Review of Key Parties of Banks

To:
The Board of Directors
At your place.

COPY
CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 9/SEOJK.03/2019 CONCERNING REVIEW OF KEY PARTIES OF BANKS

In view of the implementation of the Financial Services Authority Regulation Number 34/POJK.03/2018 concerning Review of Key Parties of Financial Service Institutions (State Gazette of the Republic of Indonesia Year 2018 Number 259, Supplement to the State Gazette of the Republic of Indonesia Number 6285), hereinafter referred to as the POJK on Review, it is necessary to regulate the implementation of the aforementioned Financial Services Authority Regulation as follows:

I. GENERAL PROVISIONS

In this Circular Letter of the Financial Services Authority, the following terms are defined:
a. Financial Service Institution, hereinafter abbreviated as FSI, is an institution that carries out activities in the Banking, Capital Market, Insurance, Pension Fund, Financing Institution, and Other Financial Service Institution sectors, as regulated in the POJK on Review. b. Bank is a business entity that collects funds from the community in the form of deposits and channels them to the community in the form of loans and/or other forms to improve the living standards of the people, as regulated in the POJK on Review, consisting of Conventional Commercial Banks (CCB), Sharia Commercial Banks (SCB), Rural Banks (RB), and Sharia Rural Financing Institutions (SRFI).
c. Key Party is a party that owns, manages, supervises, and/or has significant influence on the FSI, including those who no longer own, manage, and/or have influence at the time of the review, as regulated in the POJK on Review.
d. Bank Key Party refers to Controlling Shareholders, members of the Board of Directors, members of the Board of Commissioners, and Executive Officers. e. Management Key Party refers to members of the Board of Directors, members of the Board of Commissioners, and/or members of the Sharia Supervisory Board. f. Controlling Shareholder, hereinafter abbreviated as CS, is a legal entity, individual, and/or business group that:

owns shares of the company or Bank amounting to 25% (twenty-five percent) or more of the issued shares and has voting rights; or
owns shares of the company or Bank less than 25% (twenty-five percent) of the issued shares and has voting rights but can be proven to have controlled the company or Bank, directly or indirectly.
g. Control is an action aimed at influencing the management and/or policy of the company, including the Bank, in any manner, directly or indirectly, as regulated in the Circular Letter of the Financial Services Authority regarding the assessment of suitability and propriety for prospective controlling shareholders, prospective members of the Board of Directors, and prospective members of the Board of Commissioners of banks. h. General Meeting of Shareholders, hereinafter abbreviated as GMS:
for Banks in the form of a limited liability company (Perseroan Terbatas), is the GMS as regulated in the Law concerning limited liability companies;
for Banks in the form of a regional-owned company (Perusahaan Perseroan Daerah) or regional general company (Perusahaan Umum Daerah), is the GMS as regulated in the Law concerning regional government;
for RBs in the form of a regional company (Perusahaan Daerah), is the shareholders' meeting or GMS in RBs that have not yet changed their legal form to a regional general company or regional-owned company, as regulated in the Law concerning regional government; and
for Banks in the form of a cooperative legal entity, is the members' meeting as regulated in the Law concerning cooperatives.
i. Board of Directors:
for Banks in the form of a limited liability company (Perseroan Terbatas), is the Board of Directors as regulated in the Law concerning limited liability companies;
for Banks in the form of a regional-owned company (Perusahaan Perseroan Daerah) or regional general company (Perusahaan Umum Daerah), is the Board of Directors as regulated in the Law concerning regional government;
for Banks in the form of a regional company (Perusahaan Daerah), is the Board of Directors in RBs that have not yet changed their legal form to a regional general company or regional-owned company, as regulated in the Law concerning regional government;
for Banks in the form of a cooperative legal entity, is the management as regulated in the Law concerning cooperatives;
for branches of banks located abroad, is the head of the branch of the bank located abroad, namely the branch head and officials one level below the branch head; and
for representative offices of banks located abroad, is the head of the representative office of the bank located abroad.
j. Board of Commissioners:
for Banks in the form of a limited liability company (Perseroan Terbatas), is the Board of Commissioners as regulated in the Law concerning limited liability companies;
for Banks in the form of a regional-owned company (Perusahaan Perseroan Daerah), is the Commissioner as regulated in the Law concerning regional government;
for Banks in the form of a regional general company (Perusahaan Umum Daerah), is the Supervisor as regulated in the Law concerning regional government;
for Banks in the form of a regional company (Perusahaan Daerah), is the Supervisory Board in RBs that have not yet changed their legal form to a regional general company or regional-owned company, as regulated in the Law concerning regional government; and
for Banks in the form of a cooperative legal entity, is the Supervisor as regulated in the Law concerning cooperatives.
k. Executive Officer is a Bank official who is directly responsible to members of the Board of Directors or has significant influence on the policy and/or operations of the Bank:
for CCBs and SCBs, including division heads, regional office heads, branch office heads, functional office heads with positions no lower than branch office heads, heads of risk management units, heads of compliance units, and heads of internal audit units, and/or equivalent officials; and
for RBs and SRFRIs, including branch office heads, division heads, section heads, managers, officials appointed and responsible for the implementation of risk management, compliance, or internal audit functions, and/or equivalent officials.
l. Prudential principles in the financial service sector and/or good FSI management principles as regulated in the POJK on Review, for Banks, are:
prudential principles and/or sound banking principles in Bank business activities, services, and operations, referring to regulations regarding asset quality, lending or financing, Maximum Credit Limit (MCL) or Maximum Fund Provision Limit (MFPL), Bank risk management, minimum capital provision requirements, and the issuance of Bank products and activities; and
Bank management principles referring to regulations regarding the application of corporate governance for Banks.

