Procedures for Examination in the Capital Market Sector

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 36/POJK.04/2018
CONCERNING
PROCEDURES FOR EXAMINATION IN THE CAPITAL MARKET SECTOR BY THE GRACE OF THE ALMIGHTY GOD THE COMMISSIONERS' COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that the regulation and supervision of financial services activities in the capital market sector, with the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, has shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority; b. that based on the considerations referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Procedures for Examination in the Capital Market Sector; 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);
   FINANCIAL SERVICES AUTHORITY
   REPUBLIC OF INDONESIA

DECIDES:
Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING PROCEDURES FOR EXAMINATION IN THE CAPITAL MARKET SECTOR.

CHAPTER I
GENERAL PROVISIONS
Article 1
In this Financial Services Authority Regulation:

1. Examiner is an official of the Financial Services Authority appointed by the Executive Head of Capital Market Supervision of the Financial Services Authority to conduct examinations in the capital market sector.
2. Examination is a series of activities to search for, collect, and process data and/or other information conducted by Examiners to prove the existence or non-existence of violations of laws and regulations in the capital market sector.
3. Financial Services Authority is an independent institution free from the interference of other parties that has the function, duties, and authority for regulation, supervision, examination, and investigation in the financial services sector.
4. Written Order is a written order to carry out or not carry out certain activities to fulfill the provisions of laws and regulations in the financial services sector and/or to prevent and reduce losses to consumers, the public, and the financial services sector.

CHAPTER II
OBJECTIVES OF EXAMINATION
Article 2
(1) Examinations are conducted with the objective of proving the existence or non-existence of violations of laws and regulations in the capital market sector. (2) Examinations as referred to in paragraph (1) may be conducted in the event:
a. there is a report, notification, or complaint from parties regarding violations of laws and regulations in the capital market sector; b. obligations to be carried out by parties who have obtained permits, approvals, or registrations from the Financial Services Authority or other parties required to submit reports to the Financial Services Authority are not fulfilled; and/or
c. there are indications or clues regarding the occurrence of violations of laws and regulations in the capital market sector.

CHAPTER III
PROCEDURES FOR EXAMINATION
First Section
General
Article 3
Examinations consist of:
a. Examiners; b. Implementation of Examination; and
c. Examined Parties.

Second Section
Examiners
Article 4
(1) Examiners, in carrying out Examinations, are required to:
a. possess Examiner identification; b. possess a written examination order from the Financial Services Authority at the time of conducting the Examination;
c. notify in writing the examined party about the upcoming Examination;
d. show the Examiner identification and the written examination order to the examined party; e. explain the purpose and objectives of the Examination to the party to be examined; and f. create a report of the Examination results. (2) Examiners are prohibited from disclosing anything known or communicated to them by the examined party during the Examination to other parties who are not entitled. (3) The provisions as referred to in paragraph (2) do not limit the authority of the Financial Services Authority to announce the results of the Examination.

Third Section
Implementation of Examination
Article 5
The procedures for implementing the Examination are carried out by:
a. Examination being conducted by more than 1 (one) Examiner; b. Examination being carried out at the Examiner's office or at the office, factory, business premises, residence, or other locations suspected to be related to the violation that occurred;
c. Examination being carried out during working hours and days and may be continued outside working hours and days if necessary;
d. Examination results being embodied in an Examination results report; and e. Examination results approved by the examined party being recorded in minutes signed by the examined party.

Article 6
The implementation of Examination against the examined party is based on Examination guidelines, which include general Examination guidelines, implementation Examination guidelines, and Examination results report guidelines.

Article 7
General Examination guidelines regulate:
a. Examination being conducted by Examiners who have sufficient technical knowledge and can use their expertise carefully and meticulously and possess skills as Examiners; b. Examiners must work honestly, reasonably, responsibly, with full dedication, and must avoid actions that harm the freedom of action as a good Examiner should have; and
c. Examination results reports must be created by Examiners carefully and meticulously and provide a picture consistent with the actual situation.

Article 8
Implementation Examination guidelines regulate the following:
a. the implementation of Examination must be carried out with the best preparation and considering the objectives of the Examination, and there must be careful supervision and guidance of Examiners; b. the scope of Examination is determined based on the level of indications or clues obtained, which must be developed with strong and relevant evidence through matching, observation, questioning, and data; and
c. conclusions must be based on evidence relevant to the scope of Examination and based on laws and regulations in the capital market sector.

Article 9
Examination results report guidelines regulate:
a. in preparing the Examination results report, Examiners are required to consider:

1. the nature of the violation;
2. evidence or clues of the violation;
3. the influence or consequences of the violation;
4. laws and regulations in the capital market sector violated; and
5. other matters necessary for the Examination;
   b. the Examination results report is prepared clearly, in detail, and concisely, containing a scope appropriate to the objectives of the Examination; and
   c. descriptions and conclusions are supported by sufficient reasons and evidence regarding the existence or non-existence of violations of laws and regulations in the capital market sector.

