE BY ARTICLE EXPLANATION

Article 1

Clear enough.

Article 2

Clear enough.

Article 3

Clear enough.

Article 4

Clear enough.

Article 5

Clear enough.

Article 6

Clear enough.

Article 7

Clear enough.

Article 8

Clear enough.

Article 9

Clear enough.

Article 10

Clear enough.

Article 11

Clear enough.

Article 12

Clear enough.

Article 13

Clear enough.

Article 14

Clear enough.

Article 15

Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5821