Procedure for Granting Approval of Stock Exchange Articles of Association

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 2 /POJK.04/2019
CONCERNING
PROCEDURE FOR GRANTING APPROVAL OF STOCK EXCHANGE ARTICLES OF ASSOCIATION BY THE GRACE OF GOD THE ALMIGHTY THE COMMISSIONERS BOARD 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 the regulation and supervision of financial services activities in the capital market sector, including regulation regarding the procedure for granting approval of stock exchange articles of association, have transferred from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding the regulation of the procedure for granting approval of stock exchange articles of association, existing capital market sector regulations regarding the procedure for granting approval of stock exchange articles of association 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 the FINANCIAL SERVICES AUTHORITY REGULATION OF THE REPUBLIC OF INDONESIA CONCERNING THE PROCEDURE FOR GRANTING APPROVAL OF STOCK EXCHANGE ARTICLES OF ASSOCIATION;
Recalling:

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: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE PROCEDURE FOR GRANTING APPROVAL OF STOCK EXCHANGE ARTICLES OF ASSOCIATION.

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

1. Party means an individual, company, joint venture, association, or organized group.
2. Stock Exchange means a Party that organizes and provides systems and/or facilities to match buy and sell offers of Securities of Parties with the aim of trading Securities among them.
3. Company means a limited liability company as referred to in Article 1 number 1 of Law Number 40 of 2007 concerning Limited Liability Companies.
4. Board of Directors means the organ of the Stock Exchange that has the authority and is fully responsible for the management of the Stock Exchange for the interests of the Stock Exchange, in accordance with the purpose and objectives of the Stock Exchange and represents the Stock Exchange, both inside and outside of court, in accordance with the provisions of the articles of association.
5. Board of Commissioners means the organ of the Stock Exchange that is tasked with carrying out general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.
6. Member of the Stock Exchange means a securities broker intermediary that has obtained a business license from the Stock Exchange in accordance with the Stock Exchange's regulations.
7. Securities Company means a Party that conducts business activities as a Securities Underwriter, securities broker intermediary, and/or Investment Manager.
8. Securities Broker Intermediary means a Party that conducts buy and sell Securities business activities for its own interest or for the interest of other Parties.

CHAPTER II
STOCK EXCHANGE ARTICLES OF ASSOCIATION
Article 2
Every Stock Exchange articles of association or amendment to the articles of association must obtain approval from the Financial Services Authority before being submitted to the Minister in charge of government affairs in the field of law and human rights, to obtain ratification, approval, or submission of notification regarding the amendment to the articles of association.

Article 3
The Stock Exchange articles of association must at least contain:
a. the purpose and objectives of the Company in conducting activities as a Stock Exchange; b. provisions regarding the Board of Directors and Board of Commissioners which include the following provisions:

1. requirements for candidates for the Board of Directors and Board of Commissioners in accordance with the Financial Services Authority Regulation concerning the Board of Directors and Board of Commissioners of the Stock Exchange;
2. the number of members of the Board of Directors and Board of Commissioners, each being at most 7 (seven) persons;
3. the procedure for submitting candidates for the Board of Directors and Board of Commissioners;
4. members of the Board of Directors and Board of Commissioners are appointed for a term of office of 3 (three) years and may be appointed again for 1 (one) term of office;
5. the end of the term of office of the Board of Directors must be regulated differently from the end of the term of office of the Board of Commissioners; and
6. members of the Board of Directors do not hold concurrent positions as members of the board of directors, board of commissioners, or employees at other companies.
   c. provisions regarding shares which include the following provisions:
7. Stock Exchange shares are registered shares that have a nominal value and equal voting rights;
8. Shareholders of the Stock Exchange may only hold 1 (one) share;
9. Securities Companies that are shareholders of the Stock Exchange who do not meet the requirements to become Members of the Stock Exchange or no longer are Members of the Stock Exchange, cannot use voting rights over the shares they hold;
10. Securities Companies that are shareholders of the Stock Exchange are prohibited from having relationships with other Securities Companies that are also shareholders of the same Stock Exchange through:
    a) ownership, either directly or indirectly, of at least 20% (twenty percent) of shares with voting rights; and b) control in the field of management and/or company policy, either directly or indirectly; d. provisions that the Stock Exchange does not distribute dividends to shareholders; and e. provisions regarding the transfer of rights over Stock Exchange shares which include the following provisions:
11. the transfer of rights over Stock Exchange shares can only be carried out to Securities Companies that have already obtained a business license as a Securities Broker Intermediary and meet the requirements to become Members of the Stock Exchange;
12. the transfer of Stock Exchange shares can only be carried out after there is a statement from the Board of Directors that the Securities Company receiving the transfer of shares has met the requirements to become a Member of the Stock Exchange;
13. Securities Companies that do not meet the requirements or no longer are Members of the Stock Exchange must transfer the Stock Exchange shares they hold to other Securities Companies that meet the requirements as Members of the Stock Exchange at the latest within a period of 12 (twelve) months calculated from the date the Stock Exchange shares were owned by the said Securities Company;
14. in the event that the Securities Company does not transfer the Stock Exchange shares it holds to other Securities Companies as referred to in number 3), the Stock Exchange will auction the said Stock Exchange shares at the best price level within a period of 6 (six) months since the expiration of the time limit as referred to in number 3); and
15. in the event that Stock Exchange shares cannot be transferred within the time limit as referred to in number 4), the Securities Company owning the Stock Exchange shares must sell the shares to the Stock Exchange and the Stock Exchange must buy the shares at the nominal price.