The review of Bank Key Parties is conducted by the Financial Services Authority at any time if, based on supervision results, examinations, or information from other sources, there are indications of involvement and/or responsibility for integrity, financial soundness, financial reputation, and/or competence issues occurring in the Bank.

II. BANK KEY PARTIES SUBJECT TO REVIEW

The review is conducted by the Financial Services Authority against:

Bank Key Parties in cases where there are indications of involvement and/or responsibility for integrity, financial soundness, financial reputation, and/or competence issues occurring in the Bank, as regulated in the POJK on Review; and/or
Bank Key Parties as referred to in item 1, including parties who at the time of the review no longer own, manage, supervise, and/or have influence on the Bank but there are indications of involvement and/or responsibility for integrity, financial soundness, financial reputation, and/or competence issues occurring at the time when the Bank Key Parties still owned, managed, supervised, and/or had influence on the Bank.

III. SCOPE OF REVIEW

The review of Bank Key Parties is conducted if, based on evidence, data, and/or information obtained from direct supervision, indirect supervision, or other sources, there are indications of involvement and/or responsibility for:
a. integrity and/or financial soundness issues for CS; or b. integrity, financial reputation, and/or competence issues for members of the Board of Directors, members of the Board of Commissioners, and Executive Officers.
The term "actions by CS to influence and/or order members of the Board of Directors, members of the Board of Commissioners, Executive Officers, and/or Bank employees" as referred to in Article 4 letter a of the POJK on Review, or "actions by members of the Board of Directors, members of the Board of Commissioners, and/or Executive Officers" as referred to in Article 5 letter a of the POJK on Review, includes:
a. concealing and/or obscuring violations of certain regulations or financial conditions and/or actual transactions, including:

incorrect recording and/or transactions in Bank financial reports, including balance sheets, profit and loss statements, and/or administrative accounts;
failing to record transactions in Bank books;
destroying or damaging accounting records and/or supporting documents of Bank transactions;
conducting transactions utilizing the Bank for personal or group interests;
accounting practices and/or financial report presentations not in accordance with regulations; and/or
hacking into Bank electronic systems and/or information technology;
b. providing unfair benefits to shareholders, Bank Key Parties, Bank employees, and/or other parties that can harm or reduce Bank profits, including through:
granting loan interest rates to CCB and RB debtors or granting financing returns to SCB, Sharia Business Units (SBU), and SRFRIs;
foreign exchange transactions and/or derivative transactions in CCBs, SCBs, or SBUs;
selling Bank-owned assets, including Foreclosed Collateral (AYDA), and/or purchasing assets by the Bank;
goods and/or services procurement processes or activities;
providing facilities to Management Key Parties, Executive Officers, and/or Bank employees; and/or
providing gifts, whether in goods and/or services, directly or indirectly, in violation of legislation;
c. committing acts violating prudential principles and sound banking principles and/or good Bank management principles, including:
granting loans or financing not based on Bank standard operating procedures or Bank lending policy guidelines;
restructuring loans or financing not in accordance with regulations;
providing funds violating MCL or MFPL;
providing funds to parties, sectors, or for activities prohibited by legislation;
issuing products and/or carrying out activities affecting Bank financial conditions and risk profiles without approval from the Financial Services Authority and/or permits/approvals from other competent authorities;
making capital deposits with sources of funds not in accordance with regulations; and/or
violating Financial Services Authority regulations subject to administrative sanctions in the form of review implementation.
d. committing acts violating Sharia principles in the banking sector, including:
applying interest rate systems in fund collection and disbursement activities;
financing businesses not in accordance with Sharia principles; and/or
issuing products and/or carrying out activities not in accordance with or not supported by fatwas of the National Sharia Board – Indonesian Ulema Council.

