Regulation of the Financial Services Authority Number 5 of 2026 Reorganizing Licensing Structures, Capital Standards, and Business Operations of Investment Managers

Introduction

On April 29, 2026, the Financial Services Authority (Otoritas Jasa Keuangan, “OJK”) issued and enacted Regulation of the Financial Services Authority Number 5 of 2026 on the Business Operations of Investment Managers (“POJK 5/2026”). POJK 5/2026 aims to enhance the efficiency and effectiveness of Investment Manager business activities in Indonesia.

POJK 5/2026 was established in line with the development of the investment management industry, which requires increased capacity and professionalism from Investment Managers. In the recitals, OJK states that the regulation of licensing and business operations needs to be adjusted to meet the needs of the capital market industry. POJK 5/2026 regulates the licensing, capital, and classification of Investment Manager business activities.

Comparison

POJK 5/2026 repeals previous provisions regulated under:

1. Decree of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number KEP-460/BL/2008 dated November 10, 2008 on Periodic Reporting Obligations for Securities Companies Number X.E.1, which serves as its annex;

2. Decree of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number KEP-479/BL/2009 dated December 31, 2009 on the Licensing of Securities Companies Conducting Business as Investment Managers Number V.A.3, which serves as its annex, as amended by Decree of the Chairman of the Capital Market and Financial Institution Supervisory Agency KEP-26/BL/2010 dated February 18, 2010 on the Amendment to the Decree of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number KEP-479/BL/2009 on the Licensing of Securities Companies Conducting Business as Investment Managers;

3. Decree of the Chairman of the Capital Market and Financial Institution Supervisory Agency Number KEP-283/BL/2012 dated May 24, 2012 on Monthly Activity Reports of Investment Managers Number X.N.1;

4. Article 21 of Regulation of the Financial Services Authority Number 10/POJK.04/2018 on the Implementation of Investment Manager Governance;

5. Article 2 paragraph (4) of Regulation of the Financial Services Authority Number 52/POJK.04/2020 on the Maintenance and Reporting of Adjusted Net Working Capital;

6. Article 41 paragraph (4) of Regulation of the Financial Services Authority Number 3/POJK.04/2021 on the Conduct of Activities in the Capital Market Sector; and

7. Article 66 of Regulation of the Financial Services Authority Number 17/POJK.04/2022 on the Code of Conduct for Investment Managers.

The following table provides a comparison between POJK 5/2026 and the previous provisions:

Key Provisions

Classification and Structure of Investment Manager Business Activities

Pursuant to Article 4, OJK establishes two categories of Investment Managers: Business Class Investment Manager (MIKU) 1 and MIKU 2. Based on Articles 5 and 6, each category has a different scope of business activities.

1. MIKU 1: manages securities portfolios for individual clients, money market mutual funds that only invest in certificates of deposit, limited participation mutual funds, asset-backed securities in the form of collective investment contracts, real estate investment funds (DIRE), and infrastructure investment funds (DINFRA).

2. MIKU 2: manages all types of investment products without restrictions.

Article 41 stipulates that a change in category can only be carried out based on written approval or an order from OJK.

Capitalization and Assets Under Management

Articles 12, 13, and 14 regulate the capital and AUM requirements for Investment Managers as follows:

1. MIKU 1: must have a minimum paid-up capital of IDR 25,000,000,000.00 and maintain a minimum MKBD of IDR 5,000,000,000.00 plus 0.1% of assets under management.

2. MIKU 2: must have a minimum paid-up capital of IDR 50,000,000,000.00 and maintain a minimum MKBD of IDR 10,000,000,000.00 plus 0.1% of assets under management.

Investment Managers must reach the minimum AUM threshold of IDR 500,000,000,000.00 for MIKU 1 and IDR 1,000,000,000,000.00 for MIKU 2 within 3 years from the date the license was issued.

