SEOJK No. 3/SEOJK.05/2014 on Procedures for Implementing Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies

To:

1. The Board of Directors of Insurance Companies;
2. The Management and Acting Management of Pension Funds;
3. The Board of Directors of Financing Companies; and
4. The Board of Directors of Guarantee Companies
   at your respective locations.

COPY

CIRCULAR LETTER OF THE FINANCIAL SERVICES AUTHORITY NUMBER 3/SEOJK.05/2014

ON

PROCEDURES FOR IMPLEMENTING COMPETENCY AND PROPRIETY ASSESSMENT FOR KEY PARTIES IN INSURANCE COMPANIES, PENSION FUNDS, FINANCING COMPANIES, AND GUARANTEE COMPANIES

In view of the implementation of Financial Services Authority Regulation Number 4/POJK.05/2013 concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies (State Gazette of the Republic of Indonesia Year 2013 Number 231, Supplement to the State Gazette of the Republic of Indonesia Number 5474), it is necessary to regulate the procedures for implementing the competency and propriety assessment for key parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies as mandated in Article 12, in the Financial Services Authority Circular Letter as follows:

I. GENERAL PROVISIONS

1. Insurance Company is a business entity operating in the insurance business sector as referred to in legislation concerning insurance business.

2. Pension Fund is a legal entity that manages and operates programs promising pension benefits as referred to in legislation concerning pension funds.

3. Financing Company is a business entity specifically established to conduct leasing, factoring, consumer financing, and/or credit card business as referred to in legislation concerning financing companies.

4. Guarantee Company is a legal entity operating in the financial sector with its main business activity being guarantee provision as referred to in legislation concerning guarantee companies.

5. Key Parties include:
   a. members of the Board of Directors; b. members of the Board of Commissioners;
   c. members of the Sharia Supervisory Board;
   d. members of the Member Representative Body; e. Controlling Shareholders; f. Experts; or g. Foreign Workers; in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies.

6. Board of Directors:
   a. for Insurance Companies, Financing Companies, or Guarantee Companies in the form of a limited liability company is the Board of Directors as referred to in legislation concerning limited liability companies; b. for Financing Companies or Guarantee Companies in the form of a cooperative legal entity is the management as referred to in legislation concerning cooperatives;
   c. for Pension Funds is the management and/or acting management as referred to in legislation concerning pension funds;
   d. for Insurance Companies in the form of a joint venture legal entity is the Board of Directors as referred to in the company's articles of association; e. for Guarantee Companies in the form of a state-owned enterprise legal entity is the Board of Directors as referred to in legislation concerning state-owned enterprises; and f. for Guarantee Companies in the form of a regional enterprise legal entity is the Board of Directors as referred to in legislation concerning regional enterprises.

7. Board of Commissioners:
   a. for Insurance Companies, Financing Companies, or Guarantee Companies in the form of a limited liability company is the Board of Commissioners as referred to in legislation concerning limited liability companies; b. for Financing Companies or Guarantee Companies in the form of a cooperative legal entity is the supervisors as referred to in legislation concerning cooperatives;
   c. for Pension Funds is the Supervisory Board as referred to in legislation concerning pension funds;
   d. for Insurance Companies in the form of a joint venture legal entity is the Board of Commissioners as referred to in the company's articles of association; e. for Guarantee Companies in the form of a state-owned enterprise legal entity is the Supervisory Board as referred to in legislation concerning state-owned enterprises; and f. for Guarantee Companies in the form of a regional enterprise legal entity is the Supervisory Board as referred to in legislation concerning regional enterprises.

8. Sharia Supervisory Board, hereinafter abbreviated as DPS, is the supervisor recommended by the National Sharia Council, Indonesian Ulema Council, placed in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies or Sharia units, tasked with supervising business activities to ensure compliance with Sharia principles.

9. Member Representative Body, hereinafter abbreviated as BPA, is the highest institution in a legal entity in the form of a joint venture that determines the basic policies of the legal entity in the form of a joint venture.