The term "proven to have committed criminal offenses decided by court and having permanent legal force," as referred to in Article 4 letter b or Article 5 letter b of the POJK on Review, includes:
a. proven to have committed criminal offenses in the financial service sector; b. proven to have committed criminal offenses, namely offenses listed in the Criminal Code (KUHP) and/or similar foreign criminal codes with prison sentence threats of 1 (one) year or more; and/or
c. proven to have committed other criminal offenses with prison sentence threats of 1 (one) year or more, including corruption, money laundering, narcotics/psychotropics, smuggling, customs, excise, human trafficking, illegal weapons trade, terrorism, counterfeiting money, tax offenses, forestry offenses, environmental offenses, and marine and fisheries offenses.
The term "causing the Bank to experience difficulties endangering the continuity of the Bank's business and/or endangering the banking industry" as referred to in Article 4 letter c or Article 5 letter c of the POJK on Review, includes causing the Bank to experience difficulties endangering business continuity through actions:
a. utilizing the Bank to finance personal interests and/or group business interests; and/or b. violating regulations and/or commitments to the Financial Services Authority and/or government.
Such actions result in the Bank being placed under intensive or special supervision, taken over by the Government or the Deposit Insurance Agency, business activities being frozen, and/or business licenses being revoked, including if the Bank fails to make serious efforts to meet the criteria for removal from intensive supervision after the end of the intensive supervision period or extension of the intensive supervision period.
The term "failing to execute Financial Services Authority orders to take and/or not take certain actions for the purpose of improving and/or rehabilitating the Bank" as referred to in Article 4 letter d or Article 5 letter d of the POJK on Review, includes failing to execute supervision orders to carry out the process of Bank merger, consolidation, or takeover.
The term "having non-performing loans and/or financing in FSIs and/or being controllers, directors, or commissioners, or equivalents, of companies having non-performing loans and/or financing" as referred to in Article 4 letter e or Article 5 letter e of the POJK on Review, includes:
a. non-performing loans and/or financing recorded in the debtor data information system; and/or b. non-performing loans and/or financing not yet reported by FSIs in the debtor data information system or already reported by FSIs in the debtor data information system but not yet classified as non-performing, but based on research conducted by the Financial Services Authority, such loans and/or financing have met the criteria for classification as non-performing according to regulations governing asset quality. The definition of non-performing loans or financing for credit cards or Sharia cards does not include charges arising from annual fees, administrative fees, and/or other charges not arising from credit card or Sharia card usage transactions.
The term "proven to be declared bankrupt and/or becoming shareholders, directors, or commissioners, or equivalents, declared guilty causing a company to be declared bankrupt or have its business license revoked" as referred to in Article 4 letter f, or Article 5 letter f linked to Article 7 letter b of the POJK on Review, includes:
a. Bank Board of Commissioners members who are directors of companies causing the company to be declared bankrupt based on permanent court decisions or have their business licenses revoked by competent authorities; and/or b. Bank Board of Commissioners members who are shareholders of companies causing the company to be declared bankrupt based on permanent court decisions or have their business licenses revoked by competent authorities.
The term "CS failing to take necessary actions when the Bank faces capital and/or liquidity difficulties" as referred to in Article 4 letter g of the POJK on Review, includes CS failing to take actions such as increasing Bank capital deposits or obtaining strategic investors to increase Bank capital deposits.
The term "members of the Board of Directors, members of the Board of Commissioners, and/or Executive Officers failing to perform strategic management for the development of a healthy Bank" as referred to in Article 5 letter g of the POJK on Review, including the inability of the relevant parties to:
a. interpret the Bank's vision and mission in implementing operational activities; b. anticipate economic, financial, and/or banking technology developments;
c. analyze the banking industry situation and explore potential industrial sectors financed in the Bank's operational area;
d. implement regulations regarding prudential principles, reporting and accounting standards, and Bank institutions; and/or e. execute duties and/or responsibilities resulting in violations of prudential principles and/or good Bank management principles. Reviews of such inability are based on the duties and responsibilities of each position of members of the Board of Directors, members of the Board of Commissioners, and Executive Officers according to the job descriptions existing in the respective Bank.
The term "refusing to provide commitments and/or failing to fulfill commitments agreed with the Financial Services Authority and/or government" as referred to in Article 4 letter h or Article 5 letter h of the POJK on Review, includes:
a. commitments for Bank rehabilitation other than those referred to in item 4 letter b); b. commitments not to repeat actions or violations as referred to in item 2 letter a, item 2 letter b, item 2 letter c, item 2 letter d, item 4, item 5, and/or item 9;
c. commitments not to carry out and/or repeat actions or violations as referred to in Article 4 and/or Article 5 of the POJK on Review for Bank Key Parties who have previously received the "Fail" rating and have served bans as regulated in the POJK on Review; and/or
d. commitments for the healthy operational development of the Bank.
The term "carrying out or playing a role in violations or deviations of representative offices of banks located abroad" as referred to in Article 5 letter i of the POJK on Review, including for heads of representative offices of banks located abroad:
a. ordering fund collection and/or disbursement activities at representative offices of banks located abroad; and/or b. executing orders from the head office of banks located abroad to carry out fund collection and/or disbursement activities.

IV. REVIEW PROCEDURES

The review of Bank Key Parties is conducted with the following steps:
a. Clarification of evidence, data, and/or information to the party being reviewed.

