Twitter Logo Youtube Circle Icon LinkedIn Icon

Indonesia > Legal Developments > Law firm and leading lawyer rankings


New Regulations on Business Activities of Multi Finance Companies

March 2015 - Finance. Legal Developments by Budidjaja & Associates .

More articles by this firm.

by Saudaranta Tarigan, Senior Associate, and Narada Kumara, Junior Associate


On 19 November 2014, the Indonesia Financial Services Authority (Otoritas Jasa Keuangan or “OJK”) issued 3 regulations on multi finance companies (non-banking financial industry):

  1. OJK Regulation No. 28/POJK.05/2014 of 2014 on Business Licenses of Multi Finance Companies (“OJKR 28/2014”);
  2. OJK Regulation No. 29/POJK.05/2014 of 2014 on Conduct of Business of Multi Finance Companies (“OJKR 29/2014”); and
  3. OJK Regulation No. 30/POJK.05/2014 of 2014 on Good Corporate Governance for Multi Finance Companies (“OJKR 30/2014”).

Prior to these OJK regulations, multi finance companies were governed under Minister of Finance Regulation No. 84/PMK.012/2006 on Multi Finance Companies (“MFR 84/2006”) and other related Minister of Finance regulations. With the issuance of these OJK regulations, the authority to govern and regulate multi finance companies was transferred from the Ministry of Finance to OJK. 

Below are some of the key provisions of these OJK regulations.

Business License

Under MFR 84/2006, the Minister of Finance was authorized to grant business licenses for multi finance companies.

OJK now has the authority to grant business licenses. Article 3 of OJKR 28/2014 states that the Board of Directors of multi finance companies must submit an application for a business license to OJK. Business licenses of multi finance companies that were granted before the issuance of OJKR 28/2014 shall remain in effect.


A multi finance company must be established in the form of a cooperative or a limited liability company (PT), in which the shareholding can be owned by (a) Indonesian citizens; (b) Indonesian business entities; (c) Indonesian legal entities; (d) foreign entities or foreign institutions; (e) the Indonesian state government; and/or (f) the regional government.

Conduct of Business of Multi Finance Companies


According to OJKR 29/2014, business activities that are permitted for multi finance companies include: (a) investment financing; (b) working capital financing; (c) multipurpose financing; and/or (d) other multi finance business activities subject to OJK approval. Investment financing, working capital financing and multipurpose financing must be conducted through various ways, such as finance lease, sale and leaseback, installment buying, factoring, project finance and other finances upon prior approval from OJK. In addition to the abovementioned business activities, multi finance companies may also carry out operating lease and/or fee-based activities, as long as they are not in conflict with the laws and regulations of the financial service sector.


It is important to consider that multi finance companies are prohibited from engaging in banking activities, providing guarantees in any form for obligation of fulfillment to other parties; and issuing promissory notes except as a loan guarantee.     

Foreign Ownership

OJKR 28/2014 makes no change to the maximum percentage of foreign ownership in multi finance companies – they remain at a maximum of 85% of the paid-up capital, as stipulated previously under MFR 84/2006. 

Article 11 of OJKR 28/2014 states that a publicly listed multi finance company can only trade its shares on the stock exchange with an equivalent of no more than 85% of its paid-up capital. The remainder of its shares must remain unlisted and can only be owned by an Indonesian citizen/company, and/or the government.

Merger, Acquisition and Consolidation

MFR 84/2006 required any merger, acquisition and consolidation of a multi finance company to be reported to the Minister of Finance within 15 days of the effective date.

Article 56 and 57 of OJKR 28/2014 now requires a multi finance company that is set to merge or consolidate with, or acquire another multi finance company, to submit its plan of merger, acquisition or consolidation to OJK, as a prerequisite to obtaining approval from OJK. Additionally, the company surviving the merger, the consolidated company, or the acquired company, must report the consummation of the merger, consolidation, or acquisition to OJK within 10 days of the effective date.

Syariah Business Unit

A multi finance company conducting Syariah-based finance must establish its own Syariah Business Unit (Unit Usaha Syariah or “UUS”). A UUS must conduct its own bookkeeping separately from its parent company. A UUS must obtain its own UUS License from OJK, and must have a minimum working capital of Rp25,000,000,000.

Article 37 of OJKR 28/2014 requires a UUS to spin-off from its parent company and establish its own legal entity if:


  1. The UUS’ asset value has reached 50% of its parent company’s total asset value; or
  2. The UUS has been established for 5 years from the issuance date of OJKR 28/2014 (19 November 2014).

Maximum Financing Limit (Batas Maksimum Pemberian Pembiayaan or “BMPP”)

Pursuant to Article 39 and 40 of OJKR 29/2014, the maximum financing limits (Batas Maksimum Pemberian Pembiayaan or “BMPP”) of a multi finance company will depend on the background of the debtor:


  1. If the debtor is an affiliated party of the multi finance company, the BMPP is 50% of the multi finance company’s equity.
  2. If the debtor is a non-affiliated party, the BMPP is 20% of the multi finance company’s equity.
  3. If financing a group of debtors, the BMPP is 50% of the multi finance company’s equity.

However, these BMPP provisions shall not apply to financing for procurement that is needed by the government.

Capital Contribution

Under MFR 84/2006, a multi finance company could contribute up to 25% of the company’s equity to a company. MFR 84/2006 also stated that the total amount of capital that a multi finance company can contribute must not exceed 40% of its equity.

Article 49 of OJKR 29/2014 states that the total capital that a multi finance company can contribute to a company must not exceed 20% of the multi finance company’s equity. However, OJKR 29/2014 does not indicate a limit on a multi finance company’s maximum capital contribution to each company.

Management of a Multi Finance Company

OJKR 30/2014 provides the following requirements for the management of a multi finance company:


  1. Board of Directors 
    The Board of Directors of a multi finance company with an asset value of more than Rp200,000,000 must have at least 3 Directors. The Board of Directors of a 100% local multi finance company must all be Indonesian;
  1. Board of Commissioners 
    The Board of Commissioners of a multi finance company with an asset value of more than Rp200,000,000 must have at least 2 Commissioners;
  1. Independent Commissioner
    A multi finance company with an asset value of more than Rp200,000,000 must have at least 1 independent commissioner. 

These new regulations elaborate more detailed requirements and offer more comprehensive provisions for multi finance companies, compared to the previous ones. It is hoped that the implementation of these OJK regulations will bring additional benefits for the growth and expansion of Indonesia’s multi finance industry.



GC Powerlist -
Southeast Asia Teams