Common Terms Agreement Template for Indonesia

A Common Terms Agreement is the master document that governs complex financing arrangements in Indonesia, establishing the legal framework for syndicated loans, project finance, and multi-party lending transactions. You'll encounter this agreement when dealing with large-scale financing that involves multiple lenders, various security arrangements, and numerous interconnected finance documents that require consistent terms and conditions.

When do you need this document?

You need a Common Terms Agreement when structuring syndicated loans where multiple banks participate as lenders, requiring unified terms across all facility agreements. This document becomes essential in project finance transactions involving infrastructure developments, mining operations, or manufacturing facilities where multiple funding sources and complex security arrangements are involved. You'll also require this agreement in corporate refinancing situations where existing debt is being restructured across multiple facilities, or when establishing intercreditor arrangements between senior and subordinated lenders. The agreement is particularly crucial in cross-border financing where Indonesian entities are borrowing from both domestic and foreign lenders, ensuring all parties operate under consistent legal terms.

Key legal considerations

The agreement must clearly define the roles and responsibilities of each party, including the facility agent who coordinates between borrowers and lenders, and the security agent who holds security interests on behalf of all lenders. You need to carefully structure the conditions precedent that must be satisfied before funds are released, ensuring they comply with Indonesian banking regulations and foreign investment requirements. The document should include comprehensive representations and warranties covering the borrower's legal status, financial condition, and compliance with Indonesian laws. Events of default must be precisely defined, with clear procedures for enforcement and acceleration of obligations. You must also address voting mechanisms among lenders for amendments, waivers, and enforcement actions, ensuring minority lender rights are protected while enabling efficient decision-making.

Legal requirements in Indonesia

Under Indonesian law, your Common Terms Agreement must comply with the Civil Code requirements for contract formation, validity, and enforceability, ensuring all essential elements including parties, object, cause, and consideration are properly addressed. Law No. 24 of 2009 mandates that agreements involving Indonesian parties must be drafted in Bahasa Indonesia, with foreign language versions serving only as translations. You must ensure compliance with Law No. 25 of 2007 on Investment if foreign lenders are involved, particularly regarding permitted ownership structures and sectoral restrictions. The agreement should incorporate provisions from Law No. 37 of 2004 on Bankruptcy for default and enforcement procedures, and reference Law No. 30 of 1999 for dispute resolution mechanisms. Banking regulations from Bank Indonesia may also apply depending on the nature of the facilities and parties involved, requiring careful consideration of capital adequacy, lending limits, and reporting requirements.