The Financial Services Authority sends a letter requesting clarification of evidence, data, and/or information to the Bank Key Party being reviewed.
The Bank Key Party being reviewed submits responses to the request for clarification of evidence, data, and/or information through:
a) clarification in the form of written responses, either in physical documents submitted directly or other documents acceptable to the Financial Services Authority, including electronic letters attaching signed response documents by the Bank Key Party. Submission of documents via electronic letters does not eliminate the Bank Key Party's responsibility to submit physical response documents to the Financial Services Authority; and/or b) clarification in the form of face-to-face meetings, within a maximum time limit of 10 (ten) working days calculated from the date of the clarification request from the Financial Services Authority.
Written responses via physical documents as referred to in item 2) letter a) are submitted as follows:
a) Written responses are accompanied by supporting documents proven by:
i. receipt from the Financial Services Authority if submitted directly to the Financial Services Authority;
ii. post stamp if sent via the post office; or
iii. courier service receipt if sent via courier services.
b) If necessary, clarification can be conducted face-to-face by:
i. within a maximum time limit of 10 (ten) working days calculated from the date of the clarification request from the Financial Services Authority;
ii. the location of the clarification can be conducted at the Financial Services Authority or other locations determined by the Financial Services Authority due to specific situation or condition considerations; and
iii. the results of face-to-face clarification are accompanied by minutes of the meeting, which form an integral part of the clarification letter submitted by the Bank Key Party being reviewed.
Clarification via face-to-face meetings as referred to in item 2) letter b) is conducted as follows:
a) clarification via face-to-face meetings is carried out within a maximum time limit of 10 (ten) working days calculated from the date of the clarification request from the Financial Services Authority; b) the location of clarification via face-to-face meetings can be conducted at the Financial Services Authority or other locations determined by the Financial Services Authority due to specific situation or condition considerations; and c) the results of clarification via face-to-face meetings are accompanied by minutes of the clarification.
In cases where the party being reviewed is a CS in the form of a legal entity, responses to requests for clarification of evidence, data, and/or information are submitted by members of the Board of Directors or other parties in the legal entity authorized to represent the legal entity according to the articles of association or equivalents for foreign legal entities.
For parties who no longer own, manage, supervise, and/or have significant influence on the Bank at the time of the review, in cases where the clarification request letter is not received by the party being reviewed at the address recorded with the Financial Services Authority or the letter is returned to the Financial Services Authority, notification for the clarification request is conducted by corresponding with parties who can be contacted as referred to in Article 17 of the POJK on Review and/or summons through newspapers or the Financial Services Authority website.

In the event that the Bank Key Party subject to reassessment does not exercise the right to provide responses to clarification requests regarding evidence, data, and/or information within the stipulated time, the Otoritas Jasa Keuangan proceeds to the next step of the reassessment, namely the determination and notification of the temporary reassessment results to the Bank Key Party.

b. Determination and notification of temporary reassessment results to the Bank Key Party subject to reassessment.
The Otoritas Jasa Keuangan determines the temporary reassessment results by considering evidence, data, and/or information obtained from supervision results and other information, as well as considering responses to clarification requests regarding evidence, data, and/or information, in the event that the Bank Key Party subject to reassessment provides clarification. The Otoritas Jasa Keuangan notifies the temporary reassessment results to the Bank Key Party subject to reassessment via letter.

c. Responses from the Bank Key Party subject to reassessment regarding the temporary reassessment results.

The Bank Key Party subject to reassessment provides responses to the temporary reassessment results through physical documents submitted directly or other documents acceptable to the Otoritas Jasa Keuangan, including electronic mail containing the response document signed by the Bank Key Party as an attachment to the electronic mail. Submission of documents via electronic mail does not relieve the Bank Key Party of the responsibility to submit the physical response document to the Otoritas Jasa Keuangan.
Written responses through physical documents must be submitted within a maximum of 10 (ten) working days from the date of the temporary reassessment results letter from the Otoritas Jasa Keuangan, proven by:
a) Otoritas Jasa Keuangan receipt if submitted directly to the Otoritas Jasa Keuangan; b) post stamp if sent via the post office; or c) courier service receipt if sent via courier service.
If necessary, responses to the temporary reassessment results may be submitted via:
a) face-to-face meetings conducted within a maximum of 10 (ten) working days from the date of notification of the temporary reassessment results by the Otoritas Jasa Keuangan; b) the venue for submitting responses to the temporary reassessment results may be at the Otoritas Jasa Keuangan or at another location determined by the Otoritas Jasa Keuangan due to specific situation or condition considerations; and c) face-to-face submissions must be accompanied by minutes of responses to the temporary reassessment results.
In the event that the Bank Key Party subject to reassessment does not exercise the right to provide responses to the temporary reassessment results within the stipulated time, the Otoritas Jasa Keuangan determines that the temporary reassessment results become the final reassessment results.

d. In the event that the Otoritas Jasa Keuangan obtains new evidence, data, and/or information before the determination and notification of the final reassessment results, the Otoritas Jasa Keuangan determines the final reassessment results for the Bank Key Party by considering the new evidence, data, and/or information obtained, while still referring to the process as mentioned in letters a through c. New evidence, data, and/or information that serves as the basis for the Otoritas Jasa Keuangan to request clarification from the Bank Key Party subject to reassessment may include new evidence, data, and/or information related to indications of issues currently under reassessment, or indications of new issues committed by the Bank Key Party currently being reassessed. In considering such new evidence, data, and/or information, the Otoritas Jasa Keuangan reviews evidence, data, and/or information that could change the temporary or final reassessment results. Thus, if based on the Otoritas Jasa Keuangan's assessment, such new evidence, data, and/or information will not change the temporary or final reassessment results, the Otoritas Jasa Keuangan proceeds to the next step of the reassessment.

e. Determination and notification of final reassessment results to the Bank Key Party subject to reassessment.
The Otoritas Jasa Keuangan determines the final results after considering responses to the temporary reassessment results submitted by the Bank Key Party subject to reassessment, including new evidence, data, and/or information if any, or based on the temporary reassessment results in the event that the Bank Key Party subject to reassessment does not provide responses to the temporary reassessment results within the stipulated time.

Bank Key Parties subject to reassessment regarding issues or violations committed are categorized as Perpetrators.
Those defined as Perpetrators are:
a. persons who order, instruct, or propose the occurrence of an act; b. persons who approve, participate in approving, or sign;
c. persons who commit or participate in committing an act based on orders, with or without pressure, and who should know or should suspect that such orders contradict statutory regulations;
d. persons who commit an act due to specific promises or rewards; and/or e. persons who fail to perform acts or actions that are their duties and/or responsibilities, resulting in violations and/or deviations.
Correspondence regarding the reassessment process
a. In carrying out the reassessment process, the Otoritas Jasa Keuangan corresponds with the Bank Key Party subject to reassessment based on domicile data and information held by the Otoritas Jasa Keuangan. b. In the event that the Bank Key Party subject to reassessment cannot be contacted based on such domicile data and information, the Otoritas Jasa Keuangan may correspond through contactable parties as mentioned in Article 17 of the POJK on Reassessment. Contactable parties refer to family members or other parties other than the Bank Key Party who are willing or designated by the Bank Key Party to serve as contact persons for correspondence with the Otoritas Jasa Keuangan.
c. Reports updating domicile data and information of Bank Key Parties, including changes, must be submitted to the Otoritas Jasa Keuangan using the format example as Attachment Part A, which is an integral part of this Otoritas Jasa Keuangan Circular.
d. Banks that have submitted reports updating domicile data and information of Bank Key Parties before this Otoritas Jasa Keuangan Circular takes effect, must resubmit such reports, including in cases where there are changes in data and information, using the format example as Attachment Part A, which is an integral part of this Otoritas Jasa Keuangan Circular.

V. CONSEQUENCES OF FINAL REASSESSMENT RESULTS

Parties who, at the time of the reassessment, own, manage, supervise, and/or have significant influence on the Bank as Bank Key Parties designated with the rating "Pass," are declared to meet the requirements to remain as Bank Key Parties.
Bank Key Parties designated with the rating "Fail" are subject to prohibitions as mentioned in Article 10 paragraph (2) and Article 10 paragraph (3) of the POJK on Reassessment.
The imposition of prohibition periods on Bank Key Parties designated with the rating "Fail" as mentioned in Article 11 and Article 15 of the POJK on Reassessment.
Prohibition consequences for Bank Key Parties designated with the rating "Fail" apply from the date of the Otoritas Jasa Keuangan's determination letter.
In the event that parties designated with the rating "Fail" as mentioned in item 2 are shareholders, the following provisions apply:
a. For shareholders of LJK other than Sharia banks, the relevant party must divest all their share ownership within a maximum of 1 (one) year from being designated with the rating "Fail" as mentioned in Article 12 paragraph (1) letter c of the POJK on Reassessment. b. For shareholders of Sharia banks, the relevant party must reduce their share ownership to a maximum of 10% (ten percent) in each Sharia bank within a maximum of 6 (six) months from being designated with the rating "Fail" as mentioned in Article 12 paragraph (2) letter c of the POJK on Reassessment.

c. In the event that the relevant share ownership is not divested within the stipulated time, the provisions as mentioned in Article 13 of the POJK on Reassessment apply.

Rights of Bank Key Parties who are shareholders designated with the rating "Fail" regarding dividend distribution, the following provisions apply:
a. For BUK and BPR:

the relevant party still has the right to receive dividend distribution for a period of maximum 1 (one) year from the date of the Otoritas Jasa Keuangan's determination letter stating that the Bank Key Party who is the shareholder subject to reassessment is designated with the rating "Fail"; and
if the time period as mentioned in item 1) has expired and the relevant party has not divested share ownership or has not divested share ownership to parties having family relationships up to the second degree and/or to business groups, dividend payments are suspended until the relevant party divests share ownership in accordance with statutory regulations.
b. For BUS and BPRS:
the relevant party still has the right to receive dividend distribution for a period of maximum 6 (six) months from the date of the Otoritas Jasa Keuangan's determination letter stating that the Bank Key Party who is the shareholder subject to reassessment is designated with the rating "Fail"; and
if the time period as mentioned in item 1) has expired and the relevant party has not reduced their share ownership to a maximum of 10% (ten percent) or has not divested share ownership to parties having family relationships up to the second degree and/or to business groups, the payable dividends are maximum 10% (ten percent), and the remainder is paid after the relevant party reduces share ownership and divests share ownership in accordance with statutory regulations.

Divestment of all share ownership and/or reduction of share ownership to a maximum of 10% (ten percent) in each Sharia bank by Bank Key Parties designated with the rating "Fail" within the time period as mentioned in item 2 must be proven by a General Meeting of Shareholders (GMS) decision approving the change in share composition and meeting statutory regulations.
Bank Key Parties designated with the rating "Fail" who do not divest all share ownership and/or do not reduce share ownership to a maximum of 10% (ten percent) in each Sharia bank within the time period as mentioned in item 2, the prohibition period for the Bank Key Party is extended by 20 (twenty) years and does not eliminate the obligation to divest shares and/or reduce share ownership.
Divestment of all share ownership and/or reduction of share ownership to a maximum of 10% (ten percent) by Bank Key Parties designated with the rating "Fail" may be conducted through gifts or sales to parties who do not have family relationships up to the second degree and/or are not part of business groups.
Those defined as family relationships up to the second degree are vertical and horizontal relationships, including parents-in-law, children-in-law, and siblings-in-law, covering:
a. biological/step/adopted parents; b. biological/step/adopted siblings together with husbands or wives;
c. biological/step/adopted children;
d. biological/step/adopted grandparents; e. biological/step/adopted grandchildren; f. husbands/wives; g. parents-in-law; h. siblings-in-law;
i. husbands/wives of biological/step/adopted children;
j. grandparents of husbands/wives; k. husbands/wives of biological/step/adopted grandchildren;
l. biological/step/adopted siblings of husbands/wives together with husbands or wives.
Those defined as business groups are:
a. individuals and legal entities; b. several persons; or
c. several legal entities,
who have interrelated management, ownership, and/or financial relationships.
Banks must submit parties who will take over shares of Bank Key Parties designated with the rating "Fail" to the Otoritas Jasa Keuangan, to obtain approval as shareholders or Key Parties of Financial Service Institutions (PSP) based on Otoritas Jasa Keuangan Regulations regarding general banks, Sharia general banks, rural banks, Sharia rural financing banks, and/or assessment of ability and propriety for key parties of financial service institutions.
In the event that parties designated with the rating "Fail" as mentioned in item 2 are currently serving as Key Party of Management or Key Party of Officials at Financial Service Institutions (LJK), the relevant party is prohibited from carrying out duties, functions, and authorities as Key Party of Management or Key Party of Officials at LJK and must cease to be Key Party of Management or Key Party of Officials, as mentioned in Article 15 paragraph (1) letter b of the POJK on Reassessment. Banks where Bank Key Parties designated with the rating "Fail" are located must follow up on the aforementioned consequences by:
a. holding a GMS to dismiss members of the Board of Directors or members of the Board of Commissioners designated with the rating "Fail"; or b. issuing a decision letter to dismiss Executive Officials designated with the rating "Fail", within a maximum of 3 (three) months from the date of notification from the Otoritas Jasa Keuangan, as mentioned in Article 15 paragraph (2) of the POJK on Reassessment. Members of the Board of Directors, members of the Board of Commissioners, or Executive Officials designated with the rating "Fail" are prohibited from carrying out their duties, functions, and authorities from the date of the Otoritas Jasa Keuangan's determination. Banks have a period of 3 (three) months to hold a GMS dismissing members of the Board of Directors, members of the Board of Commissioners, or issue decision letters dismissing Executive Officials. The date of dismissal of members of the Board of Directors, members of the Board of Commissioners in the GMS, or the date of dismissal of Executive Officials in the Bank's decision letter is the same as the date of the Otoritas Jasa Keuangan's decision designating members of the Board of Directors, members of the Board of Commissioners, or Executive Officials with the rating "Fail."

VI. REQUEST FOR JUDICIAL REVIEW

Bank Key Parties designated with the rating "Fail" may submit requests for judicial review of the "Fail" rating before the consequence period expires.

Criteria for Judicial Review
Requests for judicial review may be submitted if they meet the following criteria:
a. there is new evidence, data, and/or information regarding the absence or failure to provide clarification or responses during the reassessment. Evidence, data, and/or information regarding the absence or failure to provide clarification or responses must include strong and relevant reasons or considerations supported by evidence of absence or failure to provide clarification or responses, such as illness preventing the Bank Key Party subject to reassessment from functioning normally or other strong reasons causing the Bank Key Party subject to reassessment to be unable to provide clarification or responses within the time period stipulated by the Otoritas Jasa Keuangan. b. there is a final court decision stating that the party designated with the rating "Fail" is not proven to have committed a criminal offense or is not proven to be declared bankrupt and/or is not a shareholder, member of the Board of Directors, or member of the Board of Commissioners declared guilty causing a company to be declared bankrupt or have its business license revoked;
c. as a consequence of the implementation of Indonesian National Laws, including the implementation of Law Number 11 of 2016 regarding Tax Amnesty; and/or
d. having served ¾ (three-quarters) of the consequence period and the Bank Key Party:

has no negative records while designated as "Fail," including not committing legal violations with sanctions exceeding 1 (one) year, not causing bankruptcy and/or not being a shareholder, member of the Board of Directors, or member of the Board of Commissioners declared guilty causing a company to be declared bankrupt or have its business license revoked; and
commits to contributing significantly to the strengthening or rescue of the banking industry, realized within the time period stipulated by the Otoritas Jasa Keuangan.
Commitments to contribute are expressed, among others, in the form of commitments and realization regarding capital increases or mergers and/or acquisitions of Banks for rescue or strengthening of Banks, and/or other forms of contribution required.

Implementation of judicial review assessment
a. The Otoritas Jasa Keuangan has the authority to follow up or not follow up on judicial review requests submitted by Bank Key Parties designated with the rating "Fail" by conducting:

research on document completeness;
analysis of documents; and
impact analysis on Bank conditions, both individually and industrially.
b. Judicial review requests must be accompanied by a checklist of document completeness for judicial review requests as Attachment Part B, which is an integral part of this Otoritas Jasa Keuangan Circular, signed by the Bank Key Party designated with the rating "Fail." If necessary, the Otoritas Jasa Keuangan has the authority to request other supporting information and/or documents related to the judicial review request.
c. In the event that analysis results indicate non-compliance with judicial review request criteria and/or incomplete submitted documents, the Otoritas Jasa Keuangan notifies the petitioner that the judicial review request cannot be followed up. Petitioners may submit judicial review requests again if they meet the judicial review request criteria and have complete documents.
d. In the event that criteria and document requirements are met, the Otoritas Jasa Keuangan follows up on the judicial review with the following steps:
clarification of evidence, data, and/or information to the Bank Key Party submitting the judicial review request;
determination and notification of temporary judicial review results to the Bank Key Party submitting the judicial review request;
responses from the Bank Key Party submitting the judicial review request regarding the temporary judicial review results; and
determination and notification of final judicial review results to the Bank Key Party submitting the judicial review request.
e. Bank Key Parties designated with the rating "Pass" in the judicial review process may become:
PSP, members of the Board of Directors, and/or members of the Board of Commissioners by meeting the criteria, requirements, and assessment mechanisms for ability and propriety referring to Otoritas Jasa Keuangan Regulations on assessment of ability and propriety for key parties of financial service institutions; and/or
shareholders or Executive Officials by meeting the criteria, requirements, and mechanisms as stated in Otoritas Jasa Keuangan Regulations regarding general banks, Sharia general banks, rural banks, or Sharia rural financing banks.

VII. DELIVERY ADDRESSES

Responses to clarification requests and/or responses to temporary reassessment results, judicial review requests along with supporting documents, responses to clarification requests and/or responses to temporary judicial review results, and Bank reports:
a. For BUK and BUS, submitted to:

Bank Supervision Department or Regional Office of Otoritas Jasa Keuangan in Jakarta, for BUK and BUS with headquarters in the jurisdiction of the Bank Supervision Department or Regional Office of Otoritas Jasa Keuangan in Jakarta; or
Regional Office or local Office of Otoritas Jasa Keuangan, for BUK and BUS with headquarters outside the Special Capital Region of Jakarta.
b. For BPR and BPRS, submitted to:
Regional Office of Otoritas Jasa Keuangan, for BPR and BPRS with headquarters in the jurisdiction of the Regional Office of Otoritas Jasa Keuangan; or
Office of Otoritas Jasa Keuangan, for BPR and BPRS with headquarters in the jurisdiction of the Office of Otoritas Jasa Keuangan.

Submission of documents as mentioned in item 1 may be conducted via electronic means if regulations governing such matters have been implemented.

VIII. TRANSITIONAL PROVISIONS

Regarding reassessments of Bank Key Parties conducted after the POJK on Reassessment takes effect but before this Otoritas Jasa Keuangan Circular takes effect, the procedures, results, and consequences of reassessment results still refer to:

Bank Indonesia Circular Letter Number 13/08/DPNP as amended by Bank Indonesia Circular Letter Number 13/26/DPNP regarding Fit and Proper Test;
Bank Indonesia Circular Letter Number 14/25/DPBS regarding Fit and Proper Test for Sharia Banks and Sharia Business Units;
Bank Indonesia Circular Letter Number 14/36/DKBU as amended by Bank Indonesia Circular Letter Number 15/45/DPNP regarding Fit and Proper Test for Rural Banks,
as long as they do not conflict with this Otoritas Jasa Keuangan Circular.

IX. CLOSING PROVISIONS

Upon the taking effect of this Otoritas Jasa Keuangan Circular:
a. Bank Indonesia Circular Letter Number 13/08/DPNP as amended by Bank Indonesia Circular Letter Number 13/26/DPNP regarding Fit and Proper Test;

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

b. Bank Indonesia Circular Letter Number 14/25/DPBS regarding Fit and Proper Test for Sharia Banks and Sharia Business Units;
c. Bank Indonesia Circular Letter Number 14/36/DKBU as amended by Bank Indonesia Circular Letter Number 15/45/DPNP regarding Fit and Proper Test for Rural Banks,
are revoked and declared invalid.

Provisions in this Otoritas Jasa Keuangan Circular take effect from the date of determination.

Determined in Jakarta on June 21, 2019
EXECUTIVE HEAD OF BANKING SUPERVISOR
OTORITAS JASA KEUANGAN
REPUBLIC OF INDONESIA, signed
HERU KRISTIYANA

ATTACHMENT
OTORITAS JASA KEUANGAN CIRCULAR LETTER
NUMBER 9 /SEOJK.03/2019
REGARDING
REASSESSMENT OF BANK KEY PARTIES

Part A
EXAMPLE OF DATA AND DOMICILE INFORMATION UPDATE REPORT
I. Example Format of Data and Domicile Information Update Report
for Individual PSPs, Board of Directors Members, Board of Commissioners Members, and Executive Officials A. Bank Principal Party Data Bank Name : ……………………………………………………..
Principal Party : ……………………………………………………..
(Individual PSP/Board of Directors Member/Board of Commissioners Member/Executive Official*)

Name (according to ID card/KMILN/KITAS/Passport*) : ……………………………………………………..
Place and date of birth : ……………………………………………………..
Address (according to ID card/KMILN/KITAS/Passport*)
: Street …… Number ………… RT … RW …….
Village/Sub-district …… District …………
Regency/City …………………….............
Province.............. Postal Code …………………
Domicile Address) : Street …… Number ………… RT …. RW ……
Village/Sub-district …… District …………
Regency/City ……………………............
Province.............. Postal Code …………………
Home telephone number : ……………………………………………………..
Mobile telephone number : …………………, …………………
Electronic mail address : …………………, …………………

