FINANCIAL SERVICES AUTHORITY

REPUBLIC OF INDONESIA

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 41 /POJK.05/2015

CONCERNING

PROCEDURES FOR APPOINTING STATUTORY MANAGERS

AT FINANCIAL SERVICE INSTITUTIONS

BY THE GRACE OF GOD THE ALMIGHTY,

THE COMMISSIONERS' BOARD OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that in order to carry out the regulatory and supervisory tasks for the financial service sector activities as referred to in Article 8 letter g as well as Article 9 letter e and letter f of Law Number 21 of 2011 concerning the Financial Services Authority, the Financial Services Authority has the authority to establish regulations regarding the procedures for appointing statutory managers at financial service institutions, as well as to appoint and determine the use of statutory managers; b. that in order to implement the provisions of Article 62 paragraph (6) of Law Number 40 of 2014 concerning Insurance, it is necessary to regulate the appointment, duties, term of office, and dismissal of statutory managers, as well as the rights and obligations of the inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Procedures for Appointing Statutory Managers at Financial Service Institutions;

COPY

Recalling:

1. 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);
2. Law Number 40 of 2014 concerning Insurance (State Gazette of the Republic of Indonesia Year 2014 Number 337, Supplement to the State Gazette of the Republic of Indonesia Number 5618);

DECIDING:
To establish:
FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING PROCEDURES FOR APPOINTING STATUTORY MANAGERS AT FINANCIAL SERVICE INSTITUTIONS.

CHAPTER I

GENERAL PROVISIONS

Article 1

1. The Financial Services Authority, hereinafter abbreviated as OJK, is the Financial Services Authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
2. Statutory Manager is an individual or legal entity appointed by OJK to exercise OJK's authority as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
3. Financial Service Institution is a financial service institution as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
4. Commissioners' Board is the commissioners' board as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.
5. Board of Directors is the organ of the financial service institution that performs management functions as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Financial Service Institutions in the form of a limited liability company or equivalent to the Board of Directors for Financial Service Institutions in the form of a cooperative, joint venture, pension fund, regional company, regional public company, or regional limited liability company.
6. Board of Commissioners is the organ of the Financial Service Institution that performs supervisory and advisory functions as referred to in Law Number 40 of 2007 concerning Limited Liability Companies for Financial Service Institutions in the form of a limited liability company or equivalent to the Board of Commissioners for Financial Service Institutions in the form of a cooperative, joint venture, pension fund, regional company, regional public company, or regional limited liability company.
7. Sharia Supervisory Board is a part of the Financial Service Institution's organ that conducts business activities based on Sharia principles, which performs supervision over the implementation of the Financial Service Institution's business to ensure compliance with Sharia principles.
8. Consumer is a consumer as referred to in Law Number 21 of 2011 concerning the Financial Services Authority.

CHAPTER II

APPOINTMENT OF STATUTORY MANAGERS

Article 2

(1) OJK may appoint and determine the use of Statutory Managers to take over all powers and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of Financial Service Institutions.

(2) The appointment and determination of the use of Statutory Managers are carried out based on the provisions of laws in the financial service sector.

(3) The appointment and determination of the use of Statutory Managers, in addition to being carried out based on the provisions referred to in paragraph (2), may also be carried out if, based on OJK's assessment, the Financial Service Institution meets the following criteria:
a. the financial condition of the Financial Service Institution may endanger the interests of Consumers, the financial service sector, and/or shareholders; b. the business activities of the Financial Service Institution are not in accordance with the provisions of laws and regulations in the financial service sector;
c. the Financial Service Institution has been subject to sanctions restricting business activities;
d. the Financial Service Institution is utilized by certain parties to facilitate and/or commit criminal offenses in the financial service sector; e. shareholders, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution are suspected of committing criminal offenses in the financial service sector that can disrupt operations at the relevant Financial Service Institution; f. the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution are assessed as unable to overcome the problems occurring at the Financial Service Institution; and/or g. the Financial Service Institution does not comply with written orders to replace the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

(4) The appointment and determination of the use of Statutory Managers as referred to in paragraph (1) are carried out by the Commissioners' Board based on proposals from the executive heads of each respective financial service sector.

(5) The appointment and determination of the use of Statutory Managers for Financial Service Institutions specifically formed based on laws and regulations or formed by the Government are only carried out after prior coordination with the Government.

(6) Further provisions regarding the criteria for the appointment and determination of the use of Statutory Managers as referred to in paragraph (3) are regulated in an OJK Circular.

