Procedures for Carbon Trading Through the Carbon Exchange

To:
The Board of Directors of the Carbon Exchange Organizer In Place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA NUMBER 12/SEOJK.04/2023 CONCERNING PROCEDURES FOR THE ORGANIZATION OF CARBON TRADING THROUGH THE CARBON EXCHANGE

In order to implement the provisions of Financial Services Authority Regulation Number 14 of 2023 concerning Carbon Trading through the Carbon Exchange (State Gazette of the Republic of Indonesia Year 2023 Number 24/OJK, Additional State Gazette of the Republic of Indonesia Number 48/OJK), it is necessary to regulate provisions regarding the procedures for the organization of carbon trading through the carbon exchange in this Financial Services Authority Circular as follows:

I. GENERAL PROVISIONS
In this Financial Services Authority Circular, the following terms are meant:

1. National Registry System for Climate Change Control, hereinafter abbreviated as SRN PPI, is a web-based data and information management, provision system regarding actions and resources for climate change mitigation, climate change adaptation, and the economic value of carbon in Indonesia.

2. Carbon Unit is proof of carbon ownership in the form of a certificate or technical approval expressed in 1 (one) ton of carbon dioxide recorded in the SRN PPI.

3. Carbon Exchange is a system that regulates carbon trading and/or ownership records of Carbon Units.

4. Party is an individual, legal entity, company, joint venture, association, or organized group.

5. Carbon Exchange Organizer is a party that organizes and provides the Carbon Exchange.

6. Board of Directors is the organ of a limited liability company that has the authority and is fully responsible for the management of the limited liability company for the interests of the limited liability company, in accordance with the purpose and objectives of the limited liability company, and represents the limited liability company, both inside and outside of court, in accordance with the provisions of the articles of association.

7. Board of Commissioners is the organ of a limited liability company tasked with conducting general and/or specific supervision in accordance with the articles of association and providing advice to the Board of Directors.

II. CARBON UNITS TRADED AT THE CARBON EXCHANGE ORGANIZER

1. The Financial Services Authority regulates, licenses, supervises, and develops carbon trading through the Carbon Exchange.

2. Carbon Units traded at the Carbon Exchange Organizer consist of:

a. Emission Ceiling Approval for Business Actors (PTBAEPU).

1. PTBAE-PU is a security.
2. PTBAE-PU is established by the minister who is the coordinator in the sector or responsible for the sub-sector in the implementation of the economic value of carbon.

b. Greenhouse Gas Emission Reduction Certificate (SPE-GRK).

1. SPE-GRK is a security.
2. SPE-GRK is established by the minister in charge of government affairs in the field of environment and forestry.

3. The Carbon Exchange Organizer may facilitate the trading of Carbon Units from abroad that are recorded in the SRN PPI or carbon units that are not recorded in the SRN PPI, provided that they do not conflict with applicable legislation.

4. Carbon units from abroad that are not recorded in the SRN PPI as referred to in item 3 must meet the following requirements:

a. have been registered, validated, and verified by an institution that has obtained accreditation from an international registration system organizer;

b. meet the requirements to be traded on an overseas Carbon Exchange; and

c. other requirements established by the Financial Services Authority.

5. The Financial Services Authority establishes other requirements as referred to in item 4 letter c after coordinating with the minister in charge of government affairs in the field of environment and forestry.

6. To implement the provisions of Article 3 paragraph (3) and paragraph (4) of Financial Services Authority Regulation Number 14 of 2023 concerning Carbon Trading Through the Carbon Exchange, the Carbon Exchange Organizer submits an application for registration of carbon units to the Financial Services Authority through the work unit that oversees Carbon Exchange licensing by attaching documents at least as follows:

a. identity of the applicant;

b. documents related to the project that is the basis for the carbon unit to be applied for;

c. proof of registration, validation, and verification by an institution that has obtained accreditation from an international registration system organizer, so that it can be concluded that the carbon unit to be recorded meets the requirements to be traded on an overseas Carbon Exchange;

d. carbon unit trading plan;

e. results of the review by the Carbon Exchange Organizer regarding the requirement documents; and

f. other documents deemed necessary by the Financial Services Authority.

III. CAPITAL OF THE CARBON EXCHANGE ORGANIZER

1. The Carbon Exchange Organizer submits to the Financial Services Authority documents showing the fulfillment of paid-up capital at the Carbon Exchange Organizer by the shareholders.

2. Details of capital proof documents:

a. articles of association, for limited liability companies whose paid-up capital has already met the minimum paid-up capital requirements; or

b. proof of capital deposit and proof of the process of increasing paid-up capital at the Ministry of Law and Human Rights, for limited liability companies whose paid-up capital has not yet met the minimum paid-up capital requirements.

3. Funds used for capital deposits do not come from loans, proven among others by a statement letter that the capital deposit does not come from loans or financing facilities in any form from other Parties and does not come from and for the purpose of money laundering, terrorism financing, and financing of weapons of mass destruction proliferation.

4. The Financial Services Authority may require shareholders of the Carbon Exchange Organizer to increase the capital of the Carbon Exchange Organizer by considering operational needs or the conditions of the Carbon Exchange Organizer's activities.

