Company Loan Agreement Template for Indonesia
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What is a Company Loan Agreement?
The Company Loan Agreement is a crucial document used when a company seeks to obtain financing from a bank or financial institution in Indonesia. It serves as the primary contractual framework governing the lending relationship, outlining all essential aspects of the loan including amount, purpose, interest rates, repayment terms, security arrangements, and default provisions. The agreement must comply with Indonesian banking regulations, the Civil Code (KUHPerdata), and other relevant laws such as the Banking Law (Law No. 10 of 1998) and corporate regulations. It's particularly important for ensuring legal enforceability of the loan terms and protecting both lender and borrower interests within Indonesia's civil law jurisdiction. The document typically requires corporate approvals and may need to be executed in both English and Indonesian languages, especially for loans involving foreign lenders or exceeding certain thresholds.
About the Company Loan Agreement
When your company needs to secure financing in Indonesia, a Company Loan Agreement serves as the cornerstone document that legally binds your organization to a lender. This comprehensive contract establishes the terms and conditions under which banks or financial institutions provide funding to Indonesian companies, creating enforceable obligations for both parties under the country's civil law framework.
When do you need this document?
You'll require a Company Loan Agreement whenever your business seeks formal financing from banks, financial institutions, or other commercial lenders in Indonesia. This includes situations such as expanding operations, purchasing equipment, acquiring real estate, refinancing existing debt, or addressing working capital needs. The document becomes essential when dealing with significant loan amounts that require structured repayment terms, interest calculations, and security arrangements. Indonesian companies also need this agreement when entering syndicated loan facilities involving multiple lenders or when foreign banks participate in the financing arrangement.
Key legal considerations
Your Company Loan Agreement must address several critical legal elements to ensure enforceability under Indonesian law. The contract should clearly define the loan facility type, disbursement conditions, interest rate mechanisms, and repayment schedules. Security provisions are particularly important, as they may involve fiduciary security under Law No. 42 of 1999 for movable assets or land mortgage rights under Law No. 4 of 1996 for real estate. The agreement must specify events of default, acceleration clauses, and enforcement procedures that comply with Indonesian bankruptcy and insolvency laws. Cross-default provisions, financial covenants, and reporting requirements should align with local banking regulations and corporate governance standards.
Legal requirements in Indonesia
Indonesian law imposes specific requirements on Company Loan Agreements that you must carefully observe. Under Law No. 40 of 2007 on Limited Liability Companies, your board of directors must approve loan agreements, and shareholder approval may be required for loans exceeding certain thresholds or involving related parties. The agreement must comply with Bank Indonesia regulations regarding foreign exchange if the loan involves foreign currency. For secured loans, you'll need to follow proper security creation procedures under the Fiduciary Security Law or Land Mortgage Law, which may require notarial execution and registration with relevant authorities. The Banking Law (Law No. 10 of 1998) mandates specific disclosure requirements and prohibits certain lending practices. Additionally, if your loan involves foreign lenders or exceeds USD 100 million equivalent, you may need to prepare bilingual documentation and comply with additional reporting requirements to Bank Indonesia and other regulatory bodies.
GOVERNING LAW
Applicable law
This Company Loan Agreement is drafted to comply with Indonesia law. Key legislation includes:
Law No. 40 of 2007 on Limited Liability Companies: Regulates corporate matters including company's authority to borrow money, board approvals required for corporate actions, and corporate guarantees
Law No. 42 of 1999 on Fiduciary Security: Governs secured lending and creation of security interests over movable assets, which is crucial for collateralized corporate loans
Law No. 4 of 1996 on Land Mortgage: Regulates creation of security interests over land and buildings, relevant if the loan is secured by real estate
Law No. 7 of 1992 as amended by Law No. 10 of 1998 on Banking: Sets out the regulatory framework for lending activities and banking operations in Indonesia
Bank Indonesia Regulation No. 17/12/PBI/2015: Regulates loan to value ratios and certain requirements for lending activities by banks
Law No. 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations: Important for understanding creditor rights and remedies in case of default or insolvency
Law No. 24 of 1999 on Foreign Exchange Flow: Relevant for loans involving foreign currency or cross-border elements
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