Indonesia does not have any specific regulations for insurers investing in start-ups (insurers can invest in unlisted securities); however, in general, the OJK expects and insurer investing in a start-up to provide a business justification for why it is inventing in a start-up, given the investment is funded from the insurer's investment accoung, which is sourced from premiums paid by the insurer's policyholders. There are no limitations or criteria on the type of start-ups that an insurer can invest in. The usual limitations on investments apply though (including meeting prudential requirements, amounts invested with any one party, none of which would likely be a concern for start-ups). If the insurer believes that the establishment of a subsidiary, or its shareholding in any company, could or would have a significant impact on the insurer's business (perhaps unlikely with a start-up), the insurer must submit a report to the Indonesian Financial Services Authority (OJK). If the start-up falls within the insurance criteria, then it must be licensed accordingly.

Subject to the investment limitations and the business justification test set out above:

1. An insurer can invest in a start-up through equity or equity securities.
2. An insurer cannot invest by granting of loans (e.g., convertible instruments) given an insurer is prohibited from granting a loan if it is not secured by a land mortgage (which a start-up typically does not have).

The above options are calculated toward the insurer's investment and risk-based capital calculation and funded by the company's investment account, which is sourced from premiums paid by the insurer's policyholders.

Alternatively, an insurer could grant a loan that is funded from the company's own fund (being the company's own profits, not being funded by the company's investment account and not being counted toward the company's risk-based capital calculation). This will subject to the business justification test as well. An internal assessment needs to be done as shareholders may prefer to extract such fund as dividends.

Subject to meeting risk-based capital requirements, an insurer cannot invest more than 10% of its total investments with affiliated entities and not more than 20% of its total investments in an unaffiliated group. Foreign investment restrictions may also apply as to what percentage a foreign-owned insurer can hold in a start-up (depending on the activities of that start-up). The business justification test set out above applies as well.

Subject to meeting risk-based capital requirements, an insurer cannot invest more than 20% of its total investments offshore. The business justification test set out above applies as well.

Subject to the investment limitations and the business justification test set out above:

1. An insurer can invest in a start-up through equity or equity securities.
2. An insurer cannot invest by granting of loan (e.g., convertible instruments) given an insurer is prohibited from granting a loan if it is not secure by a land mortgage (which a start-up typically does not have).

The above options are calculated toward the insurer's investment and risk-based capital calculation and funded by the company's investment account, which is sourced from premiums paid by the insurer's policyholders.

Alternatively, an insurer could grant a loan to the start-up that is funded from the company's own fund (being the company's own profits, not being funded by the company's investment account and not being counted toward the company's risk-based capital calculation). This will be subject to the business justification test as well. An internal assessment needs to be done as shareholders may prefer to extract such fund as dividends.

Regulations do not stipulate what corporate approvals are required for investments. Any corporate approval requirements for the board of directors to conduct certain matters, including to invest, will be stipulated under the insurer's articles of association. The insurer's investment committee would need to approve the investment.

The protection includes the right to do the following:

• Ask for a shareholders' meeting.
• Lodge a claim if there are allegations of negligence or mistakes.
• Request an examination of the company by the district court if there are suspicions that the company or members of the boards of directors and/or commissioners have committed acts contrary to law that caused losses to the company or the shareholders or a third party.
• Submit to the GMS a request for the dissolution of the company.

Otherwise, specific voting requirements are 66 2/3% to change the articles of association and 75% for matters such as winding up, bankruptcy, merger, consolidation or acquisitions, or securing or selling more than 50% of the company's net assets.

For expatriates, a work permit is required for a specific job in a specific company. For board members, there are limitations on the number of board positions that can be held (generally speaking, a director can only be a commissioner of an insurance company in another insurance business line or a commissioner in a subsidiary and a commissioner as a commissioner in one other company). Other employees are not so restricted.

1. There are no restrictions or regulatory approvals to enter into a service contract with the affiliated company. For private companies, there are no connected transaction requirements (although do note that directors/commissioners should declare any conflict of interest).
2. The insurer would need to get internal investment committee approval.

Note that all contracts entered by the insurer will be subject to OJK audit, so enquiries may be raised by the OJK on the basis of the business justification test set out above.

From an insurance regulatory perspective, there are no disclosure requirements for related-party transactions assuming the insurer is not a listed company.

As a general rule, an insurer must be a single-purpose entity and is prohibited from performing non-insurance related activities.What this means is that there could be enquiries from the OJK on whether the insurer has overstepped its permitted activities by providing support to the start-up company. Indonesia also has very strict rules on outsourcing (whether of work or sourcing of labor) and what is considered core and non-core activities is defined by industry associations, and if permitted, then agreements need to be registered with the Ministry of Manpower (the default being that employees could claim to be employees of the start-up company). Even then, regulators will require certain matters to be handled by the start-up depending on its activities.

Please see our explanation in question 11 above. If permitted, all arrangements should be at an arm’s-length basis. Profit sharing of itself would not necessarily be restricted. Any revenues received by the insurer will also be subject to the business justification test. The insurer is also prohibited from receiving non-premium revenues that count to 25% or more of the insurer's annual gross written premiums.

Intellectual property rights are generally transferred through an assignment agreement. The start-up must also ensure that its employees assign the rights to the start-up (unlike other countries, employees retain rights to matters developed even during their employment unless otherwise agreed). If an intellectual property in question is a registered intellectual property, such as trademarks or patents, an assignment agreement must also be recorded with the competent registrar. Start-ups would be able to license intellectual property rights, although usually, royalties are payable.

From an insurance regulatory perspective in general, the business justification test will apply as well - as to why an insurer holds intellectual property rights of a non-insurance related technology. This can be addressed by stating that the acquired intellectual property rights supports the insurer's insurance business (e.g., enhancing the insurer's digital distribution capabilities).

Any use (very broadly defined, and includes collection, storage, transfer and disclosure) of personal data is subject to the data owner's prior written consent. Data privacy is an evolving area in Indonesia and specific advice should be sought.