IV. REQUIREMENTS FOR SHAREHOLDERS OF THE CARBON EXCHANGE ORGANIZER

1. Shareholders of the Carbon Exchange Organizer must meet integrity and financial suitability requirements.

a. The integrity requirements for shareholders of the Carbon Exchange Organizer include:

1. competent to perform legal acts;

2. having good character and morality;

3. never sentenced for proven commission of:

a) financial criminal offenses, namely criminal offenses in the banking field, capital market criminal offenses, and non-bank financial industry criminal offenses proven to have been committed within the last 20 (twenty) years before nomination;

b) special criminal offenses, namely criminal offenses other than those regulated in the Criminal Code with a prison sentence threat of 1 (one) year or more, at least: corruption; narcotics/psychotropics; smuggling; customs; excise; human trafficking; illegal arms trade; terrorism; counterfeiting money; in the tax field; in the forestry field; in the environment field; in the marine and fisheries field proven to have been committed within the last 20 (twenty) years before nomination; and

c) criminal offenses, namely criminal offenses listed in the Criminal Code with a prison sentence threat of 1 (one) year or more proven to have been committed within the last 10 (ten) years before nomination;

4. never committed disgraceful acts, proven by submitting at least a police record certificate where the time period from the date of issuance to submission to the Financial Services Authority is not more than 6 (six) months or in accordance with the validity period given by the police if less than 6 (six) months;

5. never committed material violations of legislation, for example, violations subject to maximum fines, suspension of business activities, revocation of business licenses, cancellation of approvals, cancellation of registration, and/or revocation of individual licenses;

6. having a commitment to comply with legislation and support the policies of the Financial Services Authority; and

7. having a commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market that is healthy.

b. The financial suitability requirements for shareholders of the Carbon Exchange Organizer include:

1. financial capacity that can support the development of the Carbon Exchange Organizer's business;

2. never declared bankrupt and/or never been a shareholder, member of the Board of Directors, or member of the Board of Commissioners that caused a company to be declared bankrupt within the last 5 (five) years before nomination; and

3. having a commitment to take necessary measures if the Carbon Exchange Organizer faces financial difficulties.

2. In the event that the shareholder of the Carbon Exchange Organizer is a legal entity, the requirement provisions as referred to in item 1 apply mutatis mutandis to the said legal entity.

3. Shareholders of the Carbon Exchange Organizer include:

a. controlling shareholders; and

b. shareholders who are not controlling shareholders.

4. The Financial Services Authority has the authority to establish Parties deemed to be controlling the Carbon Exchange Organizer to act as controlling shareholders.

5. In the event that the prospective Carbon Exchange Organizer is a limited liability company that does not have a controlling shareholder, the assessment of the financial suitability aspect may be conducted against the limited liability company itself.

V. REQUIREMENTS FOR MEMBERS OF THE BOARD OF DIRECTORS AND MEMBERS OF THE BOARD OF COMMISSIONERS OF THE CARBON EXCHANGE ORGANIZER

1. Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer must meet integrity requirements including regarding financial reputation, competence, and expertise.

a. Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer must meet integrity requirements as follows:

1. competent to perform legal acts;

2. having good character and morality;

3. never sentenced for proven commission of:

a) financial criminal offenses, namely criminal offenses in the banking field, capital market criminal offenses, and non-bank financial industry criminal offenses proven to have been committed within the last 20 (twenty) years before nomination;

b) special criminal offenses, namely criminal offenses other than those regulated in the Criminal Code with a prison sentence threat of 1 (one) year or more, at least: corruption; narcotics/psychotropics; smuggling; customs; excise; human trafficking; illegal arms trade; terrorism; counterfeiting money; in the tax field; in the forestry field; in the environment field; in the marine and fisheries field proven to have been committed within the last 20 (twenty) years before nomination; and

c) criminal offenses, namely criminal offenses listed in the Criminal Code with a prison sentence threat of 1 (one) year or more proven to have been committed within the last 10 (ten) years before nomination;

4. never committed disgraceful acts, proven by submitting at least a police record certificate where the time period from the date of issuance to submission to the Financial Services Authority is not more than 6 (six) months or in accordance with the validity period given by the police if less than 6 (six) months;

5. never committed material violations of legislation, for example, violations subject to maximum fines, suspension of business activities, revocation of business licenses, cancellation of approvals, cancellation of registration, and/or revocation of individual licenses; and

6. having a commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market.

b. Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer must meet financial reputation requirements at least proven by:

1. not having non-performing loans and/or financing; and

2. never declared bankrupt and/or never been a shareholder, controller of a company that is not a shareholder, member of the Board of Directors, or member of the Board of Commissioners who was declared guilty of causing a company to be declared bankrupt within the last 5 (five) years before nomination.

c. Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer must meet competence and expertise requirements as follows:

1. for members of the Board of Directors of the Carbon Exchange Organizer:

a) having adequate and relevant knowledge of the capital market and/or the financial field related to their position;

b) having an education level of at least diploma;

c) having at least 2 (two) years of experience in managerial positions at companies operating in the field of climate change control, capital market sector, and/or financial sector; and

d) one of the members of the Board of Directors has knowledge or experience in the field of climate change control and carbon market, proven by practical experience, policy/regulation development, drafting, and/or assessment related to carbon trading activities and/or sustainable finance; or

2. for members of the Board of Commissioners of the Carbon Exchange Organizer:

a) having knowledge in the field of the capital market; and

b) having at least 2 (two) years of experience in the field of climate change control, capital market sector, and/or financial sector.

2. In the event that a prospective member of the Board of Directors of the Carbon Exchange Organizer holds shares and/or is a controller, directly or indirectly, of a user of the Carbon Exchange Organizer's services, such shares must be transferred no later than 6 (six) months from the general meeting of shareholders appointing the member of the Board of Directors of the Carbon Exchange Organizer.

3. Until the shares as referred to in item 2 are transferred, the member of the Board of Directors of the Carbon Exchange Organizer cannot use voting rights in the general meeting of shareholders of the user of the Carbon Exchange Organizer's services and outside the general meeting of shareholders of the user of the Carbon Exchange Organizer's services.