B. Contactable Party Data*)

Name (according to ID card/KMILN/KITAS/Passport*) : …………………………………………………….....
Place and date of birth : …………………………………………………..
Family relationship : …………………………………………………..
(husband/wife/sibling/other specify*)
Address (according to ID card/KMILN/KITAS/Passport*)
: Street …...… Number …… RT ….. RW ……
Village/Sub-district ..… District ……..
Regency/City ……………………..........
Province................ Postal Code ……………..
Domicile Address) : Street …… Number ………… RT ….. RW ……
Village/Sub-district ……. District ...……
Regency/City ………………..........……
Province............... Postal Code ………………
Home telephone number : …………………………………………………..
Mobile telephone number : …………….……….……..………………..……
Electronic mail address : ………………..………..………………..………
*) strike out what is not necessary
) fill in if different from the address on the identity document.
*) can be filled in by more than 1 (one) person.
Thus, the data and information are compiled truthfully accompanied by photocopies of ID cards/KMILN/KITAS/Passports of each respective party.
(place), (date, month, year)
(Name, signature)

II. Example Format of Data and Domicile Information Update Report for
Legal Entity PSPs
A. Bank Principal Party Data
Bank Name : ……………………………………………………

Name of legal entity PSP (according to
articles of association)
: ………………………………………...…………
Legal entity address : Street …… Number ………… RT ….. RW ….…
Village/Sub-district ……… District ..…
Regency/City ………...........………….…
Province............... Postal Code ……………..…
Telephone number : ………………….……, …………………....……
Facsimile : …………………….…, …………………....……
Electronic mail address : ………......………………, ………………….…….
Legal entity website : ………………….…………………….…………..
B. Data of Parties Representing the Legal Entity PSP*) )
Name (according to ID card/KMILN/KITAS/
Passport*) : ………………………………..…………………..
Place and date of birth : …………………………………………………….
Position in the legal entity : ………………………………………..…………..
(Board of Directors member/other specify*)
Office address : Street …… Number ………… RT ..… RW ….…
Village/Sub-district …… District ..………
Regency/City …………..................……
Province.................... Postal Code ……………
Office telephone number : ……..…….………… ext.……………….………
Mobile telephone number : ……………….…………, …………….…………
Electronic mail address : …….………….………, …………………………

C. Contactable Official Data*)

Name (according to ID card/KMILN/KITAS/Passport*) : ……………………………………………………
Place and date of birth : ……………………………………………………
Position in the legal entity : ……………………………………………………
(company secretary/other position specify*)
Office address : Street …… Number ………… RT …... RW ……
Village/Sub-district ..…… District ………
Regency/City ……………………............
Province................. Postal Code ………………
Office telephone number : …………….………… ext.………………………
Mobile telephone number : ………………….……, ……………….…………
Electronic mail address : …………………………, ………………………
*) can be filled in by more than 1 (one) name.
) according to articles of association or internal regulations of the legal entity.
*) strike out what is not necessary.
Thus, the data and information are compiled truthfully accompanied by photocopies of ID cards/KMILN/KITAS/Passports of each respective party.
(place), (date, month, year)
(Name, signature)

Part B
DOCUMENT CHECKLIST FOR RECONSIDERATION REQUEST No. Document (√) Description

Identity documents, at least:
a. photocopy of Identity Card (KTP),
Indonesian Community Card Abroad (KMILN), passport, or Limited Stay Permit Card (KITAS); b. resume;
c. recent color photograph size 4x6 cm;
d. photocopy of Taxpayer Identification Number (NPWP).
Photocopy of decision stating the applicant Failed (if any).
Evidence documents in accordance with the reconsideration request criteria, including:
a. evidence, data, and/or new information regarding absence or failure to provide clarification or response during the re-evaluation, such as an official certificate letter from the hospital where the applicant was treated; b. copy of a final and binding court decision stating that the applicant is not proven to have committed a criminal offense or is not proven to be declared bankrupt and/or become a shareholder, Board of Directors member, or Board of Commissioners member who is declared guilty causing a company to be declared bankrupt or have its business license revoked;
c. official and valid evidence of the consequences of implementing Indonesian Republic State Laws;
d. evidence of having no negative record while declared Failed, including a stamped declaration letter stating that the applicant:

did not cause bankruptcy and/or did not become a shareholder, Board of Directors member, or Board of Commissioners member who was declared guilty causing a company to be declared bankrupt or have its business license revoked; and
has never been sentenced for proven legal violations with a penalty threat of more than 1 (one) year, proven among others by a Police Record Certificate; and
e. commitment documents and realization plans, such as capital increase or merger and/or acquisition of Banks.
The undersigned hereby declares that:

The information provided above along with attached supporting documents is true, complete, and accurate.
If the above statement or information is proven to be untrue, I declare to cancel the reconsideration application.
(place), (date, month, year)
(Name, signature above sufficient stamp)
Issued in Jakarta on 21 June 2019
EXECUTIVE HEAD
BANKING SUPERVISOR
FINANCIAL SERVICES AUTHORITY, ttd
HERU KRISTIYANA

This copy is in accordance with the original
Legal Director 1
Legal Department ttd
Yuliana

Review of Key Parties of Banks

Lineage: In force