Article 3

(1) At the time the appointment and determination of the use of Statutory Managers is carried out by OJK, then:
a. the Statutory Manager takes over all powers and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution; and b. the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution are declared inactive.

(2) Since the takeover of powers and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board as referred to in paragraph (1) letter a, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board:
a. are prohibited from exercising powers and functions as the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board. b. are required to assist the Statutory Manager in exercising powers, functions, and duties.

(3) The inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board are prohibited from resigning while their powers and functions are taken over by the Statutory Manager.

(4) OJK may reactivate part or all of the inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board as referred to in paragraph (1) letter b after the use of the Statutory Manager ends.

(5) In the event that OJK reactivates part of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board after the use of the Statutory Manager ends, OJK issues a written order to the Financial Service Institution to hold a General Meeting of Shareholders to appoint the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

(6) In the event that OJK does not reactivate all of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board, OJK issues a written order to the Statutory Manager to hold a General Meeting of Shareholders to appoint a new Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board before the use of the Statutory Manager ends.

Article 4

(1) The inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board as referred to in Article 3 paragraph (1) letter a are entitled to receive remuneration, the amount of which is determined by the General Meeting of Shareholders considering the financial condition of the Financial Service Institution, at most 50% (fifty percent) of the remuneration received before the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board were made inactive.

(2) In the event that the inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board are appointed as Statutory Managers, then the remuneration provisions for Statutory Managers apply to the aforementioned Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

CHAPTER III

PARTIES APPOINTED AS STATUTORY MANAGERS

Article 5

(1) OJK appoints an individual or legal entity as a Statutory Manager.

(2) Individuals who can become Statutory Managers as referred to in paragraph (1) must:
a. meet requirements equivalent to those of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution in accordance with the powers and functions taken over, based on OJK's assessment; and b. not have a conflict of interest with the Financial Service Institution to be managed, shareholders, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution to be managed.

(3) The Board of Directors, Board of Commissioners, Sharia Supervisory Board, and/or employees of the Financial Service Institution that do not cause the Financial Service Institution to have problems may be appointed as Statutory Managers.

(4) Legal entities that can become Statutory Managers as referred to in paragraph (1) are similar Financial Service Institutions and do not have a conflict of interest with shareholders, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution to be managed.

(5) In the event that the Statutory Manager is in the form of a legal entity, members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, and/or employees of the legal entity assigned to exercise the powers, functions, and duties of the Statutory Manager must meet the requirements as referred to in paragraph (2) letters a and b.

CHAPTER IV

DUTIES, POWERS, RIGHTS, AND RESPONSIBILITIES OF STATUTORY MANAGERS

Article 6

(1) The Statutory Manager has all powers and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

(2) The Statutory Manager who has been appointed by OJK has the duties:
a. to save the assets and/or funds of the Financial Service Institution and/or Consumers; b. to control and manage the business activities of the Financial Service Institution in accordance with the provisions of laws and regulations;
c. to prepare a work plan containing at least the steps for rescue to be taken if the Financial Service Institution can still be saved;
d. to submit a proposal for OJK to revoke the business license of the Financial Service Institution if the Financial Service Institution is assessed as unable to be saved; e. to comply with the provisions of laws and regulations in the financial service sector; f. to comply with every written order from OJK regarding the control and management of business activities of the Financial Service Institution; g. to prevent and reduce losses to Consumers, the community, and the financial service sector; h. to eradicate financial crimes committed by certain parties in the financial service sector; and
i. to report their activities to OJK.

(3) In exercising powers, functions, and duties as referred to in paragraph (1) and paragraph (2), the Statutory Manager may take steps:
a. to save the continuity of business of certain Financial Service Institutions; b. to cancel or terminate agreements made by the Financial Service Institution with third parties that are detrimental and/or, according to the Statutory Manager, may harm the interests of the Financial Service Institution and/or Consumers;
c. to transfer part or all of the asset or business portfolio and/or funds of the Financial Service Institution, which, according to the Statutory Manager, can prevent greater losses to the Financial Service Institution; and/or
d. to transfer part or all of the asset and/or funds portfolio of Consumers, which, according to the Statutory Manager, can prevent greater losses to Consumers.

Article 7

(1) The Statutory Manager may request parties who are currently or have previously served as members of the Board of Directors, members of the Board of Commissioners, members of the Sharia Supervisory Board, employees of the Financial Service Institution, and/or other parties who have certain information and/or documents related to the business activities of the Financial Service Institution to provide such information and/or documents to the Statutory Manager.