VI. ASSESSMENT OF COMPETENCE AND PROPERNESS OF SHAREHOLDERS, MEMBERS OF THE BOARD OF DIRECTORS, AND MEMBERS OF THE BOARD OF COMMISSIONERS

1. Assessment of Competence and Properness of Shareholders

a. Approval of shareholders of the Carbon Exchange Organizer must go through a competence and properness assessment by the Financial Services Authority.

b. Prospective shareholders submit a letter of application for approval of prospective shareholders of the Carbon Exchange Organizer attached with documents as follows:

1. individuals include:

a) a signed curriculum vitae;

b) photocopy of identity card/population identity card;

c) latest color passport-sized photo measuring 4x6 cm with a red background, 2 (two) copies;

d) photocopy of tax identification number;

e) police record certificate;

f) statement letter from the shareholder having a commitment to comply with legislation and support the policies of the Financial Services Authority;

g) statement letter from the shareholder having a commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market that is healthy;

h) proof of financial capacity, proven by annual tax notification in the last 2 (two) years, bank accounts, and/or proof of asset ownership;

i) proof/statement letter that the shareholder has never been declared bankrupt and/or never been a shareholder, member of the Board of Directors, or member of the Board of Commissioners that caused a company to be declared bankrupt within the last 5 (five) years before nomination;

j) statement letter from the shareholder having a commitment to take necessary measures if the Carbon Exchange Organizer faces financial difficulties; and

k) answers to questions according to the format of the question list contained in the Appendix which is an integral part of this Financial Services Authority Circular; or

2. legal entities include:

a) photocopy of deed of establishment and/or amendment of articles of association as follows:

(1) for Indonesian legal entities, photocopy of the deed of establishment that has been approved by the competent authority, along with the latest amendment of articles of association that has obtained approval from the competent authority or has issued a notification acceptance letter for the amendment of articles of association from the competent authority; or

(2) for foreign legal entities, photocopy of the deed of establishment that has been approved along with the latest amendment of articles of association that has obtained approval from the competent authority in the country of origin, if there are amendments to the articles of association, and documents required according to the regulations of the country of origin if the legal entity in question is a foreign legal entity that is a state or government-owned legal entity;

b) photocopy of tax identification number for Indonesian legal entities;

c) information regarding Parties controlling the legal entity directly or indirectly, at least containing name and form of control;

d) audited financial report of the last year;

e) statement letter from the shareholder having a commitment to comply with legislation and support the policies of the Financial Services Authority;

f) statement letter from the shareholder having a commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market that is healthy;

g) statement letter from the shareholder having a commitment to take necessary measures if the Carbon Exchange Organizer faces financial difficulties;

h) list of names and data of members of the Board of Directors, members of the Board of Commissioners, and/or management of the prospective shareholder of the Carbon Exchange Organizer, including:

(1) signed curriculum vitae;

(2) photocopy of identity card/population identity card or valid passport;

(3) latest color passport-sized photo measuring 4x6 cm with a red background, 2 (two) copies;

(4) photocopy of tax identification number; and

(5) police record certificate or police clearance;

i) list of names and data of shareholders of the prospective shareholder of the Carbon Exchange Organizer, including:

(1) individuals:

(a) signed curriculum vitae;

(b) photocopy of identity card/population identity card or valid passport for foreign citizens; and

(c) latest color passport-sized photo measuring 4x6 cm with a red background, 2 (two) copies;

(2) legal entities:

(a) latest articles of association; and

(b) audited financial report of the last year;

j) if the legal entity in question is a foreign legal entity operating in the financial services field, it must be attached with a recommendation from the competent supervisory authority from the country of origin at least stating that:

(1) the foreign legal entity has a good reputation; and

(2) the foreign legal entity has never committed disgraceful acts in the financial field; and

k) if the legal entity in question is a foreign legal entity that does not operate in the financial services field, it must be attached with a recommendation from the competent Party from the country of origin at least stating that:

(1) the foreign legal entity has a good reputation; and

(2) the foreign legal entity has never committed disgraceful acts.

c. The assessment of competence and properness of prospective shareholders of the Carbon Exchange Organizer is conducted at least through an administrative assessment.

d. In the context of the administrative assessment as referred to in letter c, the Financial Services Authority may conduct clarification with the prospective shareholders of the Carbon Exchange Organizer.

e. In conducting the assessment of competence and properness of prospective shareholders, the Financial Services Authority may be assisted by sources with specific expertise from outside the Financial Services Authority.

2. Assessment of Competence and Properness of Members of the Board of Directors and Members of the Board of Commissioners

a. Members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer must go through a competence and properness assessment by the Financial Services Authority.

b. The submission of prospective members of the Board of Directors or members of the Board of Commissioners of the Carbon Exchange Organizer to the Financial Services Authority must attach the following documents:

1. signed curriculum vitae;

2. photocopy of the latest formal education diploma and certificates of expertise or proof of knowledge/experience in the field of capital market, climate change control, and/or carbon market;

3. photocopy of identity card/population identity card or other valid identification for foreign citizens;

4. police record certificate;

5. latest color passport-sized photo measuring 4x6 cm with a red background, 2 (two) copies;

6. statement letter from the prospective member of the Board of Directors or member of the Board of Commissioners of the Carbon Exchange Organizer stating that they have met the provisions of item V item 1;

7. drug-free certificate (SKBN) from the competent Party;

8. strategic plan, specifically for prospective members of the Board of Directors of the Carbon Exchange Organizer;

9. proof/statement letter of not having non-performing loans and/or financing;

10. proof/statement letter of never being declared bankrupt and/or never being a shareholder, controller of a company that is not a shareholder, member of the Board of Directors, or member of the Board of Commissioners who was declared guilty of causing a company to be declared bankrupt within the last 5 (five) years before nomination;

11. statement letter having a commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market; and

12. answers to questions according to the format of the Question List as contained in the Appendix which is an integral part of this Financial Services Authority Circular.

c. Every prospective member of the Board of Directors and member of the Board of Commissioners of the Carbon Exchange Organizer must first pass the competence and properness assessment conducted by the Financial Services Authority before being appointed by the general meeting of shareholders of the Carbon Exchange Organizer.

d. The assessment of competence and properness of prospective members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer is conducted at least through an administrative assessment.

