Regulation of the Financial Services Authority of the Republic of Indonesia Number 38/POJK.04/2018 Concerning Licensing of Securities Rating Agencies

COPY
FINANCIAL SERVICES AUTHORITY REGULATION
OF THE REPUBLIC OF INDONESIA
NUMBER 38 /POJK.04/2018
CONCERNING
LICENSING OF SECURITIES RATING AGENCIES
BY THE GRACE OF GOD THE ALMIGHTY
THE COMMISSIONERS OF THE FINANCIAL SERVICES AUTHORITY Considering: a. that with the increasing issuance of debt securities in Indonesia, the role of securities rating agencies has become increasingly important as an information provider for investors regarding the ratings of debt securities issued by issuers; b. that based on the considerations referred to in letter a and by taking into account applicable international principles, it is necessary to improve the existing regulations on the licensing of securities rating agencies to be more effective and efficient and aligned with international principles;
c. that based on the considerations referred to in letter a and letter b, it is necessary to establish a Financial Services Authority Regulation concerning the Licensing of Securities Rating Agencies;
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); FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA

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:
   Establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING LICENSING OF SECURITIES RATING AGENCIES
   CHAPTER I
   GENERAL PROVISIONS
   Article 1
   In this Financial Services Authority Regulation, the following terms are defined as:
3. Affiliation is:
   a. family relationship due to marriage and descent up to the second degree, both horizontally and vertically; b. relationship between a Party and employees, directors, or commissioners of such Party;
   c. relationship between 2 (two) companies where there is one or more members of the board of directors or board of commissioners who are the same;
   d. relationship between a company and a Party, whether directly or indirectly, controlling or controlled by such company; e. relationship between 2 (two) companies controlled, whether directly or indirectly, by the same Party; or f. relationship between a company and major shareholders.
4. Securities Rating Agency is a limited liability company in the form of an investment advisor that conducts rating activities and provides ratings.
5. Securities are securities, namely debt acknowledgment instruments, commercial paper, shares, bonds, debt certificates, Investment Contract Units for collective investment contracts, futures contracts over Securities, and any derivatives of Securities.
6. Rating is an assessment regarding the ability of a party to fully and timely meet payment obligations, expressed through a predetermined rating system.
7. Rating is an opinion given by a Securities Rating Agency based on the results of the Rating.
8. Analyst is an employee of a Securities Rating Agency who performs the analysis functions necessary to issue and/or monitor Ratings.
9. Rating Methodology is the procedure used by a Securities Rating Agency to determine Ratings, including:
   a. information that must be considered and analyzed; and b. the analysis framework, including formulas, financial measurements, assumptions, criteria, or other quantitative or qualitative factors.
   Article 2
   Securities Rating Agencies may conduct Ratings on Rating Objects as follows:
   a. parties as entities; and/or b. debt securities, sukuk, asset-backed securities, or other effects that can be rated.
   Article 3
   Securities Rating Agencies are required to inform that the Ratings in question are not recommendations for investors to make investment decisions and/or opinions on the fair value of securities and/or the value of entities that are rated.
   Article 4
   Companies conducting business activities as Securities Rating Agencies must have a business license from the Financial Services Authority.
   CHAPTER II
   APPLICATION FOR LICENSING
   OF SECURITIES RATING AGENCIES
   Section One
   Licensing Documents
   Article 5
   (1) Applications for obtaining a business license for a Securities Rating Agency are submitted to the Financial Services Authority according to the format of the Application for Business License as a Securities Rating Agency contained in the Appendix which is an integral part of this Financial Services Authority Regulation. (2) The business license application as referred to in paragraph (1) must be accompanied by the following documents and information:
   a. company identity; b. company domicile certificate;
   c. photocopy of the company's deed of establishment certified by the competent authority, along with the latest articles of association that have obtained approval from the competent authority, or the issuance of a receipt letter for changes to the articles of association from the competent authority;
   d. proof of lawful payment of paid-up capital; e. photocopy of the company's Tax Identification Number (NPWP) card; f. organizational structure of the company that separates the sections functioning for Rating, research, marketing, and compliance; and

g. data of board of directors members, board of commissioners members, officials one level below the board of directors, and Analysts, including:

1. name list;
2. signed curriculum vitae;
3. photocopy of the latest formal education diploma that has been legalized;
4. photocopy of expertise certificates in the field of securities rating, if possessing expertise certificates in the field of securities rating;
5. photocopy of valid Identity Cards or Passports;
6. two (2) pieces of the latest 4x6 cm color photos with a red background; and
7. photocopy of the Tax Identification Number (NPWP) card for board of directors members, board of commissioners members, officials one level below the board of directors, and Analysts who are required to have a Tax Identification Number based on tax legislation;
   h. name list and data of shareholders, including:
8. individuals, including:
   a) curriculum vitae; and b) photocopy of valid Identity Cards or Passports;
9. legal entities, including:
   a) name list of legal entities, addresses, and fields of business; b) photocopy of the deed of establishment of the company or legal entity certified by the competent authority, along with the latest changes to the articles of association; c) photocopy of the Tax Identification Number (NPWP) card for Indonesian legal entities;

d) information regarding controlling shareholders, whether directly or indirectly; e) latest financial statements; f) name list and data of board of directors members, board of commissioners members, and/or managers, including:

1. signed curriculum vitae; and
2. valid Identity Cards or Passports;
   g) name list and data of shareholders:
3. individuals, including curriculum vitae and photocopy of valid Identity Cards or Passports; and
4. legal entities, including articles of association and latest financial statements;
   i. photocopy of valid permits for employing foreign workers and work permits for foreign workers for foreign citizens;
   j. opening balance sheet or latest financial statements audited by a public accountant registered with the Financial Services Authority; k. special list of the company and shareholder list of the company as referred to in the Law concerning limited liability companies;
   l. quality control system documents;
   m. Rating Methodology documents; n. statement letter from controlling shareholders of the Securities Rating Agency, whether directly or indirectly, stating that they:

1. will not influence the independence and objectivity of the Rating process by the Securities Rating Agency, whether directly or indirectly;

2. are not direct or indirect shareholders of more than one Securities Rating Agency;

3. have a commitment to the healthy operational development of the company; and

4. will always comply with legislation;
   according to the format of the Controlling Shareholder/Shareholder Statement Letter contained in the Appendix which is an integral part of this Financial Services Authority Regulation; o. statement letter from board of directors and board of commissioners members stating that the following requirements are met:

5. competent to perform legal acts;

6. have good ethics and morals;

7. have never been declared bankrupt;

8. have never been managers or supervisors of a company that, based on a decision of the general meeting of shareholders or other organs equivalent to the general meeting of shareholders, were declared responsible for the bankruptcy of the company;

9. have never committed disgraceful acts;

10. have never been sentenced for proven criminal offenses in the financial field;

11. have never committed material violations of regulations in the capital markets field;

12. do not have Affiliation relationships with fellow board of directors members, fellow board of commissioners members, and/or between board of directors members and board of commissioners members;

13. have a commitment to comply with legislation; and

14. have a commitment to the development of the Rating industry in particular and the capital markets in general;
    according to the format of the Board of Directors/Board of Commissioners Member Statement Letter contained in the Appendix which is an integral part of this Financial Services Authority Regulation; p. statement letter from board of directors members stating that the company is fully responsible for all activities related to the company conducted by directors, officials, and other parties working for the company according to the format of the Statement of Responsibility Letter contained in the Appendix which is an integral part of this Financial Services Authority Regulation; q. statement letter from each board of directors member stating that they do not hold concurrent positions in any capacity at other companies according to the format of the Statement of No Concurrent Position for Directors Letter contained in the Appendix which is an integral part of this Financial Services Authority Regulation; r. statement letter from each board of commissioners member stating that they do not hold concurrent positions in any capacity at other companies conducting business activities as securities rating agencies according to the format of the Statement of No Concurrent Position for Board of Commissioners Letter contained in the Appendix which is an integral part of this Financial Services Authority Regulation; and s. statement letter from Analysts and officials one level below the board of directors stating that Analysts and officials one level below the board of directors do not hold concurrent positions in any capacity at other companies and reside in Indonesia according to the format of the Statement of Analyst/Official One Level Below Board of Directors Letter contained in the Appendix which

is an integral part of this Financial Services Authority Regulation.
Section Two
Review of Licensing Applications
Article 6
In processing the business license application for a Securities Rating Agency, the Financial Services Authority:
a. conducts research on document completeness; b. may conduct interviews;
c. may request presentations;
d. may conduct inspections at the applicant's office; e. conducts assessments of competence and propriety for controlling shareholders and board of directors and board of commissioners members of the Securities Rating Agency as regulated in the Financial Services Authority Regulation concerning competence and propriety assessments for key parties of financial service institutions; and/or f. may request additional documents.
Article 7
In the event that the Securities Rating Agency license application meets the requirements, within a maximum period of 45 (forty-five) days from the receipt of the complete application, the Financial Services Authority issues a business license letter for the Securities Rating Agency to the applicant.
Article 8
(1) In the event that the business license application as referred to in Article 5 paragraph (1) does not meet the requirements, within a maximum period of 45 (forty-five) days from the receipt of the application, the Financial Services Authority issues a notification letter to the applicant stating that:
a. the application is incomplete; or