Article 10
(1) Examination begins after obtaining a determination from the Executive Head of Capital Market Supervision of the Financial Services Authority. (2) The determination of the Executive Head of Capital Market Supervision of the Financial Services Authority as referred to in paragraph (1) is issued after an Examination program is prepared, which at least contains:
a. the objectives of the Examination; b. the scope of the Examination; and
c. the start time of the Examination.
(3) In conducting the Examination, Examiners may:
a. request information, confirmation, and/or evidence needed from the examined party and/or other parties necessary for the interests of the Examination; b. order the examined party or related parties to carry out or not carry out certain activities;
c. examine records, account books, and/or other supporting documents;
d. borrow or make copies of account books and/or other documents as necessary; e. enter specific places or rooms suspected to be places storing records, account books, and/or other documents; f. order the examined party to secure records, account books, and/or other documents located in places or rooms as referred to in letter e for the interests of the Examination; and g. set conditions and/or allow parties suspected of committing or being involved in violations of the Capital Market Law and/or its implementing regulations to take certain actions necessary to resolve arising losses. (4) The borrowing of records, account books, and other documents as referred to in paragraph (3) letter d is given a borrowing receipt clearly and in detail stating the type and quantity.

Fourth Section
Examined Parties
Article 11
Examined parties:
a. have the right to request Examiners to show the written examination order and Examiner identification; b. have the right to request Examiners to provide explanations about the purpose and objectives of the Examination; and
c. sign the Examination results recorded in minutes.

Article 12
(1) In the event that during the Examination, the examined party, their representative, or proxy is not present, the Examination may still proceed as long as there is a party who can and has the authority to act on behalf of the examined party, limited to matters they are allowed to do, and subsequently, the Examination is suspended to be repeated at a later opportunity. (2) In efforts to secure before the Examination is suspended, Examiners may order the examined party to take actions as referred to in Article 10 paragraph (3) letter f. (3) In the event that the Examination resumes after suspension as referred to in paragraph (1), and the examined party, their representative, or proxy is still not present, the Examination continues by first requesting employees of the examined party to assist in the smooth conduct of the Examination. (4) In the event that the examined party, representative, or proxy is present but refuses or hinders the implementation of the Examination, the concerned party is required to sign a statement of refusal of Examination. (5) In the event that employees of the examined party as referred to in paragraph (3) refuse to assist or hinder the smooth conduct of the Examination, the concerned party is required to sign a statement of refusal to assist the Examination. (6) In the event of refusal to sign the statements as referred to in paragraphs (4) and (5), Examiners create minutes regarding such refusal, signed by the Examiners. (7) Statements of refusal of Examination, statements of refusal to assist the Examination, or minutes as referred to in paragraphs (4), (5), and (6) can serve as the basis for investigation.

Article 13
(1) Examiners create Examination results reports to be used as a basis to prove the existence or non-existence of violations of laws and regulations in the capital market sector. (2) The Examination results reports as referred to in paragraph (1) are submitted to the Executive Head of Capital Market Supervision of the Financial Services Authority.

CHAPTER IV
ESTABLISHMENT OF ADMINISTRATIVE ACTIONS
Article 14
(1) In the event that initial evidence of a criminal offense in the capital market sector is found during the Examination, the Examination results report as referred to in Article 13 contains information:
a. the acts suspected of violating criminal provisions; b. the criminal provisions suspected to be violated;
c. the parties suspected of violating criminal provisions;
d. goods, letters, and/or documents supporting the suspicion of criminal violations; and e. recommendations from Examiners to the Executive Head of Capital Market Supervision of the Financial Services Authority. (2) Recommendations as referred to in paragraph (1) letter e are:
a. escalating to the investigation stage; or b. not escalating to the investigation stage, accompanied by proposals for establishing administrative actions in the form of administrative sanctions and/or Written Orders. (3) The Executive Head of Capital Market Supervision of the Financial Services Authority decides based on recommendations as referred to in paragraph (2). (4) In the event that administrative sanctions as referred to in paragraph (2) letter b are in the form of fines, the value of the administrative fine is at most IDR 5,000,000,000.00 (five billion rupiah). (5) Written Orders as referred to in paragraph (2) letter b may be:
a. orders to return a sum of money to the harmed parties; and/or b. orders to correct errors, conditions, and/or states arising from violations.

Article 15
Recommendations as referred to in Article 14 paragraph (1) letter e are prepared by considering:
a. the transaction value of the violation or the impact of the violation; b. the existence or non-existence of settlement of losses arising from criminal acts;
c. the impact of criminal acts on the overall offering and/or trading of securities; and/or
d. the impact of losses on the capital market system or the interests of investors and/or the public.

Article 16
Settlements as referred to in Article 15 letter b are carried out according to conditions established by the Financial Services Authority or based on agreements between the violating party and the party suffering losses.

CHAPTER V
CLOSING PROVISIONS
Article 17
Further provisions regarding the implementation of this Financial Services Authority Regulation are regulated in Financial Services Authority Circular Letters.

