FINANCIAL SERVICES AUTHORITY REGULATION

NUMBER 55/POJK.04/2015

ON

THE ESTABLISHMENT AND IMPLEMENTATION GUIDELINES FOR THE AUDIT COMMITTEE

BY THE GRACE OF THE ALMIGHTY GOD,

THE BOARD OF COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY,

Considering:
a. that with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, as of December 31, 2012, the functions, duties, and authority for regulating and supervising financial services activities in the Capital Market sector, including regulations regarding the establishment and implementation guidelines for the Audit Committee, 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 regulations concerning the establishment and implementation guidelines for the Audit Committee, regulations regarding the Establishment and Implementation Guidelines for the Audit Committee 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 issue a regulation regarding the Establishment and Implementation Guidelines for the Audit Committee by establishing a Financial Services Authority Regulation;

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
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);

DECIDES:

Establishing: FINANCIAL SERVICES AUTHABILITY REGULATION CONCERNING THE ESTABLISHMENT AND IMPLEMENTATION GUIDELINES FOR THE AUDIT COMMITTEE.

CHAPTER I

GENERAL PROVISIONS

Article 1

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

1. Audit Committee is a committee established by and responsible to the Board of Commissioners to assist in carrying out the duties and functions of the Board of Commissioners.
2. Independent Commissioner is a member of the Board of Commissioners who comes from outside the Issuer or Public Company and meets the requirements as referred to in this Financial Services Authority Regulation.

CHAPTER II

AUDIT COMMITTEE

First Section

Establishment

Article 2

Issuers or Public Companies are required to have an Audit Committee.

Second Section

Composition, Structure, and Membership

Article 3

Members of the Audit Committee are appointed and dismissed by the Board of Commissioners.

Article 4

The Audit Committee consists of at least 3 (three) members who are Independent Commissioners and Parties from outside the Issuer or Public Company.

Article 5

The Audit Committee is chaired by an Independent Commissioner.

Article 6

Independent Commissioners must meet the requirements as regulated in Financial Services Authority Regulation Number 33/POJK.04/2014 concerning Directors and Boards of Commissioners of Issuers or Public Companies.

Third Section

Membership Requirements and Term of Office

Article 7

Members of the Audit Committee:
a. must have high integrity, ability, knowledge, and experience appropriate to their field of work, and must be able to communicate effectively; b. must understand financial reports, company business, particularly those related to the services or business activities of the Issuer or Public Company, audit processes, risk management, and relevant capital market legislation and other related laws and regulations;
c. must comply with the Audit Committee Code of Ethics established by the Issuer or Public Company;
d. are willing to continuously improve competence through education and training; e. must have at least 1 (one) member with an educational background and expertise in accounting and finance; f. are not insiders of Public Accounting Firms, Law Consulting Firms, Public Appraiser Service Offices, or other parties providing assurance services, non-assurance services, appraiser services, and/or other consulting services to the relevant Issuer or Public Company within the last 6 (six) months; g. are not persons who work or have the authority and responsibility to plan, lead, control, or supervise the activities of the relevant Issuer or Public Company within the last 6 (six) months, except for Independent Commissioners; h. do not have direct or indirect shares in the Issuer or Public Company;
i. In the event that members of the Audit Committee acquire shares of the Issuer or Public Company, whether directly or indirectly, due to a legal event, such shares must be transferred to another party within a maximum period of 6 (six) months after the shares are acquired;
j. do not have an Affiliation relationship with members of the Board of Commissioners, members of the Board of Directors, or Major Shareholders of the Issuer or Public Company; and k. do not have business relationships, either direct or indirect, related to the business activities of the Issuer or Public Company.

Article 8

The term of office of Audit Committee members must not be longer than the term of office of the Board of Commissioners as regulated in the Articles of Association and may be re-elected only for 1 (one) subsequent term.

Fourth Section

Duties, Responsibilities, and Authority

Article 9

The Audit Committee acts independently in carrying out its duties and responsibilities.

Article 10

In performing its functions, the Audit Committee has at least the following duties and responsibilities:
a. reviewing financial information to be issued by the Issuer or Public Company to the public and/or authorities, including financial reports, projections, and other reports related to the financial information of the Issuer or Public Company; b. reviewing compliance with laws and regulations related to the activities of the Issuer or Public Company;
c. providing independent opinions in the event of disagreements between management and Auditors regarding the services provided;
d. recommending to the Board of Commissioners the appointment of Auditors based on independence, scope of assignment, and service fees; e. reviewing the implementation of examinations by internal auditors and supervising the follow-up actions by the Board of Directors regarding findings from internal auditors; f. reviewing the implementation of risk management activities by the Board of Directors, if the Issuer or Public Company does not have a risk monitoring function under the Board of Commissioners; g. reviewing complaints related to the accounting and financial reporting processes of the Issuer or Public Company; h. reviewing and providing recommendations to the Board of Commissioners regarding potential conflicts of interest of the Issuer or Public Company; and
i. maintaining the confidentiality of documents, data, and information of the Issuer or Public Company.

Article 11

In carrying out its duties, the Audit Committee has the following authorities:
a. accessing documents, data, and information of the Issuer or Public Company regarding employees, funds, assets, and company resources as needed; b. communicating directly with employees, including the Board of Directors and parties performing internal audit, risk management, and Auditor functions related to the duties and responsibilities of the Audit Committee;
c. involving independent parties outside the Audit Committee members as needed to assist in carrying out its duties (if necessary); and
d. exercising other authorities granted by the Board of Commissioners.

CHAPTER III

AUDIT COMMITTEE CHARTER

Article 12

(1) Issuers or Public Companies are required to have an Audit Committee Charter.
(2) The Audit Committee Charter as referred to in paragraph (1) must contain at least:
a. duties, responsibilities, and authorities; b. composition, structure, and membership requirements;
c. work methods and procedures;
d. meeting organization policies; e. activity reporting system; f. provisions regarding the handling of complaints or reports concerning alleged violations related to financial reporting; and g. the term of office of the Audit Committee. (3) The Audit Committee Charter as referred to in paragraph (2) must be included on the Website of the Issuer or Public Company.

CHAPTER IV

MEETING ORGANIZATION

Article 13

The Audit Committee holds regular meetings at least 1 (one) time every 3 (three) months.

Article 14

Audit Committee meetings may be held if attended by more than 1/2 (one half) of the total number of members.

Article 15

Decisions of Audit Committee meetings are taken based on deliberation for consensus.

Article 16

Every Audit Committee meeting is recorded in meeting minutes, including any differences of opinion, which are signed by all attending members of the Audit Committee and submitted to the Board of Commissioners.

CHAPTER V

REPORTING

Article 17

The Audit Committee is required to submit reports to the Board of Commissioners for every assignment given.

Article 18

The Audit Committee is required to create an annual report on the implementation of Audit Committee activities, which is disclosed in the Annual Report of the Issuer or Public Company.

Article 19

Issuers or Public Companies are required to submit information to the Financial Services Authority regarding the appointment and dismissal of the Audit Committee no later than 2 (two) working days after the appointment or dismissal.

Article 20

Information regarding appointment and dismissal as referred to in Article 19 must be included on the Website of the Stock Exchange and/or the Website of the Issuer or Public Company.

CHAPTER VI

SANCTION PROVISIONS

Article 21

(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, in the form of:
a. written warnings; b. fines, namely the obligation to pay a certain amount of money;
c. restriction of business activities;
d. suspension of business activities; e. revocation of business licenses; f. cancellation of approvals; and g. cancellation of registrations.
(2) Administrative sanctions as referred to in paragraph (1) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of written warnings as referred to in paragraph (1) letter a. (3) Administrative sanctions in the form of fines as referred to in paragraph (1) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 22

In addition to administrative sanctions as referred to in Article 21 paragraph (1), the Financial Services Authority may take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

CHAPTER VII

CLOSING PROVISIONS

Article 23

Upon the enactment of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number: KEP-643/BL/2012 dated December 7, 2012, concerning the Establishment and Implementation Guidelines for the Audit Committee, along with Regulation Number IX.I.5, which is its attachment, is repealed and declared invalid.

Article 24

This Financial Services Authority Regulation takes effect upon being enacted.

To be known by everyone, ordering the enactment of 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 BOARD OF COMMISSIONERS
FINANCIAL SERVICES AUTHORITY,

signed
MULIAMAN D. HADAD

Enacted in Jakarta on December 29, 2015

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed
YASONNA H. LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 406 Copy matches the original Legal Director 1 Legal Department

signed
Sudarmaji

EXPLANATION

OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 56/POJK.04/2015
ON
THE ESTABLISHMENT AND IMPLEMENTATION GUIDELINES FOR THE AUDIT COMMITTEE

I. GENERAL

That as of December 31, 2012, the functions, duties, and authority for regulating and supervising financial services activities in the Capital Market, Insurance, Pension Funds, 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 reorganize the structure of existing regulations, particularly those related to the Capital Market sector, by converting regulations of Bapepam and LK related to the Capital Market sector into Financial Services Authority Regulations. The reorganization 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 above, it is necessary to convert the regulations of Bapepam and LK, namely Regulation Number IX.I.5, Attachment of the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number: KEP-643/BL/2012 concerning the Establishment and Implementation Guidelines for the Audit Committee dated December 7, 2012.

II. ARTICLE BY ARTICLE

Article 1

Clear enough.

Article 2

Clear enough.

Article 3

Clear enough.

Article 4

Clear enough.

Article 5

Clear enough.

Article 6

Clear enough.

Article 7

Clear enough.

Article 8

Audit Committee members who have served for 2 terms cannot be re-elected.

Article 9

Clear enough.

Article 10

The duties and responsibilities referred to do not limit the Audit Committee from taking other actions as long as they do not contradict this Financial Services Authority Regulation and prevailing practices domestically and internationally.

Article 11

Clear enough.

Article 12

Clear enough.

Article 13

Clear enough.

Article 14

Clear enough.

Article 15

Clear enough.

Article 16

Clear enough.

Article 17

Clear enough.

Article 18

Clear enough.

Article 19

Clear enough.

Article 20

Clear enough.

Article 21

Clear enough.

Article 22

Clear enough.

Article 23

Clear enough.

Article 24

Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5824