b. the application is rejected because it does not meet the requirements.
(2) Applicants who do not complete the required document deficiencies within a period of 45 (forty-five) days after the date of the notification letter as referred to in paragraph (1) are deemed to have cancelled the submitted business license application.
CHAPTER III
CAPITAL AND SHAREHOLDERS
Section One
Capital
Article 9
Securities Rating Agencies must have a minimum paid-up capital of IDR 500,000,000.00 (five hundred million rupiah).
Section Two
Shareholders
Article 10
Shareholders of Securities Rating Agencies must have a commitment to the healthy operational development of the company and compliance with legislation.
Article 11
Every party is prohibited from becoming a direct or indirect shareholder of more than one Securities Rating Agency, except for ownership or capital participation by the Government.
Article 12
Shareholders of Securities Rating Agencies are prohibited from influencing, whether directly or indirectly, the independence and objectivity of the Rating process by the Securities Rating Agency.
Article 13
Plans for changes in shareholders of Securities Rating Agencies must first be submitted to the Financial Services Authority to obtain approval to meet the provisions as referred to in Article 10 and Article 11.
Article 14
The submission of plans for changes in shareholders of Securities Rating Agencies as referred to in Article 13 must be accompanied by documents as referred to in Article 5 paragraph (2) letter h.
Article 15
In granting approval or rejection for plans for changes in shareholders of Securities Rating Agencies as referred to in Article 13, the Financial Services Authority:
a. conducts research on document completeness; b. may conduct interviews;
c. may request presentations;
d. conducts assessments of competence and propriety for prospective shareholders of Securities Rating Agencies as regulated in the Financial Services Authority Regulation concerning competence and propriety assessments for key parties of financial service institutions; and/or; e. may request additional supporting documents related to fulfilling the provisions of Article 10 and Article 11.

CHAPTER IV
BOARD OF DIRECTORS AND BOARD OF COMMISSIONERS
Article 16
(1) Securities Rating Agencies must have at least 3 (three) board of directors members.
(2) Board of directors members of Securities Rating Agencies must reside in Indonesia.
Article 17
Board of directors and board of commissioners members of Securities Rating Agencies must meet the following requirements:
a. integrity requirements, including:

1. competent to perform legal acts;
2. have good ethics and morals;
3. have never been declared bankrupt;
4. have never been managers or supervisors of a company that, based on a decision of the general meeting of shareholders or other organs equivalent to the general meeting of shareholders, were declared responsible for the bankruptcy of the company;
5. have never committed disgraceful acts;
6. have never been sentenced for proven criminal offenses in the financial field;
7. in the last 2 (two) years before being nominated as board of directors and board of commissioners members, have never been subjected to administrative sanctions for violations of regulations in the financial field;
8. have never been subjected to administrative sanctions involving the revocation of individual licenses in the capital markets field or becoming board of directors or board of commissioners members responsible for administrative sanctions involving the revocation of business licenses, cancellation of approvals, and/or cancellation of registration from parties conducting activities in the capital markets;
9. do not have Affiliation relationships with fellow board of directors members, fellow board of commissioners members, and/or between board of directors members and board of commissioners members; and
10. have a commitment to comply with legislation and the development of the Rating industry in particular and the capital markets in general; and
    b. competency and expertise requirements, including:
11. for board of directors members:
    a) possess adequate and relevant knowledge in the fields of capital markets, finance, and/or Rating commensurate with their position; b) possess experience in the fields of capital markets, finance, and/or Rating for at least 3 (three) years in managerial positions; and c) possess understanding of regulations in the fields of capital markets and finance; and
12. for board of commissioners members:
    a) possess adequate knowledge in the fields of Rating or capital markets or have at least 2 (two) years of experience in companies operating in the capital markets and/or finance fields; and b) possess adequate knowledge regarding good corporate governance principles.
    Article 18
    (1) Securities Rating Agencies must have at least 2 (two) board of directors members who have expertise in the fields of capital markets or finance.