(2) Parties as referred to in paragraph (1) are required to provide certain information and/or documents related to the business activities of the Financial Service Institution to the Statutory Manager.

Article 8

(1) The Statutory Manager is entitled to remuneration.

(2) The amount of remuneration as referred to in paragraph (1) is determined by OJK considering, among other things, fairness, the complexity of problems at the Financial Service Institution, and the asset size of the Financial Service Institution.

Article 9

(1) The Statutory Manager submits a monthly Statutory Manager report to OJK no later than the 10th of the following month.

(2) If the deadline for submitting the report as referred to in paragraph (1) falls on a holiday, then the final deadline for submission is the next working day.

(3) The report as referred to in paragraph (1) must contain at least information regarding:
a. matters that have been done during the reporting period; b. the development of the financial health of the Financial Service Institution during the reporting period;
c. problems faced in carrying out duties;
d. strategic steps to be taken after the reporting period; and e. recommendations to OJK.

(4) If necessary, OJK may request the Statutory Manager to submit reports other than the monthly report as referred to in paragraph (1).

Article 10

The Statutory Manager is accountable for all decisions and actions in exercising powers, functions, and duties to OJK.

CHAPTER V

COSTS OF STATUTORY MANAGERS

Article 11

(1) The costs of conducting business activities of the Financial Service Institution during the period of use of the Statutory Manager are charged to the Financial Service Institution.

(2) The remuneration costs of the Statutory Manager as referred to in Article 8 paragraph (1) are charged to the Financial Service Institution.

(3) In the event that the remuneration costs as referred to in paragraph (2) are insufficient, OJK may determine additional remuneration and/or other income for the Statutory Manager which becomes the burden of OJK.

CHAPTER VI

TERMINATION OF STATUTORY MANAGERS

Article 12

(1) The use of Statutory Managers at Financial Service Institutions ends if:
a. OJK decides that the use of Statutory Managers is no longer needed; or b. the Financial Service Institution's business license has been revoked.

(2) OJK has the authority to replace the Statutory Manager if it is assessed that the Statutory Manager commits fraud, is dishonest, is negligent, is incapable, and/or does not comply with the provisions of laws and regulations.

(3) Further provisions regarding the termination of Statutory Managers as referred to in paragraph (1) and the replacement of Statutory Managers as referred to in paragraph (2) are regulated in an OJK Circular.

Article 13

(1) In the event that the use of Statutory Managers has ended as referred to in Article 12 paragraph (1), the Statutory Manager submits an accountability report to OJK.

(2) The submission of the accountability report as referred to in paragraph (1) is submitted no later than 30 (thirty) working days since the end of the use of the Statutory Manager.

(3) The accountability report as referred to in paragraph (1) must contain at least information regarding:
a. matters that have been done during the tenure as Statutory Manager; b. the development of the financial health of the Financial Service Institution during the tenure as Statutory Manager;
c. problems faced in carrying out duties; and
d. recommendations to OJK.

(4) In the event that OJK has approved the Statutory Manager's accountability report as referred to in paragraph (2), the Financial Service Institution is required to accept the Statutory Manager's accountability report that has been approved by OJK.

CHAPTER VII

SANCTIONS

Article 14

(1) Without prejudice to criminal provisions as regulated in Article 53 and Article 54 of Law Number 21 of 2011 concerning the Financial Services Authority, OJK has the authority to impose administrative sanctions on parties who violate the provisions in Article 3 paragraph (3), paragraph (4), Article 7 paragraph (2), and Article 13 paragraph (4) of this Financial Services Authority Regulation, in the form of:
a. written reprimands; and/or b. prohibition from becoming shareholders, controllers, the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board for a maximum of 5 (five) years in the financial service sector.

(2) In addition to administrative sanctions as referred to in paragraph (1), OJK may impose additional administrative sanctions or specific actions as regulated in the provisions of laws and regulations in the financial service sector on parties who commit violations as referred to in paragraph (1).