e. In the context of the administrative assessment as referred to in letter d, the Financial Services Authority may conduct clarification with prospective members of the Board of Directors and members of the Board of Commissioners of the Carbon Exchange Organizer.

f. In conducting the assessment of competence and properness of prospective members of the Board of Directors and members of the Board of Commissioners, the Financial Services Authority may be assisted by sources with specific expertise from outside the Financial Services Authority.

g. The Financial Services Authority has the authority to stop the nomination process for prospective members of the Board of Directors or members of the Board of Commissioners of the Carbon Exchange Organizer if the prospective candidate is undergoing legal proceedings.

h. Legal proceedings as referred to in letter g are investigation or judicial processes, including appeals and cassations, in criminal cases including:

1. criminal offenses in the financial field, namely criminal offenses in the banking field, capital market field, and non-bank financial industry field;

2. special criminal offenses, namely criminal offenses other than those regulated in the Criminal Code with a prison sentence threat of 1 (one) year or more, at least: corruption; narcotics/psychotropics; smuggling; customs; excise; human trafficking; illegal arms trade; terrorism; counterfeiting money; in

...

taxation; forestry; environmental affairs; maritime and fisheries; and
3) criminal offenses, namely criminal offenses stipulated in the Criminal Code with a penalty of imprisonment of 1 (one) year or more.
3. The assessment of competence and propriety as referred to in item VI may be applied partially or fully based on the consideration of the Financial Services Authority for:
a. Parties that have obtained a business license from the Financial Services Authority; or b. individuals who serve as Directors or Commissioners of Parties that have obtained a business license from the Financial Services Authority.

VII. OPERATIONAL AND INTERNAL CONTROL OF CARBON EXCHANGE OPERATORS

1. Carbon Exchange Operators provide systems and/or facilities to support the operation and monitoring of Carbon Unit trading, including:
   a. adequate, secure, and reliable systems in accordance with Carbon Exchange operational needs, with data centers and disaster recovery centers located within Indonesian territory; b. adequate Carbon Unit trading monitoring systems;
   c. systems connected to:

1. SRN PPI for validating Carbon Units traded at the Carbon Exchange Operator;
2. storage and settlement institutions (if needed);
3. clearing and guarantee institutions (if needed); and/or
4. other systems necessary to support Carbon Exchange activities;
   d. backup systems to address system failures; e. systems with information and network security to maintain confidentiality, integrity, and availability;

f. human resources with competence in information technology, evidenced by degrees, work experience, or professional certificates in information technology; g. adequate business continuity plans, including having disaster recovery centers; and h. the Carbon Exchange Operator's website that publishes Carbon Unit trading data as soon as possible, at minimum including:

1. name and series of Carbon Units;
2. transaction prices;
3. transaction volumes;
4. transaction values; and
5. transaction settlement dates.

2. Carbon Exchange Operators conduct internal controls with provisions including:
   a. conducting regular tests on system capacity, performance, and security; b. evaluating system and computer operation data center vulnerabilities against internal and external threats, physical risks, and natural disaster threats;
   c. applying continuous monitoring and crisis management procedures involving consistent and periodic operational system monitoring and evaluation, and IT operational issue management from incident to crisis levels;
   d. protecting systems from disruptions such as computer viruses and/or malicious software (malware) by installing firewalls; e. appointing professional information technology auditors whenever material changes occur; and f. maintaining databases and applications that can reconstruct Carbon Unit trading activities.
3. Professional information technology auditors as referred to in item 2 letter e must:
   a. audit material system changes that may affect the ongoing trading system and impact normal business processes, both software and hardware; and b. hold valid, independent information system certificates from authorized parties.
4. Carbon Exchange Operators conduct periodic reviews in accordance with independent audit standard procedures, and the Board of Directors and Board of Commissioners review reports containing recommendations and conclusions from such reports.
5. The periodic review as referred to in item 4 is conducted to ensure that all standard operating procedures are met.

VIII. PROCEDURES FOR APPLICATION FOR LICENSING OF CARBON EXCHANGE OPERATORS

1. Applications for business licenses for Carbon Exchange Operators are submitted by applicants to the work unit responsible for Carbon Exchange Operator licensing.
2. The Application for Business License as a Carbon Exchange Operator follows the format contained in the Appendix, which is an integral part of this Financial Services Authority Circular.
3. The business license application as referred to in item 2 is accompanied by the following documents:
   a. detailed information regarding the applicant, name, address, and telephone number; b. photocopies of the ratified limited liability company establishment deed, along with the articles of association and/or the latest amended articles of association that have obtained approval or a notice of acceptance of article changes from the authorized institution;
   c. photocopy of the tax identification number;
   d. list of names and data of the Carbon Exchange Operator's Directors and Commissioners, including:

1. signed biographical lists;
2. photocopies of the highest formal education diploma and professional certificates or evidence of knowledge/experience in capital markets, climate change control, and/or carbon markets;
3. photocopies of identity cards/population identity documents or other valid identification for foreign citizens;
4. police clearance certificates;
5. two (2) recent 4x6 cm color photos with red backgrounds;
6. drug-free certificates (SKBN) from authorized parties;
7. evidence/statement of no non-performing loans and/or financing;
8. evidence/statement of never having been declared bankrupt and/or never having been a shareholder, controller, Director, or Commissioner of a company declared bankrupt due to fault within the last 5 (five) years before nomination;
9. statement of commitment to the development of the Carbon Exchange Operator and Indonesia's capital markets;
10. statement from prospective Directors or Commissioners confirming compliance with item V item 1;
11. strategic plans, specifically for prospective Directors of the Carbon Exchange Operator; and
12. answers to questions according to the question list format contained in the Appendix, which is an integral part of this Financial Services Authority Circular;
    e. list of names and data of Carbon Exchange Operator shareholders, including:
13. individuals, including:
    a) signed biographical lists; b) photocopies of identity cards/population identity documents; c) two (2) recent 4x6 cm color photos with red backgrounds; d) photocopies of tax identification numbers; e) police clearance certificates; f) statements of shareholder commitment to comply with laws and regulations and support Financial Services Authority policies; g) statements of shareholder commitment to the development of the Carbon Exchange Operator and Indonesia's healthy capital markets; h) financial capability evidence such as annual tax notices for the last 2 (two) years, bank accounts, and/or asset ownership proof; i) statements of shareholders never having been declared bankrupt and/or never having been shareholders, Directors, or Commissioners causing a company to be declared bankrupt within the last 5 (five) years before nomination; j) statements of shareholder commitment to take necessary actions if the Carbon Exchange Operator faces financial difficulties; and k) answers to questions according to the Question List format contained in the Appendix, which is an integral part of this Financial Services Authority Circular; and
14. legal entities, including:
    a) photocopies of establishment and/or amended articles of association as follows:
    (1) for Indonesian legal entities, photocopies of the ratified establishment deed, along with the latest amended articles of association that have obtained approval or a notice of acceptance of article changes from the authorized institution; or (2) for foreign legal entities, photocopies of the ratified establishment deed along with the latest amended articles of association that have obtained approval from the authorized institution in the country of origin, if there are article changes, and documents required by the country of origin regulations if the foreign legal entity is a state or government-owned legal entity; b) photocopies of tax identification numbers for Indonesian legal entities; c) information regarding parties controlling the legal entity, directly or indirectly, at least containing names and forms of control; d) audited financial reports for the last year; e) statements of shareholder commitment to comply with laws and regulations and support Financial Services Authority policies; f) statements of shareholder commitment to the development of the Carbon Exchange Operator and Indonesia's healthy capital markets; g) statements of shareholder commitment to take necessary actions if the Carbon Exchange Operator faces financial difficulties; h) list of names and data of Directors, Commissioners, and/or managers of Carbon Exchange Operator shareholders, including:
    (1) signed biographical lists;
    (2) photocopies of identity cards/population identity documents or other valid identification; (3) two (2) recent 4x6 cm color photos with red backgrounds; (4) photocopies of tax identification numbers; and (5) police clearance certificates; i) list of names and data of shareholders of Carbon Exchange Operator shareholders, including:
    (1) individuals:
    (a) signed biographical lists;
    (b) photocopies of identity cards/population identity documents or valid passports; and (c) two (2) recent 4x6 cm color photos with red backgrounds; or (2) legal entities:
    (a) latest articles of association; and
    (b) audited financial reports for the last year; j) if the legal entity is a foreign legal entity operating in financial services, accompanied by recommendations from the authorized supervisory authority in the country of origin, at least stating that:
    (1) the foreign legal entity has a good reputation; and (2) the foreign legal entity has never committed misconduct in financial matters; and k) if the legal entity is a foreign legal entity not operating in financial services, accompanied by recommendations from authorized parties in the country of origin, at least stating that:
    (1) the foreign legal entity has a good reputation; and (2) the foreign legal entity has never committed misconduct; f. the latest audited financial reports by public accountants registered with the Financial Services Authority; g. photocopies of bank statements; h. evidence of valid paid-up capital deposits;
    i. statements that capital deposits do not originate from loans or financing facilities of any kind from other parties, nor from or for the purposes of money laundering, terrorism financing, or weapons of mass destruction proliferation financing;
    j. draft regulations of the Carbon Exchange Operator; k. draft trading system to be used and supporting facilities;
    l. standard operating procedures for business activities;
    m. assessment results of the trading and monitoring systems by professional information technology auditors; n. list of Carbon Exchange Operator service users; o. economic considerations underlying the establishment of the Carbon Exchange Operator; p. projected operational plans and Carbon Exchange Operator mission for the next 3 (three) years; q. organizational structure with job descriptions; and r. business location information and office room photos.

4. To process business license applications for Carbon Exchange Operators, the Financial Services Authority may conduct further clarifications through face-to-face meetings, requests for presentations, on-site inspections, and/or requests for additional documents.
5. In cases where applications are incomplete upon receipt, the Financial Services Authority must provide a notification letter to the applicant within 30 (thirty) working days from receipt, stating that:
   a. the application does not meet requirements and/or document consistency; or b. the application is rejected.
6. In cases where submitted applications meet requirements, the Financial Services Authority grants business licenses for Carbon Exchange Operators to applicants within 30 (thirty) working days from receipt of complete and correct applications.
7. Licensing requirements as referred to in item VIII may be applied partially or fully based on the Financial Services Authority's consideration for financial service institutions that have already obtained business licenses from the Financial Services Authority.

IX. CHANGES TO REGULATIONS AND ARTICLES OF ASSOCIATION OF CARBON EXCHANGE OPERATORS

1. Carbon Exchange Operator regulations and any amendments take effect after obtaining approval from the Financial Services Authority.
2. Applications for approval of draft regulations or amendments are submitted to the Financial Services Authority accompanied by:
   a. reasons for changes and drafts; b. user opinions;
   c. Board of Commissioners' approval; and
   d. opinions from interested parties.
3. The Financial Services Authority grants approval to applicants within 30 (thirty) working days after receiving complete draft regulation approval applications.
4. Within the timeframe as referred to in item 3, the Financial Services Authority may request Carbon Exchange Operators to modify the content of draft regulations and/or request additional information related to the regulations.
5. The application for draft regulation approval is calculated from the date of receipt of changes and/or additional information as referred to in item 4 by the Financial Services Authority.
6. Applications for approval of draft articles of association or amendments are submitted to the Financial Services Authority accompanied by:
   a. reasons for changes and drafts; b. user opinions;
   c. notarial minutes of the General Meeting of Shareholders registered with the Financial Services Authority;
   d. meeting summons for the General Meeting of Shareholders; e. agenda for the General Meeting of Shareholders; and f. attendance list for the General Meeting of Shareholders.
7. The Financial Services Authority grants approval to applicants within 30 (thirty) working days after receiving complete draft articles of association approval applications.
8. Within the timeframe as referred to in item 7, the Financial Services Authority may request modifications to the content of draft articles of association or amendments and/or request additional information related to the articles of association.
9. The process for approving draft articles of association or amendments is recalculated from the date of receipt of changes and/or additional information as referred to in item 8 by the Financial Services Authority.

