DECREE OF MINISTER OF FINANCE
No. 486/KMK.017/1996

ON
SECURITY COMPANY

THE MINISTER OF FINANCE,

Considering:

• a. that to increase funding capacity and ensure smooth business activities, the business World needs the widest possible access to funding sources;
• b. that towards that end, security companies are needed to assist companies in obtaining funds from various funding sources;
• c. that to give effect to the above matters, provisions on security companies need to be laid down in a decree of the Minister of Finance.

In view of:

The Civil Code (Statute Book of 1847 No.23);
Presidential Decree No.96/M/1993 as already amended by Presidential Decree No.388/M/1993

DECIDES:

To stipulate :

THE DECREE OF THE MINISTER OF FINANCE CONCERNING A SECURITY COMPANY

CHAPTER I
GENERAL PROVISIONS

Article 1

Referred to in this decree as :

• a. Minister shall be the Minister of Finance;
• b. Guarantee shall be a party receiving security from a security company;
• c. Security recipient shall be a party entitled to payment from a security company in the case of the guarantee failing to fulfil its contract obligation;
• d. Security company shall be a statutory body engaged in the financial sector with security business as its main business activities; .
• e. Security certificate shall be a certificate of security approval from a security company to a guarantee.

CHAPTER II
BUSINESS FIELDS

Article 2

The security company shall carry on activities in the form of security services to guarantee the fulfilment of the gurantee's financial obligation, if the guarantee fails to meet its contract obligation to the security recipient as a result of :

• a. credits, namely the provision of money based on a credit agreement between a bank or another statutory body and debtor requiring the debtor to settle its debts after a certain period of time with interest, recompense or profit;
• b. lease financing, factoring financing, consumer financing, profit-sharing financing;
• c. purchase of goods by instalments.

Article 3

(1) The security services from the security company to the guarantee in regard to the transactions as meant in Article 2 shall be provided in the form of a security certificate.

(2) The security certificate as meant in paragraph (1) shall at least contain:

• a. Name and address of the security company, security recipient, and guarantee;
• b. Terms of granting credits or other transactions guaranteed;
• c. Security provisions and requirements covering:
• 1) the right and obligation of the security company, security recipient, and guarantee;
• 2) the amount, time period, and security compensation;
• 3) the procedures for filing claim to security compensation and for calculating the amount of security compensation; and
• 4) Expiry date.

(3) Any application for the security certificate as meant in paragraph (1) shall be filed to the security company directly or through the security recipient.

CHAPTER III
PROCEDURES FOR ESTABLISHING AND LICENCING A SECURITY COMPANY

Article 4

(1) The security company shall take the form of a limited liability company or cooperative.

(2) The security company shall clearly state security business as meant in Article 2 in its articles of association.

Article 5

The amount of paid-up capital or principal deposits or compulsory deposits of a security company shall be at least Rp 10,000,000,000 (ten billion rupiahs).

Article 6

(1) The security company shall hold a business licence from the Minister.

(2) The business licence shall be granted to the security company in 2 (two) stages:

• a. principle approval, namely approval to make preparations for the establishment of the security company;
• b. business licence, namely a licence granted to carry on business after the preparations as meant in letter a are already complated.

(3) Any application for a principle licence and business licence as meant in paragraph (2) shall be filed to the Minister with a copy addressed to the Director General of Financial Institutes

(4) The application as meant in paragraph (3) shall be addressed to the Directorate of Banking and Financing Services, BuiIding A, 7th floor, JI. Dr. Wahidin No. 1, Central Jakarta.

Article 7

The owner of the planned security company shall file the application for the principle licence as meant in Article 6 paragraph (3), complete with:

• a. the planned articles of association /the planned articles of corporation of the security company containing at least:
• 1) name and domicile;
• 2) business line;
• 3) capital;
• 4) ownership;
• 5) authority, responsibility and tenure of members of the board of executive directors and the board of directors;
• b. lists of prospective members of the board of executive directors and the board of directors as well as prospective shareholders, complete with.
• 1) identity cards in the form of photocopies of identity card or passport;
• 2) curriculum vitae of prospective members of the board of executive directors and the board of directors;
• c. plananed organisational structure;
• d. evidence of payment of capital amounting to at least 30% (thirty percent) of the minimum paid-up capital, in the form of a photocopy of deposit form under the name of the owner of the planned security company at the commercial bank in Indonesia validated by the relevant bank.

