Bapepam Regulation on Mutual Fund Management

Chairman of Capital Market and Financial Institution Supervisory Agency (Bapapem_LK) Decree No. KEP-262/BL/2011 on Management Guidelines of Protected Mutual Funds, Guaranteed Mutual Funds, and Indexed Mutual Funds (“Decree”) has been issued to Amend Regulation No.IV.C.4 (“Regulation”) which was enacted through the issuance of Bapepam-LK Decree No. KEP-429/BL/2007, dated 19 December 2007.

In essence the Decree serves to provide flexibility to investment managers to manage mutual funds.

Under Item 3 of the Regulation, the submission statement of protected mutual funds, guaranteed mutual funds, and indexed mutual funds should be reported to the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK), in accordance with Bapepam-LK Regulation No.IX.C.4 on Statement to enlist mutual funds in public offering in the form of a Limited Liability Company or Regulation No.IX.C.5 on Statement to enlist mutual funds in public offering in the form of a Collective Investment Contract.

Pursuant to Item 6 (a 1), an investment manager intending to issue a protected mutual funds, has to provide additional information, such as a protection mechanism that consists of the sum of protected investments and its protection period; investment percent; protection coverage and the requirements; and so forth.

Stipulated also in Item 6 (a 2), the investment manager should also explain the fund’s investment policy, including the percentage of the net asset value of the protected mutual funds; protected mutual fund securities portfolio; and so forth.

The Regulation sets obligations that need to be conducted by the investment manager in Item 6 (b) and (c). Furthermore, the Regulation also lists different obligations for different mutual funds, such as guaranteed mutual funds (elaborated on in Item 7); and indexed mutual funds (elaborated on in Item 8)

Moreover, Item 9 of the Regulation states that the Bapepam-LK can issue sanctions against violations of the rules in the Regulation.

The Regulation repeals and replaces Chairman of Capital Market and Financial Institution Supervisory Agency Decree No. KEP-429/BL/2007, dated 19 December 2007, regarding the Guidelines on Protected Mutual Funds, Guaranteed Mutual Funds, and Indexed Mutual Fund Management.

The Decree has been in force since 31 May 2011.