X. ANNUAL WORK PLANS AND BUDGETS OF CARBON EXCHANGE OPERATORS

1. Carbon Exchange Operator annual work plans and budgets must be prepared for one (one) fiscal year starting from January 1 to December 31 of the following year, containing at minimum work plans, revenue plans, and expenditure budgets.
2. Realization of annual work plans and budgets as referred to in item 1 is submitted every 3 (three) months.
3. Annual budgets must be presented comparatively with the previous year's budget.
4. In case of material changes to annual work plans and budgets, Carbon Exchange Operators must submit such changes to the Financial Services Authority for approval.
5. Carbon Exchange Operator annual work plans and budgets are submitted to the work unit responsible for Carbon Exchange supervision through electronic reporting systems.
6. In case the electronic reporting system as referred to in item 5 is unavailable, reports are submitted via printed or electronic documents.

XI. CARBON EXCHANGE OPERATOR REPORTS
Carbon Exchange Operator reports include at minimum periodic reports and incidental reports.

1. Periodic reports, consisting of:
   a. monthly transaction summary reports

1. service user activity reports, containing information including:
   a) transaction values for each service user; and b) trading frequency for each service user.
2. trading activity reports, containing information including:
   a) trading volumes; b) trading values; c) trading frequency; and d) Carbon Unit status at the Carbon Exchange; and b. annual activity reports, containing information including:
3. audited annual financial reports;
4. annual governance implementation reports;
5. periodic reports on other activities;
6. reports on plans and realization of data updates related to anti-money laundering, terrorism financing, and weapons of mass destruction proliferation financing programs; and
7. reports on self-assessment results of risk management implementation;

c. monthly transaction summary reports must be submitted by the 5th (fifth) trading day of the following month; and
d. annual activity reports, including audited annual financial reports by accountants registered with the Financial Services Authority, must be submitted by the end of the 3rd (third) month after the annual financial report date.
2. Incidental reports, consisting of:
a. reports on approval and/or rejection of service user applications and/or changes in service users, to be submitted by the next trading day; b. reports on organizational structure and/or system changes, to be submitted by the next trading day;
c. reports on violations and sanctions imposed on service users, to be submitted by the next trading day;
d. reports on special events, to be submitted by the end of the same trading day; e. reports on the resignation of Directors and/or Commissioners, to be submitted within 2 (two) working days from when the event is known; and/or f. reports on the results of the Carbon Exchange Operator's General Meeting of Shareholders, submitted within 2 (two) working days from the date of the General Meeting, with the condition that the notarial deed of the General Meeting of Shareholders must be submitted to the Financial Services Authority within 2 (two) working days after the Carbon Exchange Operator receives the deed.
3. Report submissions are directed to the work unit responsible for Carbon Exchange supervision through electronic reporting systems.
4. In case the electronic reporting system as referred to in item 5 is unavailable, reports are submitted via printed or electronic documents.

This copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja

XII. CLOSING
Provisions in this Financial Services Authority Circular take effect on the date of establishment.
Established in Jakarta on September 6, 2023
EXECUTIVE HEAD OF CAPITAL MARKET, DERIVATIVE FINANCIAL, AND CARBON EXCHANGE SUPERVISOR, FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed INARNO DJAJADI

APPENDIX
FINANCIAL SERVICES AUTHORITY CIRCULAR
REPUBLIC OF INDONESIA
NUMBER 12/SEOJK.04/2023
REGARDING
PROCEDURES FOR CARBON TRADING THROUGH THE CARBON EXCHANGE

APPLICATION FOR BUSINESS LICENSE AS A CARBON EXCHANGE OPERATOR
Number: ......., ....................... 20....
Attachments:
Subject: Application for Business License as Carbon Exchange Operator To Honorable Executive Head of Capital Market, Derivative Financial, and Carbon Exchange Supervision Financial Services Authority in Jakarta We hereby apply for a business license as a Carbon Exchange Operator. As consideration material, we submit the following data:

1. Applicant Name: …………………………………………………

2. Applicant Address: …………………………………………………
   (street name and number)
   ……………………………………….. - 🗆🗆🗆🗆🗆
   (city and postal code)

3. Tax Identification Number: …………………………………………………

4. Capital: …………………………………………………
   a. Authorized Capital: ………………………………………………… b. Paid-up Capital: …………………………………………………

5. Company Address: …………………………………………………
   (street name and number)
   ……………………………………….. - 🗆🗆🗆🗆🗆
   (city and postal code)

6. Telephone, Telex,
   and Fax Number: …………………………………………………

7. Contact Person
   (include power of attorney)
   : …………………………………………………

8. Existing Business Licenses: …………………………………………………
   To complete this application, we attach the following documents:

9. detailed information regarding the applicant, name, address, telephone number,
   and fax number;

10. photocopies of the ratified limited liability company establishment deed, along with the articles of association and/or the latest amended articles of association that have obtained approval or a notice of acceptance of article changes from the authorized institution;

11. photocopy of the tax identification number;

