The Debt To Equity Conversion Agreement is a crucial instrument in Indonesian corporate restructuring and debt reorganization scenarios. It is typically employed when a company seeks to improve its balance sheet structure by converting existing debt obligations into equity shares, thereby reducing its debt burden and strengthening its capital structure. This document is particularly relevant in the context of Indonesian corporate law and financial regulations, requiring careful consideration of various regulatory requirements including OJK regulations, Company Law (Law No. 40 of 2007), and foreign investment restrictions if applicable. The agreement needs to address specific Indonesian legal requirements for share issuance, corporate approvals, and regulatory filings, while also considering tax implications and foreign exchange regulations where relevant. It's commonly used in financial distress situations, strategic corporate restructuring, or as part of larger reorganization plans.
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1. Parties: Identification of the creditor(s) and debtor company, including registration details as required under Indonesian law
2. Background: Recitals explaining the existing debt arrangement and the parties' intention to convert the debt to equity
3. Definitions: Key terms used throughout the agreement, including specific Indonesian legal and regulatory terms
4. Acknowledgment of Debt: Confirmation of the existing debt amount and its validity
5. Conversion Terms: Core terms of the conversion including conversion ratio, share price, and number of shares to be issued
6. Conditions Precedent: Prerequisites for the conversion, including corporate and regulatory approvals required under Indonesian law
7. Conversion Mechanics: Detailed process of how the conversion will be implemented, including timing and documentation requirements
8. Representations and Warranties: Standard and specific warranties from both parties, including corporate authority and compliance with Indonesian regulations
9. Completion Requirements: Actions required to complete the conversion, including registration with relevant Indonesian authorities
10. Post-Conversion Rights: Rights of the creditor as new shareholder and any specific arrangements post-conversion
11. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction provisions
12. Notices: Communication procedures between parties
13. General Provisions: Standard boilerplate clauses adapted to Indonesian law requirements
1. Security Arrangements: Required if any existing security needs to be released or new security created as part of the conversion
2. Foreign Investment Provisions: Required if the creditor is a foreign entity, addressing Indonesian foreign investment regulations
3. Tax Provisions: Detailed tax treatment section required if specific tax arrangements are agreed between parties
4. Shareholder Rights: Required if special rights are being granted to the creditor as new shareholder
5. Currency Provisions: Required if the debt is in foreign currency, addressing exchange rate mechanisms
6. Step-In Rights: Optional provisions for creditor intervention rights in specific circumstances
7. Anti-Dilution Protection: Optional provisions protecting the creditor's equity position post-conversion
1. Debt Details Schedule: Detailed breakdown of the debt being converted, including principal, interest, and other amounts
2. Conversion Calculations: Detailed calculations showing conversion ratio, share price, and number of shares
3. Form of Shareholders Resolution: Template of required corporate approvals under Indonesian law
4. Form of Board Resolution: Template of required board approvals
5. Form of Completion Certificate: Template certificate confirming completion of conversion requirements
6. Required Regulatory Filings: List and templates of required filings with OJK, Ministry of Law and Human Rights, and other authorities
7. New Constitutional Documents: Updated company constitution reflecting new shareholding structure
8. Existing Security Documents: Copies of security documents to be released or modified
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