(2) One of the board of directors members as referred to in paragraph (1) must have at least 3 (three) years of work experience in the field of Rating.
Article 19
(1) Board of directors members who have duties and authorities over the Rating function may only hold concurrent duties and authorities over the research function. (2) Board of directors members who have duties and authorities over the compliance function are prohibited from holding concurrent duties and authorities over the Rating, marketing, and/or research functions.
Article 20
(1) Board of directors members of Securities Rating Agencies are prohibited from holding concurrent positions in any capacity at other companies. (2) Board of commissioners members of Securities Rating Agencies are prohibited from holding concurrent positions in any capacity at other companies conducting business activities as securities rating agencies.
Article 21
In the event that board of directors and/or board of commissioners members no longer meet the requirements as regulated in this Financial Services Authority Regulation, within a maximum period of 60 (sixty) days from the occurrence of board of directors or board of commissioners members of the Securities Rating Agency not meeting the said requirements, a general meeting of shareholders must be held to replace the said board of directors and/or board of commissioners members.
Article 22
Plans for changes in board of directors and board of commissioners members of Securities Rating Agencies must first be submitted to the Financial Services Authority to obtain approval to meet the provisions as referred to in Article 16 to Article 20.
Article 23
In granting approval or rejection for plans for changes in board of directors and board of commissioners members of Securities Rating Agencies as referred to in Article 22, the Financial Services Authority:
a. conducts research on document completeness; b. may conduct interviews;
c. may request presentations;
d. conducts assessments of competence and propriety for prospective board of directors and prospective board of commissioners members of Securities Rating Agencies as regulated in the Financial Services Authority Regulation concerning competence and propriety assessments for key parties of financial service institutions; and/or e. may request additional documents.
CHAPTER V
OPERATIONAL AND INTERNAL CONTROL
Article 24
Securities Rating Agencies must:
a. be responsible for the Ratings given; b. conduct Rating activities independently, free from the influence of parties utilizing the services of the Securities Rating Agency, objectively, and accountably;
c. reside and conduct operational activities in Indonesia;
d. have quality control system guidelines; e. have Rating Methodologies that are accountable, systematic, have undergone testing stages, and are implemented consistently and transparently;

f. separate the sections functioning for Rating, research, marketing, and compliance in the organizational structure of the Securities Rating Agency; g. have a rating committee in the Rating process to ensure an independent, objective, and accountable Rating process; and h. have adequate facilities and infrastructure to carry out operational activities.
Article 25
The quality control system guidelines for Securities Rating Agencies as referred to in Article 5 paragraph (2) letter l and Article 24 letter d include at least:
a. client acceptance and rejection; b. quality control of Rating work;
c. standard operating procedures of the Securities Rating Agency regarding professionalism and prevention of potential conflicts of interest;
d. standard operating procedures regarding compliance officials; e. standard operating procedures to prevent misuse of unpublished client information; f. standard operating procedures regarding monitoring of Rating objects; g. code of ethics adjusted to Financial Services Authority regulations; h. requirements and qualifications for Analysts;
i. the number of Rating assignments or monitoring of given Ratings assigned to Analysts; and
j. considerations for determining the number of assignments as referred to in letter i.

CHAPTER VI
REVOCATION OF BUSINESS LICENSE
Article 26
The business license of a Securities Rating Agency may be revoked by the Financial Services Authority based on the following grounds:
a. The business license is returned by the respective Securities Rating Agency to the Financial Services Authority; or b. Violation of regulations in the capital markets field.
Article 27
Securities Rating Agencies may submit an application for the return of the business license as referred to in Article 26 letter a by submitting a letter of application for the return of the business license to the Financial Services Authority accompanied by the following documents:
a. information regarding the reasons for the return of the business license; b. results of the general meeting of shareholders decision regarding approval of the plan to return the business license;
c. business license of the Securities Rating Agency from the Financial Services Authority;
d. other businesses owned by the Securities Rating Agency; e. proof of announcement of the plan to return the business license in at least 1 (one) nationally circulated newspaper and the website of the Securities Rating Agency; and f. report on the settlement of the rights and obligations of the Securities Rating Agency to the parties receiving the Rating, along with supporting documents.

CHAPTER VII
RATING COMMITTEE AND ANALYSTS
First Section
Rating Committee
Article 28
Members of the Rating Committee of a Securities Rating Agency involved in the Rating process must:
a. be an odd number, with a minimum of 3 (three) members; b. consist of at least:

1. 1 (one) Analyst who is directly involved in the Rating process;
2. a director who has duties and authority over the Rating function; and
3. 1 (one) Analyst who has experience and knowledge other than regarding the Rating object and has at least previously held a managerial position.

Second Section
Analysts
Article 29
(1) A Securities Rating Agency must have an adequate number of Analysts to carry out Rating assignments and monitoring of Ratings that have been granted. (2) A Securities Rating Agency must ensure that the number of Rating assignments and monitoring by each Analyst considers:
a. the party issuing the securities that have been Rated; or b. the party that has been Rated, and takes into account the size and complexity of the assignment and monitoring, as well as the experience and expertise of the Analyst.