12. list of names and members of the Board of Directors and Board of Commissioners, including:
    a. signed biographical lists; b. photocopies of the highest formal education diploma and professional certificates or evidence of knowledge/experience in capital markets, climate change control, and/or carbon markets;
    c. photocopies of identity cards/population identity documents or valid passports for foreign citizens;
    d. police clearance certificates; e. two (2) recent 4x6 cm color photos with red backgrounds; f. drug-free certificates (SKBN) from authorized parties; g. evidence/statement of no non-performing loans and/or financing;

h. proof/statement of never having been declared bankrupt and/or never having been a shareholder, controlling party, member of the Board of Directors, or member of the Board of Commissioners who was declared guilty of causing a company to be declared bankrupt within the last 5 (five) years before nomination;

i. statement of commitment to the development of the Carbon Exchange Organizer and the Indonesian capital market;

j. statement from the candidate for Board of Directors or Board of Commissioners of the Carbon Exchange Organizer stating that they have met integrity requirements, including regarding financial reputation, competence, and expertise;

k. strategic plan, specifically for candidates for the Board of Directors of the Carbon Exchange Organizer; and

l. in the event that members of the Board of Directors and Board of Commissioners have undergone capability and propriety assessments by the Financial Services Authority within the last 4 years, it is sufficient to attach the name, year of the capability and propriety assessment, and position.

5. list of names and data of shareholders, including:

a. individuals, including:

1. a signed biography;

2. photocopy of the identity card/population identity card;

3. recent color passport-size photos measuring 4x6 cm with a red background, 2 (two) sheets;

4. photocopy of the tax identification number (NPWP);

5. police record certificate;

6. statement of the shareholder's commitment to comply with laws and regulations and support the policies of the Financial Services Authority;

7. statement of the shareholder's commitment to the development of the Carbon Exchange Organizer and a healthy Indonesian capital market;

8. proof of financial capability in the form of annual tax notification letters for the last 2 (two) years, bank accounts, and/or proof of asset ownership;

9. proof/statement of never having been declared bankrupt and/or never having been a shareholder, member of the Board of Directors, or member of the Board of Commissioners who caused a company to be declared bankrupt within the last 5 (five) years before nomination; and

10. statement of commitment to take necessary measures if the Carbon Exchange Organizer faces financial difficulties; and

b. legal entities, including:

1. photocopy of the deed of establishment and/or amendment of the articles of association as follows:
   a) for Indonesian legal entities, a photocopy of the deed of establishment approved by the competent authority, along with the latest amendment of the articles of association that has received approval from the competent authority or has been issued a notice of acceptance for the amendment of the articles of association by the competent authority; or b) for foreign legal entities, a photocopy of the approved deed of establishment along with the latest amendment of the articles of association that has received approval from the competent authority in the country of origin, if there are amendments to the articles of association, and documents required according to the regulations of the country of origin if the legal entity is a foreign legal entity that is a state or government-owned legal entity;

2. photocopy of the tax identification number (NPWP) for Indonesian legal entities;

3. information regarding the parties controlling the legal entity, directly or indirectly, which must at least contain the name and form of control;

4. audited financial statements for the last year;

5. statement of the shareholder's commitment to comply with laws and regulations and support the policies of the Financial Services Authority;

6. statement of the shareholder's commitment to the development of the Carbon Exchange Organizer and a healthy Indonesian capital market;

7. statement of the shareholder's commitment to take necessary measures if the Carbon Exchange Organizer faces financial difficulties;

8. list of names and data of members of the Board of Directors, members of the Board of Commissioners, and/or management of the shareholder, including:
   a) biography; b) photocopy of the identity card/population identity card or valid passport; c) recent color passport-size photos measuring 4x6 cm with a red background, 2 (two) sheets; d) photocopy of the tax identification number (NPWP); and e) police record certificate or police clearance;

9. list of names and data of shareholders of the shareholder of the Carbon Exchange Organizer, including:
   a) signed biography; b) photocopy of the identity card/population identity card or valid passport; c) recent color passport-size photos measuring 4x6 cm with a red background, 2 (two) sheets; and d) the latest articles of association and audited financial statements for the last year for shareholders of the Carbon Exchange Organizer that are legal entities;

10. in the event that the shareholder of the Carbon Exchange Organizer is a Financial Services Institution supervised by the Financial Services Authority, it is sufficient to attach the list of names of shareholders;

11. if the legal entity is a foreign legal entity operating in the financial services sector, it must be accompanied by a recommendation from the competent supervisory authority in the country of origin, at least stating that the foreign legal entity has a good reputation and has never committed disgraceful acts in the financial sector;

12. if the legal entity is a foreign legal entity not operating in the financial services sector, it must be accompanied by a recommendation from the competent authority in the country of origin, at least stating that the foreign legal entity has a good reputation and has never committed disgraceful acts; and

c. in the event that the shareholder of the Carbon Exchange Organizer is a Financial Services Institution supervised by the Financial Services Authority, it is sufficient to attach the list of names of shareholders.

6. the latest financial statements audited by an accountant registered with the Financial Services Authority;

7. photocopy of bank statements;

8. proof of valid payment of paid-up capital;

9. statement stating that the paid-up capital does not originate from:
   a. loans or financing facilities in any form from other parties; and b. and for the purpose of money laundering and terrorism financing;

10. draft regulations of the Carbon Exchange Organizer;

11. draft of the trading system to be used and its supporting facilities;

12. standard operating procedures for business activities;

13. assessment results of the trading and supervision system by professional information technology auditors;

14. list of users of the Carbon Exchange Organizer's services;

15. economic considerations underlying the establishment of the Carbon Exchange Organizer;

16. projection of operational plans and mission of the Carbon Exchange Organizer for the next 3 (three) years;

17. organizational structure with job descriptions; and

18. information on business premises and photos of the office rooms.

This application is submitted, and we thank you for your attention.

Applicant,
………………………………………
(clear name and signature) stamp

QUESTIONNAIRE LIST
I. INSTRUCTIONS FOR ANSWERING QUESTIONS

1. All questions must be answered by candidates for the Board of Directors, members of the Board of Directors, candidates for the Board of Commissioners, members of the Board of Commissioners, candidate shareholders, and shareholders.

2. Signed by each member of the Board of Directors, member of the Board of Commissioners, candidate for the Board of Directors, candidate for the Board of Commissioners, and controlling party or shareholder on stamped paper.

