“OJK requires Fintech Company must have a certain kind of Agreement to support its types of business. Not only about the kind of Agreement related to the business, but OJK also regulates compulsory clause to be included in the Agreement.”
Nowadays, the number of the financial technology company, or also commonly known as Fintech Company, is undoubtedly high. There are lots of Fintech Companies offering various types of financial technology services. In Indonesia, some are already regulated while some others are not. While the unregulated ones are still required to be reviewed by Indonesian Financial Service Authority (OJK) under POJK No. 13 /POJK.02/2018 on Financial Digital Innovation, the regulated ones on the other hand already have quite a strict and specified regulation. P2P Lending and Financing Company in specific have been regulated by OJK with specific separated regulations. The regulation does not only cover the general area but even the details of the business, including the agreements required by the specific business and what clauses should be included in it.
Fintech Company - Compulsory Agreements
P2P Lending and Finance Company businesses deal with lots of agreements, whether it is for the establishment or for the operational of the business itself. Some of these agreements are strictly regulated by OJK while some others are merely mentioned and is not compulsory to have, as can be seen in the table below:
Fintech Company - Compulsory Clauses
For some agreements, OJK strictly specify the content which is required as the minimum basis of the agreement. The agreements which have specified content and clauses are as follows:
1. P2P Lending Agreement
P2P Lending agreement, both the agreement between P2P service operator and Lender, and the agreement between lender and borrowers must include the following clauses:
a. Agreement number and date;
b. Identities of the Parties;
c. Rights and obligations of the Parties;
d. Amount of loan;
e. Interest rate;
f. Period of agreement;
g. Other relevant fees;
h. Provisions on Fines (if any);
i. Details on collateral (if any);
j. Dispute settlement;
k. Commission rate (specifically for agreement between P2P service operator and Lender); and
l. Instalments (specifically for agreement between Lender and Borrower).
Additionally, OJK allows the usage of standard agreement for P2P Lending agreement, but, the following clauses are prohibited to be included in such agreement:
a. Transfer of responsibility from the Operator to the user (either lender or borrower); and
b. Stating that user will comply with any new regulation/provision that was one-sidedly created by the operator.
2. Financing Agreement
There are various financing schemes, such as financial lease, financing through convertible bonds, etc. However, the following clauses generally apply to and must be included in all of financing agreement, regardless the scheme:
a. Types of business and financing scheme;
b. Number and date of agreement;
c. Identities of the Parties;
d. Identity of any 3rd Parties in cooperation (if any);
e. Details on the financed goods or services, including the purpose of the purchase of the goods/usage of the services;
f. Purpose of the financing;
g. Amount of the financed goods or services;
h. Amount of account receivables and instalments;
i. Period of agreement;
j. Interest rate;
k. Details on collateral;
l. Other relevant financing fees (if any), such as:
o Survey fees;
o Insurance fees;
o Provision fees;
o Notarial fees;
m. Details on fiduciary, mortgage, or hypothec rights (if any);
n. Dispute resolution, including the mechanism for dispute resolution and the choice of place for dispute resolution (if there were ever any);
o. Provisions on warning procedures and execution of collateral in the event of default;
p. Provisions on mechanism for settlement of loan and return of excess amount from execution of collateral or insurance claim;
q. Illustration on the distribution of principle financing receivables, interest, and outstanding principle financing;
r. Rights and obligations of the Parties;
s. Provisions on fines (if any);
t. In the event the financing scheme is a financial lease, the agreement must include clause to prohibit the leased object to be sub-leased to another party.
Author: Benedictus Giovanni
Gaffar & Co., Indonesian Boutique Law Firm which specializing and focus on commercial law areas e.g. Capital Market & Financial Services.
For further queries and information, contact us:
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