CHAPTER VIII

CLOSING PROVISIONS

Article 15

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

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

Determined in Jakarta on December 21, 2015

CHAIRMAN OF THE COMMISSIONERS' BOARD
FINANCIAL SERVICES AUTHORITY,

signed

MULIAMAN D. HADAD

Promulgated in Jakarta on December 28, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed

YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 368

Copy in accordance with the original

Director of Legal Affairs 1
Department of Law

signed

Sudarmaji

EXPLANATION

OF

FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 41 /POJK.05/2015

CONCERNING

PROCEDURES FOR APPOINTING STATUTORY MANAGERS

AT FINANCIAL SERVICE INSTITUTIONS

I. GENERAL

The Financial Services Authority was formed with the aim that all financial service activities are conducted in an orderly, fair, transparent, and accountable manner, and are able to realize a financial system that grows sustainably and stably, and is able to protect the interests of Consumers and the community.

In order to protect the interests of Consumers, OJK can take actions deemed necessary, including the appointment and determination of the use of Statutory Managers.
The appointment of Statutory Managers is carried out when the management of a Financial Service Institution is assessed to harm the interests of Consumers, so that a manager who can represent the interests of OJK and Consumers is needed.

In principle, Statutory Managers exercise OJK's authority, including in the form of efforts to save the continuity of business of Financial Service Institutions, the takeover of all powers and functions of the management of Financial Service Institutions, the cancellation or termination of agreements, and the transfer of asset or business portfolios from Financial Service Institutions.

In order for the authority to appoint and use Statutory Managers to be carried out with good governance, the appointment and use of Statutory Managers need to be compiled in one OJK Regulation.

This Regulation includes, among other things, parties who can be appointed as Statutory Managers, the mechanism for appointing Statutory Managers, the duties, powers, and rights of Statutory Managers, as well as the accountability of Statutory Managers and the termination of the use of Statutory Managers.

II. ARTICLE BY ARTICLE

Article 1

Sufficiently clear.

Article 2

Paragraph (1)

Sufficiently clear.

Paragraph (2)

What is meant by "laws in the financial service sector" includes, among others, the Law on Insurance.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Financial Service Institutions specifically formed based on laws and regulations include, for example, the Indonesia Export Financing Agency, Social Security Management Agency, Indonesia Infrastructure Agency, Sarana Multigriya Finansial, and Sarana Multi Infrastruktur.

Paragraph (6)

Sufficiently clear.

Article 3

Paragraph (1)

Letter a

The takeover of all powers and functions of the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board of the Financial Service Institution applies from the date the term of office of the Statutory Manager appointed by OJK begins.

Letter b

What is meant by "inactive" is that the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board still hold office but cannot carry out their duties, functions, and powers as the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board. The declaration of inactivity as referred to in this letter is determined by a decision of the Commissioners' Board communicated to the Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board.

Paragraph (2)

Letter a

Sufficiently clear.

Letter b

Assistance that must be provided by the inactive Board of Directors, Board of Commissioners, and/or Sharia Supervisory Board to the Statutory Manager includes, among others:

1. providing all information and explanations regarding the business of the Financial Service Institution; and
2. obtaining documents and explanations from other parties.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

Sufficiently clear.

Paragraph (5)

Sufficiently clear.

Paragraph (6)

Sufficiently clear.

Article 4

Sufficiently clear.

Article 5

Paragraph (1)

Sufficiently clear.

Paragraph (2)

Letter a

OJK's assessment in this letter is carried out without going through a competency and fitness test process.

Letter b

What is meant by "conflict of interest" refers to the conflict of interest provisions in each respective financial service sector.

Paragraph (3)

Sufficiently clear.

Paragraph (4)

What is meant by "similar Financial Service Institution" is a Financial Service Institution that has the same field of business. Examples of similar Financial Service Institutions include, among others, general banks with each other, securities underwriting companies with each other, life insurance companies with each other, financing companies with each other, or pension funds with each other.

Paragraph (5)

Sufficiently clear.

Article 6

Sufficiently clear.

Article 7

Sufficiently clear.

Article 8

Paragraph (1)

Components of remuneration include, among others, honorariums, health allowances, and other allowances.

Paragraph (2)

Sufficiently clear.

Article 9

Sufficiently clear.

Article 10

Sufficiently clear.

Article 11

Sufficiently clear.

Article 12

Paragraph (1)

Letter a.

Statutory Managers are no longer needed, among others, in the event that the Financial Service Institution no longer meets the criteria as referred to in Article 2 paragraph (3).

Letter b.

Sufficiently clear.

Paragraph (2)

Sufficiently clear.

Paragraph (3)

Sufficiently clear.

Article 13

Sufficiently clear.

Article 14

Sufficiently clear.

Article 15

Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5808