3. Place a checkmark 🗸 in the box in front of the word “yes”, if your answer is “yes”, or place a checkmark 🗸 in the box in front of the word “No” if your answer to the following questions is “no”.

For every “yes” answer, the applicant must provide a detailed and clear answer at least containing:
a. the relevant institution; b. the case and date of the action taken;
c. the court or institution that took the action; and
d. the actions and sanctions taken.

II. INTEGRITY OF MEMBERS OF THE BOARD OF DIRECTORS, MEMBERS OF THE BOARD OF COMMISSIONERS, CANDIDATE MEMBERS OF THE BOARD OF DIRECTORS, CANDIDATE MEMBERS OF THE BOARD OF COMMISSIONERS, AND CONTROLLING PARTIES/SHAREHOLDERS

Definition
Investment is activities regarding Securities, banking, insurance, pension funds, cooperatives, other financial institutions, including activities, directly or indirectly, related to securities companies, investment advisors, banks, or other companies operating in the financial sector, and/or other investment activities in the real sector, such as housing or real estate businesses.

Answer the following questions:

1. Within the last 20 (twenty) years, have you ever been convicted for:
   a. criminal acts related to investment? yes no b. or other crimes? yes no

2. Has the court ever:
   a. declared you bankrupt? yes no b. within the last 20 (twenty) years, prohibited you from activities related to investment? yes no
   c. declared you guilty of being involved in legal violations (criminal acts) related to investment and/or involved in legal violations of laws and regulations in the financial services sector?
   yes no d. frozen/stopped temporarily, limited, or revoked permits (or other permits of a similar nature to permits) that you possess? yes no e. declared that you caused a business related to investment, its business permit, or permit to conduct business to be rejected, frozen, revoked, or limited? yes no

3. Has the Financial Services Authority ever:
   a. stated and/or found that you made false, misleading, or dishonest, unfair, or unethical statements, or were negligent in providing information that should have been provided? yes no

b. stated and/or found that you were involved in violations of laws and regulations in the capital market sector? yes no
c. declared you guilty of being involved in investment activities, so that business permits or other permits of a similar nature to the business permit owned by a company were frozen, limited, or revoked/cancelled?
yes no d. rejected applications for permits, approvals, or registration/registered letters that you submitted? yes no e. imposed sanctions by freezing, limiting activities, or revoking/cancelling permits, approvals, or registration/registered letters that you possess, such as registered letters as capital market supporting professions such as accountants, legal consultants, appraisers, or notaries? yes no f. stated that your business permit or permit to conduct business related to investment was rejected, frozen, revoked, or limited? yes no g. ordered to reject, temporarily stop, revoke permits for your business, or impose sanctions by limiting your activities? yes no

4. Have other competent authorities ever:
   a. stated and/or found that you made false, misleading, or dishonest, unfair, or unethical statements? yes no

b. stated and/or found that you were involved in violations of laws and regulations concerning investment activities? yes no
c. stated and/or found that you caused a company related to investment whose application for business permits was rejected or its business permits (or other permits of a similar nature to business permits) to be frozen/stopped temporarily, limited, or revoked?
yes no d. ordered to prohibit you from activities related to investment within the last 20 (twenty) years? yes no e. rejected applications for permits (other permits of a similar nature to permits), or frozen/stopped temporarily, limited, or revoked permits (other permits of a similar nature to permits) that you possess to operate in investment activities? yes no f. rejected applications for permits (other permits of a similar nature to permits), frozen/stopped temporarily, limited, or revoked permits (other permits of a similar nature to permits) that you possess to operate in activities other than investment activities, such as registered letters as capital market supporting professions such as accountants, legal consultants, appraisers, or notaries? yes no

5. Has the Carbon Exchange Organizer ever:
   a. stated and/or found that you made false, misleading, or dishonest, unfair, or unethical statements, or were negligent in providing information that should have been provided? yes no b. stated and/or found that you were involved in violations of Carbon Exchange Regulations? yes no
   c. disciplined you by issuing or temporarily stopping the use of services of the place where you work from a Carbon Exchange Organizer resulting from your error, by limiting or temporarily stopping the relationship between the service user and other Carbon Exchange service users?
   yes no d. found that you caused business permits or permits to conduct business of a company related to investment to be frozen, revoked, or limited? yes no

6. Has a foreign court ever declared that you were guilty due to criminal charges or civil lawsuits related to investment?
   yes no

7. Has a foreign court, applicable regulations, or a Carbon Exchange Organizer ever ordered action to be taken against you concerning fraud?
   yes no

8. Are you currently a party to a lawsuit in court?
   yes no

9. Do you have commitments, specific ties, or contingent obligations to third parties whose cases are being processed or have received court decisions?
   yes no

10. Taking disciplinary action against you by issuing or freezing membership by preventing or freezing relationships with other members, or by limiting its activities?
    yes no

11. Has an insurance company ever refused to pay to or revoked your insurance coverage?
    yes no

12. Have you ever been a member of the Board of Directors of a service user, investment advisor, or controlling shareholder of a Financial Services Institution that was declared bankrupt?
    yes no

13. Do you individually or collectively hold shares exceeding 5% (five percent) in a service user?
    yes no

14. Have you ever been declared ineligible by the Financial Services Authority as a shareholder, controlling shareholder, member of the Board of Directors, member of the Board of Commissioners, and executive officials of financial services institutions?
    yes no

Copy is consistent with the original
Legal Director 1
Legal Department signed
Mufli Asmawidjaja
……….., ……………………20……
(place and date)
………………………………………
(clear name and signature) stamp

Established in Jakarta on 6 September 2023
EXECUTIVE HEAD
CAPITAL MARKET, DERIVATIVE, AND CARBON EXCHANGE SUPERVISOR, FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed INARNO DJAJADI stamp