POJK Regarding Securities Rating Agency Reports

FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 57 /POJK.04/2015
CONCERNING
SECURITIES RATING AGENCY REPORTS
BY THE GRACE OF THE ALMIGHTY GOD,
THE COMMISSIONERS 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 authority for regulation and supervision of financial services activities in the Capital Market sector, including Securities Rating Agencies, have transferred 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 Securities Rating Agency reports, regulations regarding Securities Rating Agency reports issued prior to the establishment of the Financial Services Authority need to be changed into a Financial Services Authority Regulation;
c. that based on the considerations as referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning Securities Rating Agency Reports;
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA

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:
Establishing : FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING SECURITIES RATING AGENCY REPORTS.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation, the following terms are defined as:

1. Securities Rating Agency 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 fulfill payment obligations on time by a Party:
   a. as an entity (company rating); and/or b. concerning Securities issued by the Rated Party (instrument rating).

CHAPTER II
REPORTING
Article 2
(1) Securities Rating Agencies that have received business licenses from the Financial Services Authority are required to submit reports to the Financial Services Authority, one copy each, as follows:
a. changes to the members of the Board of Directors and/or the Board of Commissioners, at the latest 7 (seven) working days after the change, accompanied by documents:

1. data on members of the Board of Directors, Board of Commissioners, officials one level below the Board of Directors, and analysts, both those with and without experience in the field of finance and securities rating or expertise in securities rating, including:
   a) name list; b) signed resume lists; c) photocopies of the latest formal education diplomas that have been legalized; d) photocopies of certificates of expertise in securities rating (if any); e) photocopies of valid Identity Cards or passports; f) recent color photographs size 4x6 cm with a red background, 2 (two) copies; g) photocopies of the Taxpayer Identification Number (NPWP) cards for members of the Board of Directors, Board of Commissioners, officials one level below the Board of Directors, and analysts who are required to have a Taxpayer Identification Number based on tax laws and regulations;
2. statements from members of the Board of Directors and members of the Board of Commissioners stating that the following requirements are met:
   a) capable of performing legal acts; b) having good ethics and morality; c) never declared bankrupt; d) never serving as managers or supervisors of a company that, based on a decision of the General Meeting of Shareholders or an equivalent organ, was declared responsible for the bankruptcy of the company; e) never sentenced for committing criminal offenses; f) never committed disgraceful acts in the Capital Market sector in particular and the financial sector in general; g) never committed material violations of laws and regulations in the Capital Market sector; h) not having affiliation relationships with fellow members of the Board of Directors, with fellow members of the Board of Commissioners, and/or between members of the Board of Directors and members of the Board of Commissioners; i) having a commitment to comply with applicable laws and regulations; and j) having a commitment to the development of the rating industry in particular and the Capital Market in general;
3. statements from each member of the Board of Directors stating that they do not hold concurrent positions in any other company; and
4. statements from each member of the Board of Commissioners stating that they do not hold concurrent positions in any other company that conducts business activities as a securities rating agency;
   b. changes related to analysts as referred to in Article 28, Article 29, and Article 30 of the Financial Services Authority Regulation concerning Licensing of Securities Rating Agencies, at the latest 7 (seven) working days after the change, accompanied by a statement from the analyst stating that the analyst does not hold concurrent positions in any other company and resides in Indonesia;
   c. changes to organizational structure, procedures and standard operating procedures, and/or procedures and rating methodologies, at the latest 7 (seven) working days after the change, accompanied by documents regarding such changes;
   d. changes related to:
5. business address;
6. identity of the Securities Rating Agency, including but not limited to name and logo;
7. articles of association;
8. Foreign Worker Employment Permit (IMTA) and Foreign Worker Work Permit (IKTA); or
9. Special List concerning company shareholders as referred to in the Limited Liability Company Law,
   at the latest 14 (fourteen) days after such changes, accompanied by documents regarding such changes; e. agenda of the General Meeting of Shareholders to the Financial Services Authority, at the latest 14 (fourteen) working days before the summons of the General Meeting of Shareholders related to changes to the articles of association covering the purpose and objectives or business activities, capital, members of the Board of Directors and Commissioners, and changes to shareholders; f. results of the General Meeting of Shareholders as referred to in letter e, at the latest 7 (seven) working days after the date of the holding of the General Meeting of Shareholders; g. annual financial reports accompanied by Auditor reports, at the latest by the end of the third month after the date of the annual financial report; and h. periodic operational activity reports every three months (March, June, September, and December), at the latest on the 15 (fifteenth) day of the following month. (2) In the event that the deadline for submitting reporting obligations to the Financial Services Authority as referred to in paragraph (1) letters d, g, and h falls on a holiday, the aforementioned reports are submitted on the next working day.