Article 30
(1) The number of Analysts owned by a Securities Rating Agency as referred to in Article 29 must be at least 2 (two) Analysts, with the provision that there is at least one Analyst for the financial sector and one Analyst for the non-financial sector. (2) The Analysts as referred to in paragraph (1) must meet the following requirement provisions:
a. integrity requirements, which include:

1. capable of performing legal acts;
2. having good ethics and morality;
3. never having committed disgraceful acts;
4. never having been sentenced for proven criminal acts in the financial field; and
5. having a commitment to comply with laws and regulations.
   b. Competence and expertise requirements, at least:
6. having at least 3 (three) years of experience in the financial sector or non-financial sector; and
7. having at least 3 (three) years of experience in credit assessment or having at least 2 (two) years of experience in Rating.

Article 31
Analysts and officials one level below the Board of Directors of a Securities Rating Agency must reside in Indonesia.

CHAPTER VIII
OTHER PROVISIONS
Article 32
(1) In the event that the Financial Services Authority has provided an electronic system, business license applications as referred to in Article 5 and/or reporting obligations as referred to in the Financial Services Authority Regulation regarding reports by Securities Rating Agencies must be submitted through that electronic system. (2) In the event that the electronic system as referred to in paragraph (1) experiences technical disturbances or force majeure occurs, business license applications as referred to in Article 5 and/or reporting obligations as referred to in the Financial Services Authority Regulation regarding reports by Securities Rating Agencies may be conducted in the form of printed documents.

CHAPTER IX
SANCTION PROVISIONS
Article 33
(1) Any party that violates the provisions as referred to in Article 3, Article 4, Article 9, Article 10, Article 11, Article 12, Article 13, Article 14, Article 16, Article 17, Article 18, Article 19, Article 20, Article 21, Article 22, Article 24, Article 25, Article 28, Article 29, Article 30, Article 31, Article 32, and Article 37 shall be subject to administrative sanctions. (2) Sanctions as referred to in paragraph (1) shall also be imposed on parties who cause the occurrence of violations as referred to in paragraph (1). (3) Sanctions as referred to in paragraph (1) and paragraph (2) are imposed by the Financial Services Authority. (4) Administrative sanctions as referred to in paragraph (1) consist of:
a. written warning; b. fines, 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 laws and regulations. (6) Administrative sanctions as referred to in paragraph (4) letters b, c, d, e, f, or g may be imposed with or without being preceded by the 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 fines 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 34
In addition to administrative sanctions as referred to in Article 33 paragraph (4), the Financial Services Authority may take certain actions against any party that violates the provisions of this Financial Services Authority Regulation.

Article 35
The Financial Services Authority may announce the imposition of administrative sanctions as referred to in Article 33 paragraph (4) and certain actions as referred to in Article 34 to the public.

CHAPTER X
TRANSITIONAL PROVISIONS
Article 36
Applications for business licenses for Securities Rating Agencies that have been submitted to the Financial Services Authority before this Financial Services Authority Regulation takes effect and are still in the process of completion, shall continue to be processed based on the provisions of Regulation Number V.C.2, appendix of the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number Kep-151/BL/2009 concerning Permitting of Securities Rating Agencies.

Article 37
Securities Rating Agencies that have obtained business licenses from the Financial Services Authority must adjust the quality control system guidelines as referred to in Article 25 and submit them to the Financial Services Authority no later than 6 (six) months after this Financial Services Authority Regulation takes effect.

CHAPTER XI
CLOSING PROVISIONS
Article 38
Upon the taking effect of this Financial Services Authority Regulation, the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number Kep-151/BL/2009 dated June 22, 2009 concerning Permitting of Securities Rating Agencies along with Regulation Number V.C.2 which is its appendix, are revoked and declared invalid.

Article 39
This Financial Services Authority Regulation takes effect on the date of enactment.

A copy of this is consistent with the original Director of Law 1 Legal Department signed Yuliana

So that everyone knows, 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 31, 2018 CHAIRMAN OF THE COMMISSIONERS FINANCIAL SERVICES AUTHORITY REPUBLIC OF INDONESIA signed WIMBOH SANTOSO

Enacted in Jakarta on December 31, 2018
MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 263

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 38 /POJK.04/2018
CONCERNING
PERMITTING OF SECURITIES RATING AGENCIES

I. GENERAL
Article 6 of Law Number 21 of 2011 concerning the Financial Services Authority regulates the authority of the Financial Services Authority to regulate and supervise financial business activities in the capital market sector. The regulation and supervision of financial business activities in the capital market sector aim to realize orderly, fair, and efficient capital market activities and protect the interests of investors and the public. In carrying out regulatory and supervisory functions over the capital market industry, the Financial Services Authority has the authority to grant business licenses to Securities Rating Agencies.