Governance and Human Resources

The management requirements for Investment Managers are regulated in Articles 23 to 30 as follows:

1. MIKU 1: must have at least 2 Directors and 2 members of the Board of Commissioners.

2. MIKU 2: must have at least 3 members of the Board of Directors, including 1 Independent Compliance Director.

Pursuant to Article 26, MIKU 2 is also required to have Independent Commissioners comprising at least 30% of the total members of the Board of Commissioners if the Board of Commissioners consists of more than 2 members.

Ownership and Control

POJK 5/2026 regulates the source of capital funds and ownership of Investment Managers, whereby the payment for share capital cannot originate from loans, debt, or any form of financing facility as stipulated in Article 47. Furthermore, any party may only own shares in or control one Investment Manager in accordance with the single presence policy, except for ownership by the Government as regulated in Article 54.

Periodic Compliance and Reporting Transparency

Investment Managers must submit periodic reports through the OJK electronic system as regulated in Articles 72, 74, and 83. These reports include:

1. Annual Financial Statements audited by a registered public accountant (submitted no later than the end of the third month);

2. Semi-Annual Financial Statements;

3. Monthly MKBD Reports covering the recapitulation of MKBD positions on all working days in the previous month, submitted no later than the 12th day of the following month; and

4. Monthly Activity Reports, which must be submitted no later than the 12th day of the following month.

Human Resources Quality Development

Companies must conduct sustainable human resources quality development as regulated in Article 97. This obligation includes enhancing employee expertise through education and training, as well as providing a budget to support such activities.

Risk Mitigation, Administrative Sanctions, and License Revocation

OJK may revoke the business license of an Investment Manager if the company experiences conditions that jeopardize its business continuity as regulated in Article 88, which includes, among others, the company's failure to cover losses for 3 consecutive years pursuant to Article 91. In the event a business license is revoked, the company must apply for the dissolution of the legal entity and form a liquidation team no later than 180 days thereafter, as regulated in Article 95.

Standardization of Annexes

POJK 5/2026 establishes the use of standard document formats in the licensing and reporting process as set forth in the Annexes. These formats include, among others, business license application forms, monthly activity reports, risk management reports, as well as fit and proper test documents and declarations on the source of capital funds.

Adjustment Obligations for Investment Managers

Transitional provisions regulate the adjustment obligations for Investment Managers that held licenses prior to the entry into force of POJK 5/2026, as follows:

1. Companies must determine their choice of MIKU 1 or MIKU 2 category no later than 6 months from the date POJK 5/2026 took effect. If a choice is not submitted within that period, the company is automatically declared to have chosen MIKU 2 as regulated in Article 100 paragraph (2).

2. Companies are granted a maximum of 3 years to comply with the provisions on paid-up capital, MKBD, and AUM targets.

3. If these provisions are not met within the specified period, the company must return its business license pursuant to Article 104.

4. Corporate actions submitted prior to the enactment of POJK 5/2026 shall continue to be processed under the previous provisions as regulated in Article 113.
   

Closing

POJK 5/2026 regulates the business operations of Investment Managers by establishing MIKU 1 and MIKU 2 classifications that must be selected within 6 months after the regulation takes effect, with each category determining the scope of business activities where MIKU 1 is limited to specific products while MIKU 2 is authorized to manage all investment products. The regulation also sets differentiated capital and assets under management requirements, including obligations to fulfill paid-up capital, MKBD, and AUM targets within 3 years, and governs corporate governance through requirements on the composition of the Board of Directors and Board of Commissioners, including the mandatory appointment of a Compliance Director and Independent Commissioners for MIKU 2. In addition, the ownership and control provisions prohibit the use of loans or debt for share capital and restrict ownership to only one Investment Manager under the single presence policy, while also requiring periodic reporting through the OJK electronic system, the use of standardized document formats as set forth in the Annexes, and the implementation of human resources development programs. Transitional provisions require adjustments to classification, capital, and AUM within the specified timeframe, with the consequence of returning the business license if such obligations are not met, while corporate actions submitted prior to the enactment of POJK 5/2026 remain subject to previous provisions and OJK retains the authority to revoke business licenses under certain conditions, including failure to meet financial obligations.