Article 3
Reports as referred to in Article 2 letters g and h must be accompanied by digital formats.

Article 4
Securities Rating Agencies are required to provide access that enables the Financial Services Authority to obtain data and information related to the determination of a Rating at any time and easily, including but not limited to:
a. supporting data for the preparation of rating result reports; b. the name of each analyst involved in the rating process;
c. the name and position of each Party involved in the rating determination process;
d. the name and position of each Party who approved the Rating before the Rating was determined; and e. procedures, methodologies, and assumptions used in determining a Rating.

Article 5
Annual financial reports as referred to in Article 2 paragraph (1) letter g must meet the following requirements:
a. containing at least:

1. financial position reports;
2. income statements and comprehensive income reports;
3. equity change reports;
4. cash flow reports; and
5. notes to the financial statements.
   b. presented in the Indonesian language;
   c. presented in comparison with the same period of the previous year; and
   d. prepared based on generally accepted accounting principles and capital market accounting regulations established by the Financial Services Authority.

Article 6
Operational activity reports as referred to in Article 2 paragraph (1) letter h must contain information covering at least:
a. for Ratings issued based on the request of a Party, including:

1. identity of the Party requesting the rating;
2. name of the Rated Party and/or name and total value of the Rated Securities;
3. rating results and interpretation or meaning of the Rating results; and
4. the validity period of the rating agreement.
   b. information for Ratings issued not based on the request of a Party, including:
5. name of the Rated Party and/or name and total value of the Rated Securities;
6. rating results and interpretation or meaning of the Rating results; and
7. data and information sources used for rating.

CHAPTER III
SANCTION PROVISIONS
Article 7
(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. business activity restrictions;
d. business activity suspension; e. business license revocation; f. approval cancellation; and g. registration cancellation.
(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 independently or together with the imposition of administrative sanctions as referred to in paragraph (1) letters c, d, e, f, or g.

Article 8
In addition to administrative sanctions as referred to in Article 7 paragraph (1), the Financial Services Authority may take specific actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 9
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 7 paragraph (1) and specific actions as referred to in Article 8 to the public.

CHAPTER IV
CLOSING PROVISIONS
Article 10
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-153/BL/2009 dated June 22, 2009 concerning Securities Rating Agency Reports, along with Regulation Number X.F.4 which is its attachment, are revoked and declared invalid.

Article 11
This Financial Services Authority Regulation comes into force on the date of enactment.

In order that everyone knows it, 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 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 408 Copy in accordance with the original Legal Director 1 Legal Department signed Sudarmaji

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
NUMBER 57 /POJK.04/2015
CONCERNING
SECURITIES RATING AGENCY REPORTS

I. GENERAL
That since December 31, 2012, the functions, duties, and authority for regulation and supervision of financial services activities in the Capital Market, Insurance, Pension Fund, Financing Institutions, and Other Financial Institutions sectors have transferred 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 Bapepam and LK regulations related to the Capital Market sector into Financial Services Authority Regulations. This reorganization is conducted to ensure that there are Financial Services Authority regulations regarding 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 Bapepam and LK regulations, namely Regulation Number X.F.4, Attachment of the Decision of the Chairman of Bapepam and LK Number Kep-153/BL/2009 concerning Securities Rating Agency Reports, dated June 22, 2009.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.
Article 2
Paragraph (1)
Letter a
Statements from members of the Board of Directors and/or Board of Commissioners stating that the requirements are met, and statements from each member of the Board of Directors and/or Board of Commissioners stating that they do not hold concurrent positions, according to the format as stated in the Financial Services Authority Regulation concerning Licensing of Securities Rating Agencies. Letter b Statements from analysts stating that analysts do not hold concurrent positions in any other company and reside in Indonesia, according to the format as stated in the Financial Services Authority Regulation concerning Licensing of Securities Rating Agencies. Letter c Sufficiently clear. Letter d Sufficiently clear. Letter e Sufficiently clear. Letter f Sufficiently clear. Letter g Auditors are Auditors who have obtained licenses from the Minister and are registered with the OJK as referred to in Law Number 8 of 1995 concerning the Capital Market. Letter h Sufficiently clear. Paragraph (2) Sufficiently clear.
Article 3
Sufficiently clear.
Article 4
Sufficiently clear.
Article 5
Sufficiently clear.
Article 6
Sufficiently clear.
Article 7
Sufficiently clear.
Article 8
Sufficiently clear.
Article 9
Sufficiently clear.
Article 10
Sufficiently clear.
Article 11
Sufficiently clear.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 5826