The main function of a securities rating agency is to measure the risk potential of a bond or structured financial instrument and the bond-issuing company. Along with the development of bonds in Indonesia, the role of Securities Rating Agencies has become increasingly important as an intermediary providing information between issuers and investors in the field of Rating. Rating results issued by Securities Rating Agencies are often used as consideration for investors in determining their investment choices.

As an effort to maintain the credibility of Rating results by Securities Rating Agencies, quality control measures are needed in the Rating process to obtain high-quality Rating results. One form of quality control, the Financial Services Authority (formerly Bapepam and LK) has issued regulations, namely Regulation Number V.C.2, appendix of the Decision of the Chairman of the Capital Market Supervisory Agency and Financial Institutions Number KEP-151/BL/2009 concerning Permitting of Securities Rating Agencies. In line with developments in the financial services industry, it is necessary to amend Regulation Number V.C.2. These amendments include adjustments to terminology in the regulation by aligning and adding definitions referring to the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies issued in 2015, as well as changes to provisions regarding the ratio of Analysts to assignments to bridge obstacles faced by Securities Rating Agencies and alignment of regulations with other countries regarding this matter.

Based on the considerations outlined above and in the context of appropriate policy development, the Financial Services Authority deems it necessary to establish regulations concerning the Permitting of Securities Rating Agencies.

II. ARTICLE BY ARTICLE
Article 1
Sufficiently clear.

Article 2
Sufficiently clear.

Article 3
Sufficiently clear.

Article 4
Sufficiently clear.

Article 5
Paragraph (1)
Sufficiently clear.

Paragraph (2)
Letter a
Company identity includes among others name, address, and logo.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Letter e
Sufficiently clear.

Letter f
Sufficiently clear.

Letter g
Sufficiently clear.

Letter h
Information regarding parties controlling shareholders includes among others name and form of control.

Letter i
Sufficiently clear.

Letter j
Sufficiently clear.

Letter k
Sufficiently clear.

Letter l
Sufficiently clear.

Letter m
Sufficiently clear.

Letter n
Sufficiently clear.

Letter o
Sufficiently clear.

Letter p
Sufficiently clear.

Letter q
Sufficiently clear.

Letter r
Sufficiently clear.

Letter s
Sufficiently clear.

Article 6
Sufficiently clear.

Article 7
Sufficiently clear.

Article 8
Sufficiently clear.

Article 9
Sufficiently clear.

Article 10
Sufficiently clear.

Article 11
Sufficiently clear.

Article 12
Sufficiently clear.

Article 13
Sufficiently clear.

Article 14
Sufficiently clear.

Article 15
Sufficiently clear.

Article 16
Sufficiently clear.

Article 17
Sufficiently clear.

Article 18
Sufficiently clear.

Article 19
Sufficiently clear.

Article 20
Sufficiently clear.

Article 21
Sufficiently clear.

Article 22
Sufficiently clear.

Article 23
Sufficiently clear.

Article 24
Sufficiently clear.

Article 25
Sufficiently clear.

Article 26
Sufficiently clear.

Article 27
Letter a
Sufficiently clear.

Letter b
Sufficiently clear.

Letter c
Sufficiently clear.

Letter d
Sufficiently clear.

Letter e
Announcement of the plan to return the business license includes among others notification of the settlement of rights and obligations.

Letter f
Sufficiently clear.

Article 28
Sufficiently clear.

Article 29
Sufficiently clear.

Article 30
Paragraph (1)
The number of Analysts does not include analysts who serve as members of the Board of Directors or members of the Board of Commissioners.

Paragraph (2)
Sufficiently clear.

Article 31
Sufficiently clear.

Article 32
Sufficiently clear.

Article 33
Sufficiently clear.

Article 34
Sufficiently clear.

Article 35
Sufficiently clear.

Article 36
Sufficiently clear.

Article 37
Sufficiently clear.

Article 38
Sufficiently clear.

Article 39
Sufficiently clear.

SUPPLEMENT TO THE STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6289

APPENDIX
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 38 /POJK.04/2018
CONCERNING
PERMITTING OF SECURITIES RATING AGENCIES

APPLICATION FOR BUSINESS LICENSE
AS A SECURITIES RATING AGENCY
(place), (date, month) 20...
Number :
Attachment :
Subject : Application for Business License as a Securities Rating Agency.
To
Yth. Executive Head
Capital Market Supervisor
Financial Services Authority in Jakarta
With respect,
Hereby we apply for a business license as a Securities Rating Agency. As consideration material, we hereby submit the following data:

1. Applicant Name : ……………………………….

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

3. Company Name : ……………………………….

4. Tax Identification Number (NPWP) : ……………………………….

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

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

7. Telephone & Fax Number : ……………………………….

8. Contact Employee : ……………………………….
   (include power of attorney)

Completing this application, we attach the following documents:

1. company identity including among others name, address, and logo;
2. company domicile certificate;
3. photocopy of the company establishment deed that has been legalized by the competent authority, along with the latest articles of association that have received approval from the competent authority, or the issuance of a letter accepting changes to the articles of association from the competent authority;
4. proof of valid payment of paid-up capital;
5. photocopy of the company's Tax Identification Number (NPWP) card;
6. company organizational structure separating the functions of Rating, research, marketing, and compliance;
7. data of members of the Board of Directors, members of the Board of Commissioners, officials one level below the Board of Directors, and Analysts, including:
   a. name list; b. signed resume list;
   c. photocopy of the latest formal education diploma that has been legalized;
   d. photocopy of expertise certificates in the field of Securities Rating, if possessing expertise certificates in the field of Securities Rating; e. photocopy of valid Identity Card (KTP) or Passport; f. latest color photos sized 4x6 cm with a red background, 2 (two) sheets; g. photocopy of Tax Identification Number (NPWP) card for members of the Board of Directors, members of the Board of Commissioners, officials one level below the Board of Directors, and Analysts who are required to have a Tax Identification Number (NPWP) based on tax laws and regulations;
8. name list and data of shareholders, including:
   a. individuals, including:

1. resume list;
2. photocopy of valid Identity Card (KTP) or Passport; and
   b. legal entities, including:
3. name list of legal entities, address, and business field;
4. photocopy of the company or legal entity establishment deed that has been legalized by the competent authority, along with the latest changes to the articles of association;
5. photocopy of the Tax Identification Number (NPWP) card for Indonesian legal entities;
6. information regarding controlling shareholders, both directly and indirectly, including among others name and form of control;
7. latest financial statements;
8. name list and data of members of the Board of Directors, Board of Commissioners, and/or management, including:
   a) signed resume list; and b) valid Identity Card (KTP) or Passport;
9. name list and data of shareholders:
   a) individuals, including:
   (1) resume list; and
   (2) valid Identity Card (KTP)/Passport; b) legal entities, including:
   (1) articles of association; and
   (2) latest financial statements;

9. photocopy of valid foreign worker employment permit and foreign worker work permit for foreign citizens;
10. opening balance sheet or latest financial statements audited by a public accountant registered with the Financial Services Authority;
11. special company list and company shareholder list as referred to in the Limited Liability Company Law;
12. quality control system documents;
13. Rating Methodology documents;
14. statement letter from controlling shareholders, both directly and indirectly, stating that they:
    a. will not influence, directly or indirectly, the independence and objectivity of the Rating process by the Securities Rating Agency; b. are not direct or indirect shareholders in more than one Securities Rating Agency;
    c. have a commitment to the healthy operational development of the company; and
    d. will always comply with laws and regulations;
15. statement letter from members of the Board of Directors and Board of Commissioners of the company stating that the following requirements are met:
    a. capable of performing legal acts; b. having good ethics and morality;
    c. never declared bankrupt;
    d. never served as management or supervisors of a company that, based on a decision of the General Meeting of Shareholders or an equivalent organ, was declared responsible for the company's bankruptcy; e. never committed disgraceful acts; f. never sentenced for proven criminal acts in the financial field; g. never committed material violations of laws and regulations in the capital market field; h. have no Affiliation relationship with fellow members of the Board of Directors, fellow members of the Board of Commissioners, and/or between members of the Board of Directors and members of the Board of Commissioners;
    i. have a commitment to comply with laws and regulations; and
    j. have a commitment to the development of the Rating industry in particular and the capital market in general.
16. statement letter from members of the Board of Directors stating that the company is fully responsible for all activities related to the company conducted by directors, officials, and other parties working for the company;
17. statement letter from each member of the Board of Directors stating that they do not hold concurrent positions in any other company;
18. statement letter from each member of the Board of Commissioners stating that they do not hold concurrent positions in any other company conducting business as a securities rating agency; and
19. statement letter from Analysts and officials one level below the Board of Directors of Rating stating that Analysts and officials one level below the Board of Directors of Rating do not hold concurrent positions in any other company and reside in Indonesia.

I, the undersigned, declare that the data and information I submit are true and correct, and if any errors are found later, I am willing to take responsibility. Thus, this application is submitted, and thank you for your attention. Applicant stamp
................................................