10. Controlling Shareholder, hereinafter abbreviated as PSP, is an individual, legal entity, and/or business group that:
    a. holds shares or capital in Insurance Companies, Financing Companies, or Guarantee Companies amounting to 25% (twenty-five percent) or more of the issued shares and has voting rights; or b. holds shares or capital in Insurance Companies, Financing Companies, or Guarantee Companies less than 25% (twenty-five percent) of the issued shares and has voting rights but can be proven to have exercised control over Insurance Companies, Financing Companies, or Guarantee Companies, directly or indirectly.

11. Expert, hereinafter abbreviated as TA, is an individual who has specific qualifications and/or expertise and is appointed as an Expert in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies where they work.

12. Foreign Worker, hereinafter abbreviated as TKA, is a foreign citizen holding a visa for the purpose of working in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies in Indonesia.

13. General Meeting of Shareholders, hereinafter abbreviated as RUPS:
    a. for Insurance Companies, Financing Companies, or Guarantee Companies in the form of a limited liability company is the RUPS as referred to in legislation concerning limited liability companies; b. for Financing Companies or Guarantee Companies in the form of a cooperative legal entity is the member meeting as referred to in legislation concerning cooperatives;
    c. for Pension Funds is the founder as referred to in legislation concerning pension funds;
    d. for Insurance Companies in the form of a joint venture legal entity is the member meeting as referred to in the company's articles of association; e. for Guarantee Companies in the form of a state-owned enterprise legal entity is the RUPS as referred to in legislation concerning state-owned enterprises; and f. for Guarantee Companies in the form of a regional enterprise legal entity is the RUPS as referred to in legislation concerning regional enterprises.

14. Executive Head is the Executive Head of Insurance, Pension Fund, Financing Institution, and Other Financial Institution Supervision.

15. Competency and Propriety Testing Team, hereinafter referred to as the Testing Team, is a team formed to conduct competency and propriety testing and provide assessments of Key Parties.

16. Financial Services Authority, hereinafter abbreviated as OJK, is an independent institution free from the interference of other parties that has the function, task, and authority for regulation, supervision, examination, and investigation, as referred to in legislation concerning the financial services authority.

II. ASSESSMENT APPLICATION AND ADMINISTRATIVE REQUIREMENTS

A. Key Party Assessment
Applications for competency and propriety assessment are conducted against:

1. Parties nominated as members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, PSP, TA, or TKA.
2. Members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, TA, or TKA whose validity period of the competency and propriety assessment approval decision has expired.
3. Members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, PSP, TA, or TKA who are suspected or reasonably suspected of no longer meeting the competency and propriety assessment factors.

B. Procedure for Competency and Propriety Assessment Application

1. The Board of Directors submits a letter of application for competency and propriety assessment of members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, PSP, TA, or TKA to the Executive Head, using the format of Appendix I of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies.

2. The application letter for parties nominated as members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, TA, or TKA must be accompanied by administrative requirements and supporting documents, namely:
   a. A completed resume using the format of Appendix II.a of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, containing:

1. personal data, accompanied by photocopies of identity documents such as an ID card or passport, which are still valid, tax identification number (NPWP), and a recent color passport photo;
2. formal education history;
3. training and seminars attended;
4. work history, accompanied by a letter of employment confirmation, specifically for DPS members accompanied by a recommendation from the Sharia Council of the Indonesian Ulema Council (DSN-MUI);
5. awards relevant to the financial industry achieved;
   and 6) foreign language skills mastered.

b. A completed statement letter, affixed with sufficient stamp duty, and signed by the party nominated as a member of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, TA, or TKA using the format of Appendix III of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, containing the statement:

1. has never committed criminal acts in the field of financial services business and/or the economy;
2. has never been sentenced for criminal offenses based on court decisions within a period of at most 5 (five) years prior to the competency and propriety assessment;
3. has never violated commitments agreed upon with the supervising and supervisory agencies of financial services business;
4. has never committed acts that provide unfair benefits to shareholders, members of the Board of Commissioners, members of the BPA, members of the Board of Directors, employees, and/or other parties that can harm or reduce the rights of policyholders, participants, guarantee recipients, and/or consumers;
5. has never violated prudential principles in the field of financial services business;
6. is not listed in the Unqualified List in the banking sector;
7. has never committed acts inconsistent with their authority or beyond their authority;
8. has never been declared incapable of exercising their authority;
9. has never committed acts violating legislation in the field of Integrated Financial Services (IKNB);
10. does not have non-performing loans;
11. has never been declared bankrupt and has never been a shareholder, member of the Board of Commissioners, member of the BPA, or member of the Board of Directors who was declared guilty causing a company to be declared bankrupt based on court decisions within 5 (five) years prior to the competency and propriety assessment; and
12. has never been involved in money laundering crimes.

3. The application letter for parties nominated as individual PSP must be accompanied by administrative requirements and supporting documents as follows:
   a. a completed resume using the format of Appendix II.a of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, containing; personal data, by attaching photocopies of identity documents such as an ID card or passport, which are still valid, NPWP, and a recent color passport photo; and b. a completed statement letter, affixed with sufficient stamp duty, and signed by the party nominated as an individual PSP using the format of Appendix III of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies, containing the statement:

1. has never committed criminal acts in the field of financial services business and/or the economy;
2. has never been sentenced for criminal offenses based on court decisions within a period of at most 5 (five) years prior to the competency and propriety assessment;
3. has never violated commitments agreed upon with the supervising and supervisory agencies of financial services business;
4. has never committed acts that provide unfair benefits to shareholders, members of the Board of Commissioners, members of the BPA, members of the Board of Directors, employees, and/or other parties that can harm or reduce the rights of policyholders, participants, guarantee recipients, and/or consumers;
5. has never violated prudential principles in the field of financial services business;
6. is not listed in the Unqualified List in the banking sector;
7. has never committed acts inconsistent with their authority or beyond their authority;
8. has never been declared incapable of exercising their authority;
9. has never committed acts violating legislation in the field of IKNB;
10. does not have non-performing loans;
11. has never been declared bankrupt and has never been a shareholder, member of the Board of Commissioners, member of the BPA, or member of the Board of Directors who was declared guilty causing a company to be declared bankrupt based on court decisions within 5 (five) years prior to the competency and propriety assessment;
12. has never been involved in money laundering crimes;
13. has financial capabilities that can support business development; and
14. has a commitment to be willing to take necessary measures if the company faces capital and liquidity difficulties.

4. The application letter for parties nominated as legal entity or business group PSP must be accompanied by administrative requirements and supporting documents as follows:
   a. a completed company questionnaire using the format of Appendix II.b of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, containing; legal entity or business group data, attaching photocopies of establishment documents such as the articles of incorporation, including the latest amended articles of association approved by the competent authority or equivalent documents for foreign business entities according to the regulations in the country of origin, and the NPWP of the legal entity or business group or equivalent documents valid for foreign legal entities; and b. a completed resume of the Board of Directors or equivalent officials representing the legal entity or business group using the format of Appendix II.a of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies;
   c. the latest audited annual financial report by a public accountant for Indonesian legal entities or Indonesian business group legal entities, or the latest audited annual financial report by a public accountant at the company's domicile, for foreign legal entities.

d. a completed statement letter, affixed with stamp duty, and signed by the Board of Directors or equivalent officials representing the legal entity or business group using the format of Appendix III of the Financial Services Authority Regulation concerning Competency and Propriety Assessment for Key Parties in Insurance Companies, Pension Funds, Financing Companies, and Guarantee Companies, containing statements as stated in number 3 letter c above.

5. In the event that members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, PSP, TA, or TKA are suspected or reasonably suspected of no longer meeting the competency and propriety assessment requirements, OJK sends a notification to the Board of Directors. Based on the notification letter, within 20 (twenty) days after the notification letter, the Board of Directors must submit the following documents to the Executive Head:
   a. administrative requirements and supporting documents as referred to in number 2 letter a and letter b for members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, PSP, TA, or TKA; b. administrative requirements and supporting documents as stated in number 3 letter a, letter b, and letter c for individual PSP; or
   c. administrative requirements and supporting documents as stated in number 4 letter a, letter b, and letter c for legal entity or business group PSP.

6. In the event that the administrative requirements and supporting documents as referred to in letter B number 2, number 3, number 4, or number 5 received by OJK are incomplete, OJK may request the Board of Directors to complete the administrative requirements and supporting documents within a maximum period of 20 (twenty) days.

III. DELIVERY ADDRESS

Application letters along with complete and correct administrative requirements and supporting documents are submitted to the Executive Head, with the address as follows:
Executive Head of IKNB Supervision, Financial Services Authority Attention: Deputy Commissioner of IKNB Supervision I Sumitro Djojohadikusumo Building Jl. Lapangan Banteng Timur 1-4 Jakarta 10710

IV. FACTORS ASSESSED IN COMPETENCY AND PROPRIETY ASSESSMENT

The competency and propriety assessment of members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, TA, or TKA as referred to in Roman numeral II letter A number 1, number 2, and number 3, includes competence, integrity, and financial reputation factors, while the competency and propriety assessment of PSP as referred to in Roman numeral II letter A number 1 and number 3, includes integrity and financial reputation factors, as detailed below:

A. COMPETENCE

The competence factor consists of 3 (three) sub-factors including:

1. knowledge and strategic management capability;
2. experience in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies and/or other fields relevant to their position; and
3. expertise in Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies and/or other fields relevant to their position.

The three sub-factors as referred to above are as follows:

1. Sub-factor of knowledge and strategic management capability
   The assessment of the competence factor sub-factor of knowledge and strategic management capability is conducted to ensure that:
   a. members of the Board of Directors have adequate and relevant knowledge to their position including criteria:

1. knowledge regarding organizational structure, management, description of duties and responsibilities of the Board of Directors; and

2. potential ability to analyze business processes, lead organizations, and manage human resources to achieve organizational goals.
   b. members of TA or TKA have adequate and relevant knowledge to their position including criteria:

3. knowledge regarding organizational structure, management, description of duties and responsibilities of TA or TKA members; and

4. potential ability to analyze business processes.
   c. members of the Board of Commissioners, members of the DPS, or members of the BPA have adequate and relevant knowledge to their position including criteria:

5. knowledge regarding organizational structure, management, description of duties and responsibilities of Board of Commissioners members, DPS members, or BPA members; and

6. basic supervisory knowledge including internal controls; and

7. leadership and conflict management.
   d. members of the Board of Directors, members of the Board of Commissioners, members of the DPS, members of the BPA, TA, or TKA have understanding of legislation including criteria:

8. understanding of legislation in the field of insurance business, pension funds, guarantee companies, or financing companies.
   Understanding required for Key Parties prioritizes legislation in the industry where the Key Party will serve.

9. basic understanding of other relevant legislation, including understanding of legislation concerning limited liability companies, Financial Services Authority, capital markets, banking, bankruptcy, and money laundering crimes and their implementing regulations.
   e. members of the Board of Directors, members of the Board of Commissioners, members of the DPS, or members of the BPA have the ability to conduct strategic management for healthy business development including criteria:

10. For members of the Board of Directors
    a) formulate company vision and mission; b) analyze the insurance, pension fund, guarantee company, or financing company industry situation; c) analyze the company's internal condition developments; d) determine the direction and targets the company must achieve; and e) design short-term, medium-term, and long-term strategies to achieve company targets, including the ability to anticipate future developments, such as the ability to prepare annual business plans, medium-term and long-term corporate plans using realistic and measurable assumptions.

11. For members of the Board of Commissioners, members of the DPS, or members of the BPA:
    a) conduct an analysis of the basic situation of the insurance, pension fund, financing, or guarantee industry; b) conduct an analysis of the development of the internal conditions of the Insurance Company, Pension Fund, Guarantee Company, or Financing Company; and c) conduct an analysis of the policies of the Board of Directors members.

2. Sub-factor of experience in the field of Insurance Companies, Pension Funds, Guarantee Companies, or Financing Companies and/or other fields relevant to their position

The assessment of the competency factor, sub-factor of experience in the field of Insurance Companies, Pension Funds, Guarantee Companies, Financing Companies, and/or other fields relevant to their position, is conducted to ensure that Board of Directors members, Board of Commissioners members, DPS members, BPA members, TKA, or TA have:

a. Experience in a company equivalent to the plan for the person to be appointed or employed, including positions previously held and the duration of holding those positions; b. Experience in other financial service fields consistent with the plan for the person to be appointed or employed, including positions previously held and the duration of holding those positions; and/or
c. Experience in supervisory agencies or government institutions, including those relevant to the field of duty to be held by the person.

An Insurance Company, Pension Fund, Financing Company, or Guarantee Company is considered equivalent if it has a business scope, managed assets, and business portfolio that are not significantly different.

3. Expertise in the field of Insurance Companies, Pension Funds, Financing Companies, Guarantee Companies, or other fields relevant to their position

The assessment of the competency factor, sub-factor of expertise in the field of Insurance Companies, Pension Funds, Financing Companies, Guarantee Companies, and/or other fields relevant to their position, is conducted to ensure that Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA have:

a. professional expertise at the expert level in the insurance field or equivalent; b. professional expertise at the expert level in the pension fund field or equivalent;
c. professional expertise at the expert level in the guarantee company field or equivalent;
d. professional expertise at the expert level in the financing company field or equivalent; e. professional expertise at the expert level in the finance field; and/or f. academic expertise at the Master's degree (Strata 2) or Bachelor's degree (Strata 1) level relevant to the position to be held.

B. INTEGRITY

The integrity factor assessment is conducted to ensure the level of compliance and good faith of Board of Directors members, Commissioners, DPS members, BPA members, PSP, TA, or TKA in managing, supervising, and/or executing business processes so that Insurance Companies, Pension Funds, Guarantee Companies, or Financing Companies can fulfill their obligations to policyholders, participants, guarantee recipients, or consumers. The integrity factors of Key Parties assessed are:

1. Never committed criminal acts in the financial service and/or economic business fields.

Criminal acts in the financial service and/or economic business fields include the following criteria:
a. Criminal acts or indications of criminal acts committed by or involving the Key Party being assessed as violations of financial service legislation.
These acts include, among others, criminal acts in the banking, insurance, pension fund, guarantee company, and/or financing company fields; and/or b. Criminal acts or indications of criminal acts committed by or involving the Key Party being assessed as violations of economic legislation. These acts include, among others, criminal acts in the state finance, money laundering, Financial Services Authority (OJK), taxation, and/or customs and excise fields.

2. Never sentenced for criminal offenses based on court decisions for a period of up to 5 (five) years prior to the competency and fit and proper assessment.

Criminal offenses based on court determinations with sentences of 5 (five) years or more are criminal acts committed by or involving the person being assessed as violations of criminal law regulations governed in the Criminal Code, punishable by 5 (five) years imprisonment or more. These acts include, among others, fraud, embezzlement, treason, and murder.

3. Never violated commitments agreed upon with the supervising and regulating agencies of the financial service business.

Acts of failing to meet commitments agreed upon with the supervising and regulating agencies of the financial service sector are acts of failing to fulfill some or all of the commitments stipulated in meeting minutes, minutes of meetings, or statements of commitment letters of the company. These acts include, among others, criteria of not executing:
a. recommendations from audit results reports; b. programs for the rehabilitation of the company or Pension Fund; and
c. settlement of the company's obligations to policyholders, participants, guarantee recipients, or consumers that have been agreed upon.

4. Never committed acts that provide unfair benefits to shareholders, Board of Directors members, Board of Commissioners members, BPA members, employees, and/or other parties that can harm or reduce the rights of policyholders, consumers, or participants.

These acts include, among others, criteria of committing:
a. rejection of payable claims or approval of non-payable claims without adequate reason; b. payment of claims that are too high or too low from the value that should be paid, without a justifiable reason;
c. formulation of unfair pension benefits for some Participants;
d. provision of financing to consumers with mechanisms and/or amounts that are unfair; e. rejection of payment of excess auction proceeds of collateral goods to consumers without adequate reason; f. return of payment of excess auction proceeds of collateral goods to consumers without a justifiable reason;

g. payment of fictitious and/or manipulated claims; h. transfer of company or Pension Fund assets to owners, commissioners, directors, employees, or other parties unfairly, both in terms of value and transactions;
i. provision of commissions (fees) for insurance closing transactions with mechanisms and amounts that are unfair;
j. provision of IJP or guarantee agent commissions with mechanisms and/or amounts that are unfair; k. purchase of company or Pension Fund assets at prices above market value unfairly;
l. purchase of assets using company or Pension Fund funds where ownership is registered under another party's name;
and/or m. provision of excessively excessive salaries and facilities to managers and employees of the company or Pension Fund.

5. Never violated prudential principles in the financial service business field.
   a. for Key Parties in Insurance Companies, these acts include, among others, criteria of:

   1. negligence or intentional acts or omissions in company financial management that cause the company's financial condition to suffer significant losses or become insolvent;
   2. negligence or intentional acts of paying claims to parties not entitled, such as paying claims without prior adequate verification;
   3. conducting insurance underwriting without adequate underwriting processes;
   4. conducting insurance underwriting above own retention without full reinsurance support;
   5. placing reinsurance abroad without investigating/checking the condition of the relevant reinsurance company;
   6. determining loss assessments not based on professional ethical codes and/or healthy general practices, for insurance loss assessors;
   7. determining insurance technical reserves not based on norms, professional ethical codes, and/or healthy general practices;
   8. failing to or delaying premium payments to insurers for premiums already received; and/or
   9. committing actions violating professional ethical codes.
      b. for Key Parties in Pension Funds, these acts include, among others, criteria of:
   10. not conducting financial transaction stages through written Pension Fund SOP procedures;
   11. not conducting adequate verification in the pension benefit payment process; or
   12. not conducting adequate study in the asset purchase/disposal process.
       c. for Key Parties in Guarantee Companies, these acts include, among others, criteria of:
   13. negligence or intentional acts or omissions in company financial management that cause the company's financial condition to suffer significant losses;
   14. negligence or intentional acts of paying claims to parties not entitled, such as paying claims without prior adequate verification;
   15. determining reserve amounts not based on norms, professional ethical codes, and/or healthy general practices; and
   16. not conducting financial transaction stages through existing company SOPs.
       d. for Key Parties in Financing Companies, these acts include, among others, criteria of:
   17. negligence or intentional acts or omissions in company financial management that cause the company's financial condition to suffer significant losses;
   18. conducting loans not based on norms or healthy general practices; and
   19. not conducting financial transaction stages through existing company SOPs.

6. Not listed in the Disqualified List (DTL) in the banking sector.

Key Parties included in the aforementioned criteria are those who, based on information obtained from Bank Indonesia, are included in the disqualification list issued by Bank Indonesia.

7. Never committed acts inconsistent with or beyond their authority.

Key Parties included in the aforementioned criteria are those who, based on information from the company, committed acts violating the company's articles of association, company SOPs, and/or employment contracts with the company.

8. Never declared incapable of exercising their authority.

Key Parties included in the aforementioned criteria are those who, based on information from the company, committed acts violating the company's articles of association, company SOPs, and/or employment contracts with the company.

9. Never violated legislation in the IKNB field.

Key Parties included in the aforementioned criteria are those who committed acts violating legislation in the insurance, pension fund, guarantee company, or financing company fields in their capacity or position, resulting in the company or the person being assessed not meeting IKNB legislation requirements and being subject to administrative sanctions by the financial service sector supervisor and regulator.

C. FINANCIAL REPUTATION

The assessment of the financial reputation factor is conducted to assess financial capability and evaluate the involvement of Key Parties in financial reputation factor criteria.

1. For Board of Directors members, Board of Commissioners members, BPA members, DPS, TA, and TKA, assessment criteria include:
   a. not having non-performing loans; b. never being declared bankrupt and never having been a shareholder, Board of Commissioners member, or Board of Directors member declared at fault for causing a company to be declared bankrupt based on court decisions within the last 5 (five) years prior to the competency and fit and proper assessment; and
   c. never being involved in money laundering criminal acts.

2. For PSP, assessment criteria include:
   a. having financial capability that can support business development, namely:

   1. the financial position of an individual PSP capable of supporting the company's business development, accompanied by a statement letter from the individual PSP that they have financial capability, which can be supported by evidence; and
   2. the position of the latest audited annual financial reports for legal entity PSP or business groups, including: liquidity position, solvency position, investment placement position, return on assets position, and return on equity position.
      b. having a commitment of willingness to undertake necessary measures if an Insurance Company, Pension Fund, Financing Company, or Guarantee Company faces capital or liquidity difficulties;
      c. not having non-performing loans;
      d. not being in a state of bankruptcy and never having been a shareholder, Board of Commissioners member, or Board of Directors member declared at fault for causing a company to be declared bankrupt based on court decisions within the last 5 (five) years prior to the competency and fit and proper assessment; and e. never being involved in money laundering criminal acts.

V. PROCEDURES FOR IMPLEMENTING COMPETENCY AND FIT AND PROPER ASSESSMENTS

A. Procedures for assessing the competency and fit and proper of Key Parties as referred to in Roman numeral II letter A number 1 and number 2 are as follows:

1. Administrative Review

Administrative review is conducted by the Secretariat of the Competency and Fit and Proper Assessment Team to assess the completeness and truthfulness of the application letters submitted by the Board of Directors of Insurance Companies, Pension Funds, Guarantee Companies, or Financing Companies.

1. for Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA as referred to in Roman numeral II letter A number 1 and number 2, the Secretariat of the Competency and Fit and Proper Assessment Team assesses the completeness of:
   a) the letter of application for competency and fit and proper assessment as referred to in Roman numeral II letter B number 1; and b) administrative requirements and supporting documents for the resume as referred to in Roman numeral II letter B number 2 letter a; and c) the statement letter as referred to in Roman numeral II letter B number 2 letter b.

2. for individual PSP as referred to in Roman numeral II letter A number 1, the Secretariat of the Competency and Fit and Proper Assessment Team assesses the completeness of:
   a) the letter of application for competency and fit and proper assessment as referred to in Roman numeral II letter B number 1; b) administrative requirements and supporting documents for the resume as referred to in Roman numeral II letter B number 3 letter a; and c) the statement letter as referred to in Roman numeral II letter B number 3 letter c.

3. for legal entity PSP or business groups as referred to in Roman numeral II letter A number 1, the Secretariat of the Competency and Fit and Proper Assessment Team assesses the completeness of:
   a) the letter of application for competency and fit and proper assessment as referred to in Roman numeral II letter B number 1; b) administrative requirements and supporting documents for the company questionnaire as referred to in Roman numeral II letter B number 4 letter a; c) the latest annual financial report and supporting documents as referred to in Roman numeral II letter B number 4 letter b; and d) the statement letter and statement letter as referred to in Roman numeral II letter B number 4 letter c.

4. Based on the results of the administrative review conducted, the Secretariat of the Competency and Fit and Proper Assessment Team:
   a) submits the schedule for the competency and fit and proper assessment to the Board of Directors; b) in the event of incomplete documents, requests the Board of Directors to complete the supporting documents for administrative requirements within a maximum period of 20 (twenty) days; or c) submits a rejection letter for the Board of Directors' application letter if;
   i. within a maximum period of 20 (twenty) days, the Board of Directors does not submit the missing documents; or
   ii. the supporting documents for administrative requirements are incomplete and incorrect.

The 20 (twenty) day period is calculated from the date of the OJK's letter requesting completeness of administrative requirement documents until the documents are received by OJK.

2. Interview

a) Interviews for Board of Directors members, Board of Commissioners members, DPS members, BPA members, PSP, TA, or TKA are conducted face-to-face to gather further information from the tested party to obtain assurance that the integrity, competency, and financial reputation factor requirements are met. b) In the event that the candidate PSP is the Government or Regional Government, the interview is conducted if deemed necessary by OJK. Interviews are conducted, among others, to deepen the commitment of the Government or Regional Government in managing Insurance Companies, Pension Funds, Financing Companies, or Guarantee Companies in accordance with prudential principles and good corporate governance.

B. Procedures for re-assessing the competency and fit and proper of Board of Directors members, Board of Commissioners members, DPS members, BPA members, PSP, TA, or TKA as referred to in Roman numeral II letter A number 3 are as follows:

1. Verification of Data and Information

Verification of data and information is conducted to perform re-assessment of competency and fit and proper and to ensure the truthfulness of data and information indicating that Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA are suspected of no longer meeting competency, integrity, and/or financial reputation requirements, or PSP no longer meets integrity and/or financial reputation requirements.

