Fit and Proper Test Reassesment

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Fit and Proper Test Reassesment
The Financial Services Authority (OJK) issued a regulation Number 34 / POJK.03 / 2018 Concerning Reassessment for Main Parties of Financial Services Institutions ("POJK 34/2018") which regulates the provisions for conducting a Reassessment of the Capability and Compliance of Main Parties in Financial Services Institutions (LJK) including the scope, procedures, results and consequences of the reassessment. This regulation comes into force on January 28^th 2019.
 
Matters that are regulated in POJK 34/2018:
 
Main Party to be Reassessed
 
The main parties referred and subject to POJK 34/2018 for re-evaluation are Controlling Shareholders, Directors, Board of Commissioners, Executive Officers, Members of the Sharia Supervisory Board, Internal Auditors, Pension Fund Managers and Actuaries from Banks, Securities Companies, Investment Advisors, Insurance Companies, Pension Funds, Financing Companies, Guarantee Institutions, PMVs and Pawnshop companies.
 
Scope of Reassessment
 
OJK has the authority to reassess the fulfillment of the integrity, feasibility or financial reputation criteria, and/ or competence of a Main Party that has previously passed the Fit and Proper Test from OJK, including if the Main Party:
 
1. Proven to have committed a criminal act that has been decided by the court;
2. Causing LJK to experience difficulties that endanger the business continuity of the LJK and/ or the Financial Services Industry;
3. Fail to carry out OJK orders;
4. Holds bad credit and/ or financing proven to be declared bankrupt and/ or found guilty of causing a company to be declared bankrupt or having its business license revoked;
5. Refuse to make commitments and/ or fail to fulfill the commitments agreed upon with the Financial Services Authority and / or the government;
6. Conceal and/ or obscure the violation of a provision or financial condition and/ or actual transaction; and
7. Violate Islamic principles in the Islamic financial services sector.  
 
 
Reassessment Procedure
 
OJK can re-evaluate based on any evidence, data or information collected by OJK itself or provided by other sources. The OJK will then arrange face-to-face meetings with the Main Parties concerned to seek clarification regarding the evidence, data or information it has collected. After the series of procedures, the OJK then determines the final result of the revaluation in writing to the Main Party with the predicate pass or fail.
 
OJK can waive the entire procedure above if the Main Party is proven to have committed a criminal act, declared bankrupt or found guilty of causing a company to be declared bankrupt or having its business license revoked.
 
Consequences of Final Reassessment Results
 
If the final result of the reassessment of the Main Party is determined not to pass, the consequences that can be given by OJK include the Main Party concerned is prohibited from holding a position (Controlling Shareholder, Board of Directors or Board of Commissioners), loses the right to vote in the General Meeting of Shareholders, is prohibited from owning shares and must release shares (if any) in LJK or the Financial Services Industry where the Main Party is revalued for a period of consequences ranging from 3 to 20 years.
 
Request for Review
 
The Main Party determined not to have passed can submit an application for Review to OJK before the period of consequences has passed by submitting supporting evidence, data and information as the reason for submitting the application. OJK has the authority to follow up or not upon the request for review. In the event that the request is followed up, OJK will implement the same reassessment mechanism based on POJK 34/2018.