STATEMENT LETTER OF CONTROLLING SHAREHOLDER/SHAREHOLDER ) I, the undersigned:
Name : ..............................................................................
Full Address : ..............................................................................
..............................................................................
(street name & number)
................................... -
(city & postal code) as the controlling shareholder/shareholder) of PT .................. hereby state that I:
a. will not influence, directly or indirectly, the independence and objectivity of the Rating process by the Securities Rating Agency; b. am not a direct or indirect shareholder in more than one Securities Rating Agency;
c. have a commitment to the healthy operational development of the company; and
d. will always comply with laws and regulations; This statement is made truthfully so that it may be used as appropriate.
(place), (date, month, year) stamp
..................................................
*) cross out what is not necessary

STATEMENT LETTER OF BOARD OF DIRECTORS/BOARD OF COMMISSIONERS MEMBERS ) I, the undersigned:
Name : ..............................................................................
Full Address : ..............................................................................
..............................................................................
(street name & number)
................................... -
(city & postal code) as a member of the Board of Directors/Board of Commissioners, candidate member of the Board of Directors/Board of Commissioners) of PT .................................... hereby state that I:
a. am capable of performing legal acts; b. have good ethics and morality;
c. have never been declared bankrupt;
d. have never served as management or supervisors of a company that, based on a decision of the General Meeting of Shareholders or an equivalent organ, was declared responsible for the company's bankruptcy; e. have never committed disgraceful acts; f. have never been sentenced for proven criminal acts in the financial field; g. in the last 2 (two) years before being nominated as a member of the Board of Directors/Board of Commissioners, have never been subject to administrative sanctions for violations of laws and regulations in the financial field; h. have never been subject to administrative sanctions in the form of revocation of individual licenses in the capital market field or serving as members of the Board of Directors or Board of Commissioners responsible for administrative sanctions in the form of revocation of business licenses, cancellation of approvals, and/or cancellation of registration from parties conducting activities in the capital market;
i. have no Affiliation relationship with fellow members of the Board of Directors and/or between members of the Board of Directors and members of the Board of Commissioners; and
j. have a commitment to comply with applicable laws and regulations and the development of the Rating industry in particular and the capital market in general. This statement is made truthfully so that it may be used as appropriate. (place), (date, month, year) Stamp
..................................................
*) cross out what is not necessary

STATEMENT LETTER OF RESPONSIBILITY
We, the undersigned:

1. Name : ..............................................................................
   Position : ..............................................................................
   Full Address : ..............................................................................
   ..............................................................................
   (street name & number)
   ................................... -
   (city & postal code)
2. Name : ..............................................................................
   Position : ..............................................................................
   Full Address : ..............................................................................
   ..............................................................................
   (street name & number)
   ................................... -
   (city & postal code) acting on behalf of and for the name of PT .................. located in ...................................... with headquarters at ........................................................ hereby state truthfully that the company is fully responsible for all activities related to the company conducted by directors, officials, employees, and other parties working for the company. This statement is made truthfully so that it may be used as appropriate. (place), (date, month, year) stamp (clear name) (signature) 1.(......................) (.........................) 2.(......................) (.........................)

STATEMENT OF NON-CONCURRENT DIRECTORSHIPS FOR THE BOARD OF DIRECTORS

I, the undersigned below:
Name : ..............................................................................
Full address : ..............................................................................
..............................................................................
(street name & number)
................................... -
(city & postal code)

as a director of PT .............................. located at ...........................
hereby declare truthfully that I do not hold concurrent positions in any capacity in other companies.

This statement is made truthfully for its intended use.

(place), (date, month, year) stamp duty
..................................................

STATEMENT OF NON-CONCURRENT DIRECTORSHIPS FOR THE BOARD OF COMMISSIONERS

I, the undersigned below:
Name : ..............................................................................
Full address : ..............................................................................
..............................................................................
(street name & number)
................................... -
(city & postal code)

as a commissioner of the Board of Commissioners of PT .............................. located at ........................... hereby declare truthfully that I do not hold concurrent positions in any capacity in other companies that conduct business activities as equity rating agencies.

This statement is made truthfully for its intended use.

(place), (date, month, year) stamp duty
..................................................

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

STATEMENT OF ANALYST/OFFICIAL *)

I, the undersigned below:
Name : ..............................................................................
Full address : ..............................................................................
..............................................................................
(street name & number)
................................... -
(city & postal code)

as an Analyst/official one level below the Board of Directors*) of PT .............................. located at ........................... hereby declare truthfully that I do not hold concurrent positions in any capacity in other companies and reside in Indonesia.

This statement is made truthfully for its intended use.

(place), (date, month, year) stamp duty
..................................................
*) strike out what is not necessary

Established in Jakarta on December 31, 2018
CHAIRMAN OF THE COMMISSIONERS
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO