POJK on the Implementation of the Open Company Governance Guidelines

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 21 /POJK.04/2015
ON
THE IMPLEMENTATION OF THE OPEN COMPANY GOVERNANCE GUIDELINES BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in order to improve the implementation of good corporate governance for Open Companies whose implementation is not yet mandated by regulations, guidelines for implementing governance practices are needed that refer to international practices worthy of emulation that are not yet mandated; b. that in order to improve transparency regarding the implementation of good corporate governance practices as referred to in letter a, Open Companies need to disclose their implementation in practice;
c. that based on the considerations referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation on the Implementation of the Open Company Governance Guidelines;
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

Recalling: 1. Law Number 8 of 1995 on Capital Markets (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 on 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: FINANCIAL SERVICES AUTHORITY REGULATION ON THE IMPLEMENTATION OF THE OPEN COMPANY GOVERNANCE GUIDELINES.

CHAPTER I
GENERAL PROVISIONS
Article 1
(1) The Open Company Governance Guidelines, hereinafter referred to as the Governance Guidelines, are corporate governance guidelines for Open Companies issued by the Financial Services Authority to encourage the implementation of governance practices in accordance with international practices worthy of emulation. (2) The Governance Guidelines as referred to in paragraph (1) contain aspects, principles, and recommendations for good corporate governance. (3) Further provisions regarding the Governance Guidelines as referred to in paragraph (1) shall be regulated by a Circular Letter of the Financial Services Authority.

Article 2
(1) Open Companies are required to implement the Governance Guidelines as referred to in Article 1 paragraph (1).
(2) In the event that Open Companies do not implement the Governance Guidelines as referred to in paragraph (1), Open Companies are required to explain the reasons for not implementing said Governance Guidelines.

CHAPTER II
DISCLOSURE
Article 3
Open Companies are required to disclose information regarding the implementation of recommendations in the Governance Guidelines as referred to in Article 2 in the annual report of the Open Company.

Article 4
The disclosure of the implementation of the Governance Guidelines as referred to in Article 3 must contain at least:
a. a statement regarding the implementation of recommendations in the Governance Guidelines as referred to in Article 1 paragraph (2); and/or b. an explanation regarding the non-implementation of recommendations in the Governance Guidelines as referred to in Article 1 paragraph (2), which must contain at least:

1. reasons for non-implementation; and
2. alternative implementation (if any).

CHAPTER III
SANCTION PROVISIONS
Article 5
(1) The Financial Services Authority is authorized 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; and b. fines, namely the obligation to pay a certain amount of money.
(2) Administrative sanctions as referred to in paragraph (1) letter b 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.

Article 6
In addition to administrative sanctions as referred to in Article 5 paragraph (1), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 7
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 5 paragraph (1) and specific actions as referred to in Article 6 to the public.

CHAPTER IV
CLOSING PROVISIONS
Article 8
In the event that other legislation regulates provisions regarding governance guidelines for Open Companies that differ from the provisions in this Financial Services Authority Regulation, the provisions that regulate more strictly shall apply.

Article 9
The obligation to disclose information regarding the implementation of recommendations in the Governance Guidelines in the annual report of the Open Company as referred to in Article 3 shall apply for the annual reports of Open Companies with periods ending on December 31, 2016.

Article 10
This Financial Services Authority Regulation shall come into force upon its promulgation.
To ensure that everyone knows it, 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 November 16, 2015
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY

signed
MULIAMAN D. HADAD

Promulgated in Jakarta on November 17, 2015
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA,

signed
YASONNA H.LAOLY

STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2015 NUMBER 276 A copy in accordance with the original Director of Law 1 Ministry of Law

signed
Sudarmaji

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 21 /POJK.04/2015
ON
THE IMPLEMENTATION OF THE OPEN COMPANY GOVERNANCE GUIDELINES

I. GENERAL
In order to encourage Open Companies to implement good corporate governance, the Financial Services Authority has regulated corporate governance in various legislation in the Capital Markets sector that must be implemented. However, the corporate governance that has been regulated does not cover all aspects of corporate governance, because not all aspects of governance can be applied equally to all Open Companies while their business activities in sectors, types of industry, size, and complexity of the company differ. Considering this, this Regulation regulates the implementation of Corporate Governance Guidelines that are not yet or are not regulated in legislation in the Capital Markets sector related to good corporate governance, but should properly or appropriately be implemented by Open Companies in the form of Governance Guidelines whose implementation is carried out through a "Comply or Explain" approach. The regulation of corporate governance with such an approach is expected to encourage Open Companies to internalize good corporate governance practices.

The improvement of corporate governance implementation by Open Companies is also very necessary in anticipating the ASEAN Economic Community (AEC) 2015, so that the level of corporate governance of Open Companies can at least be equated with corporate governance in other ASEAN countries.

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
The term "specific actions" as referred to includes, for example:
a. Postponement of the issuance of an effectiveness statement, for example, an effectiveness statement for business mergers, business consolidations; and b. Postponement of the issuance of a Financial Services Authority statement that there are no further responses to documents submitted to the Financial Services Authority in the context of capital increases with Preemptive Rights for Open Companies.

Article 7
Clear enough.

Article 8
Clear enough.

Article 9
Clear enough.

Article 10
Clear enough.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5765