Procedure for Granting Approval of the Articles of Association of a Depository and Settlement Institution

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 4 /POJK.04/2019
CONCERNING
PROCEDURE FOR GRANTING APPROVAL OF THE ARTICLES OF ASSOCIATION OF A DEPOSITORY AND SETTLEMENT INSTITUTION BY THE GRACE OF GOD THE ALMIGHTY, THE COMMISSIONERS COUNCIL 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 the regulation and supervision of financial service activities in the capital market sector, including regulation regarding the procedure for granting approval of the Articles of Association of a Depository and Settlement Institution, have shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding regulation on the procedure for granting approval of the Articles of Association of a depository and settlement institution, existing legislation in the capital market sector regarding the procedure for granting approval of the Articles of Association of a Depository and Settlement Institution issued prior to the establishment of the Financial Services Authority needs 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 the Procedure for Granting Approval of the Articles of Association of a Depository and Settlement Institution;
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:
Establishing: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING THE PROCEDURE FOR GRANTING APPROVAL OF THE ARTICLES OF ASSOCIATION OF A DEPOSITORY AND SETTLEMENT INSTITUTION.

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. Depository and Settlement Institution means a Party that conducts central custodian activities for custodian banks, securities companies, and other Parties.
3. Stock Exchange means a Party that organizes and provides systems and/or facilities to match buy and sell offers of other Parties' Securities with the aim of trading Securities among them.
4. Company means a limited liability company as referred to in Article 1 number 1 of Law Number 40 of 2007 concerning Limited Liability Companies.
5. Board of Directors is the organ of the Depository and Settlement Institution that has the authority and is fully responsible for the management of the Depository and Settlement Institution for the interests of the Depository and Settlement Institution, in accordance with the purpose and objectives of the Depository and Settlement Institution, and represents the Depository and Settlement Institution, both in and out of court, in accordance with the provisions of the Articles of Association.
6. Board of Commissioners is the organ of the Depository and Settlement Institution tasked with conducting general and/or specific supervision in accordance with the Articles of Association and providing advice to the Board of Directors.
7. Securities Company means a Party that conducts business activities as a Securities Underwriter, Securities Broker, and/or Investment Manager.
8. Securities Administration Bureau means a Party that, based on a contract with the Issuer, implements the recording of Securities ownership and the distribution of rights related to Securities.
9. Custodian means a Party that provides services for the safekeeping of Securities and other assets related to Securities, as well as other services, including receiving dividends, interest, and other rights, settling Securities transactions, and representing account holders who are its clients.
10. Custodian Bank means a General Bank that has obtained approval from the Financial Services Authority to conduct business activities as a Custodian.

CHAPTER II
ARTICLES OF ASSOCIATION OF A DEPOSITORY AND SETTLEMENT INSTITUTION
Article 2
Every Articles of Association or amendment to the Articles of Association of a Depository and Settlement Institution 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 Articles of Association of a Depository and Settlement Institution must at least contain:
a. the purpose and objectives of the Company conducting activities as a Depository and Settlement Institution; 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 a Depository and Settlement Institution;
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 term of office of the Board of Directors and Board of Commissioners referred to is arranged such that the appointment of the Board of Directors and Board of Commissioners is not done at the same time; 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 of other companies.
   c. provisions regarding shares which include the following provisions:
7. shares of the Depository and Settlement Institution are registered shares having the same nominal value and voting rights;
8. shares of the Depository and Settlement Institution may only be owned by a Stock Exchange, Securities Company, Securities Administration Bureau, Custodian Bank, or other Party with the approval of the Financial Services Authority; and
9. in the event that shares of the Depository and Settlement Institution are owned by a Party that no longer meets the requirements as a shareholder of the Depository and Settlement Institution, such shares must be transferred within 6 (six) months to a Party that meets the requirements.
   d. the transfer of rights over shares of the Depository and Settlement Institution may only be done to a Stock Exchange, Securities Company, Securities Administration Bureau, Custodian Bank, or other Party that has obtained approval from the Financial Services Authority; and e. provisions stating that the Depository and Settlement Institution does not distribute dividends to shareholders.

CHAPTER III
APPLICATION FOR APPROVAL OF THE ARTICLES OF ASSOCIATION OR AMENDMENT TO THE ARTICLES OF ASSOCIATION OF A DEPOSITORY AND SETTLEMENT INSTITUTION
Article 4
(1) An application for approval of the Articles of Association or amendment to the Articles of Association of a Depository and Settlement Institution is submitted to the Financial Services Authority in quadruplicate 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 establishment or 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 Articles of Association or amendment to the Articles of Association of a Depository and Settlement Institution, the reasons for the application are explained.

Article 5
To process the application for approval of the Articles of Association or amendment to the Articles of Association of a Depository and Settlement Institution as referred to in Article 4, the Financial Services Authority conducts a review of the material of the amendment to the Articles of Association of the Depository and Settlement Institution 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 any Party that causes the occurrence of the violation 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 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-16/PM/1996 dated January 17, 1996 concerning the Procedure for Granting Approval of the Articles of Association of a Depository and Settlement Institution, along with Regulation Number III.C.5 which is its appendix, is revoked and declared invalid.

Article 11
This Financial Services Authority Regulation shall come into force on the date of its enactment.

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

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.
Established in Jakarta on February 8, 2019
CHAIRMAN OF THE COMMISSIONERS COUNCIL
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 26

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 4 /POJK.04/2019
CONCERNING
PROCEDURE FOR GRANTING APPROVAL OF THE ARTICLES OF ASSOCIATION OF A DEPOSITORY AND SETTLEMENT INSTITUTION

I. GENERAL
That since December 31, 2012, the functions, duties, and authority for the regulation and supervision of financial service activities in the capital market, insurance, pension funds, financing institutions, and other financial service institutions have shifted 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 legislation in the capital market sector regulating the procedure for granting approval of the Articles of Association of a Depository and Settlement Institution, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-16/PM/1996 dated January 17, 1996 concerning the Procedure for Granting Approval of the Articles of Association of a Depository and Settlement Institution, along with Regulation Number III.C.5 which is its appendix, into a Financial Services Authority Regulation concerning the Procedure for Granting Approval of the Articles of Association of a Depository and Settlement Institution.

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 Depository and Settlement Institution to submit an application for approval of the Articles of Association or amendment to the Articles of Association of the Depository and Settlement Institution, if the Articles of Association or amendment to the Articles of Association of the Depository and Settlement Institution is 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 6311