Disclosure Letter Template for Indonesia

A Disclosure Letter lets a seller reveal important details and potential issues about their business during a merger, acquisition, or major transaction in Indonesia. It works alongside the main agreement to protect sellers from future claims by documenting exceptions to their warranties and representations.

Under Indonesian commercial law, these letters play a crucial role in due diligence by highlighting everything from ongoing legal disputes to licensing issues. They help buyers make informed decisions while giving sellers a way to be upfront about known problems, creating a clear record that can prevent disputes later. Many Indonesian companies now include these letters as standard practice in major business deals.

Use a Disclosure Letter when selling your business or negotiating major investments in Indonesia. This document becomes essential during due diligence, especially when buyers request detailed information about your company's operations, assets, and potential risks.

The timing matters most during mergers and acquisitions, joint ventures, or significant share transfers. Indonesian regulations require transparent disclosure of material facts, so prepare this letter before finalizing any purchase agreement. It's particularly important when dealing with complex assets, multiple subsidiaries, or when your business operates in heavily regulated sectors like mining, banking, or telecommunications.

• General Disclosure Letters outline basic company information and standard warranties
• Transactional Disclosure Letters focus on specific deals or investments, detailing unique risks and exceptions
• Industry-Specific Letters adapt to Indonesian regulatory requirements for sectors like mining, banking, or real estate
• Supplemental Disclosure Letters update previous disclosures with new information during extended negotiations
• Consolidated Disclosure Letters combine multiple disclosure schedules into one comprehensive document, common in complex corporate restructuring

• Selling Companies: Draft and submit the Disclosure Letter to reveal material facts and potential risks about their business
• Corporate Lawyers: Prepare and review the document to ensure compliance with Indonesian law and protect client interests
• Acquiring Companies: Review disclosures to make informed investment decisions and understand potential liabilities
• Investment Banks: Coordinate the disclosure process during mergers and acquisitions
• Company Directors: Sign off on disclosures and take responsibility for their accuracy under Indonesian corporate law

• Business Records: Gather all company documents, licenses, contracts, and financial statements from the past three years
• Legal Review: Check pending litigation, regulatory compliance issues, and past disclosure violations
• Asset Inventory: List all properties, intellectual property, equipment, and material contracts
• Warranty Review: Match each warranty in the main agreement with relevant exceptions or qualifications
• Verification: Confirm accuracy of all statements with department heads and technical experts
• Document Structure: Organize disclosures by category, following Indonesian legal standards for clarity and completeness

• Introduction: Identify all parties, transaction details, and reference the main agreement
• General Statements: Declare the purpose and scope of disclosures under Indonesian law
• Warranty References: Link each disclosure to specific warranties in the main agreement
• Material Facts: Detail exceptions, qualifications, and limitations to warranties
• Supporting Documents: List and attach all referenced documents and evidence
• Signature Block: Include authorized signatures, corporate seals, and witnessing requirements
• Governing Law: Specify Indonesian jurisdiction and applicable regulations

A Disclosure Letter differs significantly from a Disclosure Statement in both scope and application within Indonesian business law. While both documents involve revealing information, their purposes and legal implications vary considerably.

• Purpose and Timing: Disclosure Letters specifically accompany sale agreements or investments, detailing exceptions to warranties. Disclosure Statements serve broader purposes, often used for regulatory compliance or public filing requirements
• Legal Protection: Disclosure Letters provide direct protection against warranty breach claims in specific transactions. Disclosure Statements fulfill general statutory obligations without transaction-specific protections
• Content Structure: Disclosure Letters organize information by referencing specific warranties in the main agreement. Disclosure Statements follow standardized formats based on regulatory requirements
• Binding Effect: Disclosure Letters form part of the transaction documents and bind specific parties. Disclosure Statements typically inform stakeholders without creating direct contractual obligations