Article 18
At the time this Financial Services Authority Regulation comes into force, provisions concerning procedures for Examination in the capital market sector are subject to this Financial Services Authority Regulation.

Article 19
This Financial Services Authority Regulation comes into force on the date of enactment.

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

In order that everyone knows it, ordering the enactment of this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia. Established in Jakarta on December 27, 2018 CHAIRMAN OF THE COMMISSIONERS' COUNCIL FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA, signed WIMBOH SANTOSO

Enacted in Jakarta on December 28, 2018
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 261

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 36/POJK.04/2018
CONCERNING
PROCEDURES FOR EXAMINATION IN THE CAPITAL MARKET SECTOR

I. GENERAL
In order for activities in the capital market sector to be carried out in an orderly, reasonable, and efficient manner, and so that investor communities can be protected from practices that are harmful and inconsistent with laws and regulations in the capital market sector, the Financial Services Authority has the authority to conduct Examinations against any parties suspected of committing or being involved in violations of the aforementioned provisions. To ensure that such Examinations can be carried out smoothly and orderly while considering the rights and obligations of the examined parties, it is necessary to regulate the procedures for Examination in the capital market sector. With the enactment of Law Number 21 of 2011 concerning the Financial Services Authority, as of December 31, 2012, the regulation and supervision of financial services activities in the capital market sector shifted from the Capital Market Supervisory Agency and Financial Institutions to the Financial Services Authority. This Financial Services Authority Regulation introduces the concept of restorative justice in law enforcement, focusing on efforts to restore or improve conditions resulting from a violation while still striving to achieve a deterrent effect for violators. These efforts include allowing harmed parties to obtain compensation and/or other benefits from violators, either directly or through the Financial Services Authority. Based on Article 70 of Law Number 21 of 2011 concerning the Financial Services Authority, it is stated that upon the enactment of said Law, laws and regulations in the financial services sector remain in force as long as they are not contrary to and have not yet been replaced based on said Law. Based on Article 70 of said Law, the Financial Services Authority has the authority to re-regulate provisions concerning procedures for Examination in the capital market sector contained in Government Regulation Number 46 of 1995 concerning Procedures for Examination in the Capital Market Sector with a Financial Services Authority Regulation. Therefore, it is necessary to establish a Financial Services Authority Regulation concerning Procedures for Examination in the Capital Market Sector.

II. ARTICLE BY ARTICLE
Article 1
Clear enough.
Article 2
Clear enough.
Article 3
Clear enough.
Article 4
Paragraph (1)
Letter a
Examiner identification is necessary so that Examination is conducted only by authorized Examiners.
Letter b
A written examination order is necessary so that Examination is only directed at parties whose names are listed in the written examination order. Before the Examination begins, Examiners must show the Examiner identification and the written examination order to the party to be examined. In the event that Examiners do not show the Examiner identification and the written examination order, or if the Examiner identity listed in the Examiner identification does not match that listed in the written examination order, the party to be examined has the right to refuse the Examination. Letter c Written notification to the examined party in the form of, among others, summons letters, duty letters, and written examination orders. The time for written notification to the examined party can be several days, 1 (one) day, or shortly before the Examination. Letter d Clear enough. Letter e Clear enough. Letter f Clear enough. Paragraph (2) Clear enough. Paragraph (3) Clear enough.
Article 5
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
Clear enough.
Letter e
Types of minutes include, among others, Examination minutes and document handover minutes.
Article 6
What is meant by "Examination guidelines" is a rule containing limits that Examiners must fulfill regarding the nature, scope, and content of the Examination report.
Article 7
Clear enough.
Article 8
Clear enough.
Article 9
Clear enough.
Article 10
Paragraph (1)
Clear enough.
Paragraph (2)
Clear enough.
Paragraph (3)
Letter a
Clear enough.
Letter b
Clear enough.
Letter c
Clear enough.
Letter d
What is meant by "making copies" also includes duplicating by photocopying.
Letter e
Clear enough.
Letter f
Clear enough.
Letter g
Clear enough.
Paragraph (4)
Clear enough.
Article 11
Clear enough.
Article 12
Paragraph (1)
Clear enough.
Paragraph (2)
To prevent account books, records, and/or other documents related to the activities of the examined party from being damaged, destroyed, replaced, forged, transferred, etc., before Examiners leave the place or room of the examined party, Examiners may order the examined party to secure such documents for the interests of the Examination process. This provision can also be applied to representatives, proxies, or parties who can and have the authority to act on behalf of the examined party. Paragraph (3) Clear enough. Paragraph (4) Clear enough. Paragraph (5) Clear enough. Paragraph (6) Clear enough. Paragraph (7) Clear enough.
Article 13
Paragraph (1)
Examination results reports contain, among others, the objectives of the Examination, findings obtained, and conclusions of the Examination results. Paragraph (2) Clear enough.
Article 14
Clear enough.
Article 15
Clear enough.
Article 16
Clear enough.
Article 17
Clear enough.
Article 18
Clear enough.
Article 19
Clear enough.
SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6287