Procedure for Providing Approval of the Articles of Association of Clearing and Guarantee Institutions

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 3 /POJK.04/2019
CONCERNING
PROCEDURE FOR PROVIDING APPROVAL OF THE ARTICLES OF ASSOCIATION OF CLEARING AND GUARANTEE INSTITUTIONS BY THE GRACE OF THE ALMIGHTY GOD, 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 regulating and supervising financial services activities in the capital market sector, including regulations regarding the procedure for providing approval of the Articles of Association of Clearing and Guarantee Institutions, have shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that to provide clarity and certainty regarding regulations on the procedure for providing approval of the Articles of Association of clearing and guarantee institutions, existing legislation in the capital market sector regarding the procedure for providing approval of the Articles of Association of Clearing and Guarantee Institutions 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 referred to in letters a and b, it is necessary to establish a Financial Services Authority Regulation concerning the Procedure for Providing Approval of the Articles of Association of Clearing and Guarantee Institutions;
Recalling:

1. Law Number 8 of 1995 concerning 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 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 AUTHORITY REGULATION CONCERNING THE PROCEDURE FOR PROVIDING APPROVAL OF THE ARTICLES OF ASSOCIATION OF CLEARING AND GUARANTEE INSTITUTIONS.

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

1. Party is an individual, company, joint venture, association, or organized group.
2. Clearing and Guarantee Institution is a Party that provides clearing and guarantee services for the settlement of Stock Exchange Transactions.
3. Stock Exchange is a Party that operates 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. Limited Liability Company is 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 an organ of the Clearing and Guarantee Institution authorized and fully responsible for managing the Clearing and Guarantee Institution for the interests of the Clearing and Guarantee Institution, in accordance with the purpose and objectives of the Clearing and Guarantee Institution, and representing the Clearing and Guarantee Institution, both inside and outside of court, in accordance with the provisions of the Articles of Association.
6. Board of Commissioners is an organ of the Clearing and Guarantee 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 is a Party that conducts business activities as an Underwriter of Securities, Securities Broker, and/or Investment Manager.
8. Securities Administration Office is a Party that, based on a contract with the Issuer, executes the recording of Securities ownership and the distribution of rights related to Securities.
9. Custodian is 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 is 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 CLEARING AND GUARANTEE INSTITUTIONS
Article 2
Every Articles of Association or amendment to the Articles of Association of a Clearing and Guarantee 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 Clearing and Guarantee Institution must contain at least:
a. the purpose and objectives of the Limited Liability Company in conducting activities as a Clearing and Guarantee Institution; b. provisions regarding the Board of Directors and Board of Commissioners, including 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 Clearing and Guarantee Institutions;
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 of the Clearing and Guarantee Institution; 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, including the following provisions:
7. shares of the Clearing and Guarantee Institution are registered shares with nominal value and equal voting rights;
8. shares of the Clearing and Guarantee Institution may only be owned by Stock Exchanges, Securities Companies, Securities Administration Offices, Custodian Banks, or other Parties with the approval of the Financial Services Authority; and
9. the majority of shares of the Clearing and Guarantee Institution must be owned by Stock Exchanges.
   d. provisions regarding the transfer of rights to shares of the Clearing and Guarantee Institution, including the following provisions:
10. the transfer of rights to shares of the Clearing and Guarantee Institution may only be carried out to Stock Exchanges, Securities Companies, Securities Administration Offices, Custodian Banks, or other Parties that have obtained approval from the Financial Services Authority;
11. the transfer of rights to shares of the Clearing and Guarantee Institution by a Stock Exchange to a Party that is not a Stock Exchange may only be carried out as long as the Stock Exchange continues to hold the majority of shares of the Clearing and Guarantee Institution; and
12. in the event that shares of the Clearing and Guarantee Institution are owned by a Party that no longer meets the requirements as a shareholder of the Clearing and Guarantee Institution, such shares must be transferred within 6 (six) months to a Party that meets the requirements.
    e. provisions that the Clearing and Guarantee 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 CLEARING AND GUARANTEE INSTITUTIONS
Article 4
(1) An application for approval of the Articles of Association or amendment to the Articles of Association of a Clearing and Guarantee Institution is 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 Articles of Association or amendment to the Articles of Association for which approval is requested; b. the minutes of the General Meeting of Shareholders made by a notary;
c. the meeting invitation for 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 Clearing and Guarantee 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 Clearing and Guarantee Institution as referred to in Article 4, the Financial Services Authority examines the material of the proposed amendment to the Articles of Association submitted by the applicant.

Article 6
Within 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 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 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 the provisions of 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 enactment of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-11/PM/1996 dated January 17, 1996 concerning the Procedure for Providing Approval of the Articles of Association of Clearing and Guarantee Institutions, along with Regulation Number III.B.5 which is its appendix, is revoked and declared invalid.

Article 11
This Financial Services Authority Regulation takes effect on the date of enactment.

This copy is consistent with the original
Director of Law 1
Legal Department signed
Yuliana
To ensure 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 February 8, 2019
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO
Enacted 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 25

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 3 /POJK.04/2019
CONCERNING
PROCEDURE FOR PROVIDING APPROVAL OF THE ARTICLES OF ASSOCIATION OF CLEARING AND GUARANTEE INSTITUTIONS

I. GENERAL
Since 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 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 existing regulatory structure, particularly those related to the capital market sector, by converting Capital Market Supervisory Agency regulations related to the capital market sector into Financial Services Authority Regulations. This 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 and aspects mentioned above, it is necessary to replace the existing legislation in the capital market sector regulating the procedure for providing approval of the Articles of Association of Clearing and Guarantee Institutions, namely the Decision of the Chairman of the Capital Market Supervisory Agency Number Kep-11/PM/1996 dated January 17, 1996 concerning the Procedure for Providing Approval of the Articles of Association of Clearing and Guarantee Institutions, along with Regulation Number III.B.5 which is its appendix, into a Financial Services Authority Regulation concerning the Procedure for Providing Approval of the Articles of Association of Clearing and Guarantee Institutions.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.
Article 2
Sufficiently clear.
Article 3
Sufficiently clear.
Article 4
Paragraph (1)
Sufficiently clear.
Paragraph (2)
The reasons for the application include, among others, the background of the amendment to the Articles of Association.
Article 5
Sufficiently clear.
Article 6
Sufficiently clear.
Article 7
Sufficiently clear.
Article 8
Sufficiently clear.
Article 9
The term "specific actions" in this Article includes, among others, requesting the Clearing and Guarantee Institution to submit an application for approval of the Articles of Association or amendment to the Articles of Association of the Clearing and Guarantee Institution, if the Articles of Association or amendment to the Articles of Association of the Clearing and Guarantee 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
Sufficiently clear.
Article 11
Sufficiently clear.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6310