Article 8

The principle licence as meant in Article 6 paragraph (2) letter a shall be effective for a maximum period of 1 (one) year starting from the date of its issuance.

Article 9

(1) The board of executive directors shall file the application for the business licence as meant in Article 6 paragraph (3), complete with at least:

• a. articles of association/articles of corporation already validated by the relevant agency;
• b. lists of members of the board of executive directors and the board of directors, complete with photocopies of identity card/passport and curriculum vitae;
• c. organisational structure, including personnel;
• d. evidence of the settlement of paid-up capital, in the form of a photocopy of deposit form under the name of the security company at the commercial bank in Indonesia validated by the relevant bank;
• e. evidence of other operational preparations in the form of:
• 1) evidence of ownership, control, or contract for leasing office buildings;
• 2) balance sheet
• 3) specimen security certificate;
• 4) taxpayer code number of the security company.

(2) The business licence shall be effective as from the date of issuance and remain effective as long as the security compay still runs its business and does not violate the law in force.

Article 10

(1) The security company can open its branches throughout Indonesia.

(2) To open the branches as meant in paragraph (1) the security company shall obtain prior approval from the Director General of Financial Institutes.

(3) The Director General of Financial Institutes shall stipulate procedures and requirements for applying for approval to open branches as meant in paragraph (1).

CHAPTER IV
REPORTING

Article 11

(1) Any security company shall submit to the Minister:

• a. a mid-yearly operational report and financial statement no later than 1 (one) month after the end of the relevant semester,
• b. a yearly financial statement already audited by a public accountant no later than 3 (three) months after the end of the relevant book year.

(2) The security company shall announce a condensed balance sheet and profit/loss statement for one year period in a daily no later than 3 (three) months after the end of the relevant book year.

(3) The Director General of Financial Institutes shall stipulate the model of reports as meant in paragraph (1) and the procedure for submitting the reports.

Article 12

The security company shall report any change in address of office, line-up of the board of executive directors and shareholders, and amendment to articles of association to the Minister no later than 14 (fourteen) days after the date of change.

Article 13

The reports as meant in Article 11 paragraph (1) and Article 12 shall be addressed to the Directorate of Banking and Financing Services, Building A, 7th floor, Jl. Dr. Wahidin No. 1, Central Jakarta.

CHAPTER V
SANCTIONS

Article 14

(1) The security company, which violates this decree in running its business, is late in submitting the reports as meant in Articles 11 and 12, or is not active in running its business within 12 (twelve) months after obtaining the business licence, may have its business licence revoked.

(2) The revocation of business licence as meant in paragraph (1) shall be done, after :

• a. the security company has 3 (three) times received written warnings with an interval of 2 (two) months; and
• b.the security company has its business activities frozen.

(3) During the period of time in which the business activities as meant in paragraph (2) letter b are frozen, the security company:

• a. is not allowed to carry on new security business;
• b. is held responsible for settling all obligations including security obligations as contained in the security certificate.

(4) The revocation of the business licence shall be done after the security company settles the obligations as meant in paragraph (3) letter b.

CHAPTER VI
TRANSITIONAL PROVISIONS

Article 15

The legal status of the security company as meant in this decree shall not apply to the public company in charge of developing cooperative's finance.

CHAPTER VII
CLOSING PROVISIONS

Article 16

This decree shall take effect as from the date of stipulation.

For public cognizance, this decree shall be announced by placing it in the State Gazette of the Republic of Indonesia.

Stipulated in Jakarta
On July 30, 1996

THE MINISTER OF FINANCE
sgd.
MAR'IE MUHAMMAD