1. for Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA as referred to in Roman numeral II letter A number 3, the Secretariat of the Competency and Fit and Proper Assessment Team conducts:
   a) verification of data and information obtained from OJK audit results reports and/or reports or information from other parties received by OJK; b) administrative review of requirements and supporting documents for Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA, consisting of:
   i. administrative requirements and supporting documents for the resume as referred to in Roman numeral II letter B number 2 letter a; and
   ii. the statement letter as referred to in Roman numeral II letter B number 2 letter b.

2. for individual Controlling Shareholders as referred to in Roman numeral II letter A number 3, the Secretariat of the Competency and Fit and Proper Assessment Team conducts:
   a) verification of data and information obtained from OJK audit results reports and/or reports or information from other parties received by OJK; b) administrative review of requirements and supporting documents for PSP, consisting of:
   i. administrative requirements and supporting documents for the resume as referred to in Roman numeral II letter B number 3 letter a; and
   ii. the statement letter as referred to in Roman numeral II letter B number 3 letter c.

3. for legal entity Controlling Shareholders or business groups as referred to in Roman numeral II letter A number 3, the Secretariat of the Competency and Fit and Proper Assessment Team conducts:
   a) verification of data and information obtained from OJK audit results reports and/or reports or information from other parties received by OJK; b) administrative review of requirements and supporting documents for PSP, consisting of:
   i. administrative requirements and supporting documents for the company questionnaire as referred to in Roman numeral II letter B number 4 letter a;
   ii. the latest annual financial report and supporting documents as referred to in Roman numeral II letter B number 4 letter b; and
   iii. the statement letter as referred to in Roman numeral II letter B number 4 letter c.

2. Interview

Interviews for Board of Directors members, Board of Commissioners members, DPS members, BPA members, PSP, TA, or TA suspected of no longer meeting competency, integrity, and/or financial reputation factor requirements are conducted to verify data and information obtained from OJK audit results reports and/or reports or information from other parties received by OJK to the tested party and to gather information for re-assessment of whether the person being assessed still meets integrity, competency, and/or financial reputation factor requirements.

VI. ASSESSMENT RESULTS AND CONSEQUENCES

A. Classification of Assessment Results

The results of the competency and fit and proper assessment are classified into 2 (two) predicates as follows:
a. pass; or b. fail.

OJK determines the results of the competency and fit and proper assessment for Board of Directors members, Board of Commissioners members, DPS members, BPA members, PSP, TA, or TKA as referred to in Roman numeral II letter A within a maximum of 60 (sixty) days after the documents are received in complete form.

B. Consequences of Assessment Results

Since the date of determination of the competency and fit and proper assessment results, for the assessed party receiving the 'Pass' predicate, they meet the requirements to be appointed as or remain as Board of Directors members, Board of Commissioners members, DPS members, BPA members, PSP, TA, or TKA.

Since the date of determination of the competency and fit and proper assessment results, for the assessed party receiving the 'Fail' predicate, the following consequences apply:
a. prohibited from being appointed as a Key Party; b. dismissed as Board of Directors members, Board of Commissioners members, DPS members, BPA members, TA, or TKA; or
c. for PSP:

1. prohibited from taking actions as a PSP;
2. required to transfer their shares to other parties so that they no longer meet the criteria as PSP within a maximum period of 2 (two) years calculated from the date of determination of the competency and fit and proper assessment results.

VII. CLOSING

This OJK Circular shall take effect on the date of determination.

To ensure that everyone is aware, it is ordered that this Circular of the Financial Services Authority is announced by placing it in the State Gazette of the Republic of Indonesia.

Determined in Jakarta on 14 March 2014

EXECUTIVE HEAD OF NON-BANK FINANCIAL INDUSTRY SUPERVISOR FINANCIAL SERVICES AUTHORITY, Signed, FIRDAUS DJAELANI

STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 77 DATED 26 SEPTEMBER 2014

Copy consistent with the original
Head of Legal Assistance Division
Legal Directorate,
Signed,
Mufli Asmawidjaja