CHAPTER III
APPLICATION FOR APPROVAL OF STOCK EXCHANGE ARTICLES OF ASSOCIATION OR AMENDMENT TO THE STOCK EXCHANGE ARTICLES OF ASSOCIATION
Article 4
(1) Applications for approval of the Stock Exchange articles of association or amendment to the Stock Exchange articles of association are submitted to the Financial Services Authority in quadruplicate (4 copies) using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation, accompanied by the following documents:
a. the deed of amendment to the articles of association for which approval is requested; b. the deed of minutes of the General Meeting of Shareholders made by a notary;
c. the notice of the General Meeting of Shareholders;
d. the agenda of the General Meeting of Shareholders; and e. the attendance list of the General Meeting of Shareholders.
(2) In the application for approval of the Stock Exchange articles of association or amendment to the Stock Exchange articles of association, the reasons for the application are explained.

Article 5
To process the application for approval of the Stock Exchange articles of association or amendment to the Stock Exchange articles of association as referred to in Article 4, the Financial Services Authority conducts a review of the material of the proposed amendment to the articles of association submitted by the applicant.

Article 6
Within a period of 30 (thirty) days after receiving the application, the Financial Services Authority provides a notification letter to the applicant stating that:
a. the application is incomplete using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation; b. the application is rejected using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation; or
c. the application is approved using the form contained in the Appendix which is an integral part of this Financial Services Authority Regulation.

Article 7
If within a period of 30 (thirty) days the Financial Services Authority does not provide a response as referred to in Article 6, the application for approval of the articles of association and the amendment thereof becomes effective.

CHAPTER IV
SANCTION PROVISIONS
Article 8
(1) Any Party that violates the provisions as referred to in Article 2 and Article 3 shall be subject to administrative sanctions.
(2) Sanctions as referred to in paragraph (1) shall also be imposed on Parties that cause the occurrence of violations as referred to in paragraph (1).
(3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority.
(4) Administrative sanctions as referred to in paragraph (1) consist 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/or g. cancellation of registration.
(5) The procedure for imposing sanctions as referred to in paragraph (3) is carried out in accordance with the provisions of applicable legislation.
(6) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without prior imposition of administrative sanctions in the form of a written warning as referred to in paragraph (4) letter a. (7) Administrative sanctions in the form of a fine as referred to in paragraph (4) letter b may be imposed separately or together with the imposition of administrative sanctions as referred to in paragraph (4) letters c, d, e, f, or g.

Article 9
In addition to administrative sanctions as referred to in Article 8 paragraph (4), the Financial Services Authority may take specific actions against any Party that violates the provisions of this Financial Services Authority Regulation.

CHAPTER V
CLOSING PROVISIONS
Article 10
Upon the commencement of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-06/PM/1996 dated January 17, 1996 concerning the Procedure for Granting Approval of Stock Exchange Articles of Association, along with Regulation Number III.A.5 which is its appendix, is revoked and declared invalid.

This copy is in accordance with the original
Director of Law 1
Law Department signed
Yuliana

Article 11
This Financial Services Authority Regulation shall come 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 February 8, 2019
CHAIRMAN OF THE COMMISSIONERS BOARD
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO
Promulgated in Jakarta on February 11, 2019
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2019 NUMBER 24

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 2 /POJK.04/2019
CONCERNING
PROCEDURE FOR GRANTING APPROVAL OF STOCK EXCHANGE ARTICLES OF ASSOCIATION
I. GENERAL
That as of December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial services activities in the capital market, insurance, pension funds, financing institutions, and other financial service institutions have transferred from the Minister of Finance and the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority. In relation to the above, it is necessary to reorganize the existing regulatory structure, particularly those related to the capital market sector, by converting Capital Market Supervisory Agency and Financial Institutions regulations related to the capital market sector into Financial Services Authority Regulations. The reorganization is carried out so that Financial Services Authority Regulations related to the capital market sector are consistent with Financial Services Authority Regulations in other sectors. Based on the background thinking and aspects thereof, it is necessary to replace the existing capital market sector regulations regarding the procedure for granting approval of stock exchange articles of association, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-06/PM/1996 dated January 17, 1996 concerning the Procedure for Granting Approval of Stock Exchange Articles of Association, along with Regulation Number III.A.5 which is its appendix, into a Financial Services Authority Regulation concerning the Procedure for Granting Approval of Stock Exchange Articles of Association.

II. ARTICLE BY ARTICLE
Article 1
Clearly sufficient.
Article 2
Clearly sufficient.
Article 3
Clearly sufficient.
Article 4
Paragraph (1)
Clearly sufficient.
Paragraph (2)
The reasons for the application include, among others, the background of the amendment to the articles of association.
Article 5
Clearly sufficient.
Article 6
Clearly sufficient.
Article 7
Clearly sufficient.
Article 8
Clearly sufficient.
Article 9
The term "specific actions" in this Article includes, among others, requesting the Stock Exchange to submit an application for approval of the Articles of Association or amendment to the Articles of Association of the Stock Exchange, if the Articles of Association or amendment to the Articles of Association of the Stock Exchange are submitted to the Minister in charge of government affairs in the field of law and human rights without first obtaining approval from the Financial Services Authority.
Article 10
Clearly sufficient.
Article 11
Clearly sufficient.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6309