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Director Profit Sharing Agreement

Director Profit Sharing Agreement Template for Indonesia

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Key Requirements PROMPT example:

Director Profit Sharing Agreement

"I need a Director Profit Sharing Agreement for our Indonesian technology startup, with a 5% profit share structure and quarterly payments starting from January 2025, including specific KPIs for customer growth and revenue targets."

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Document background
The Director Profit Sharing Agreement is a crucial document for Indonesian companies seeking to implement performance-based compensation structures for their directors. This agreement becomes necessary when companies want to align director compensation with company performance and profitability, while ensuring compliance with Indonesian corporate and tax regulations. The document addresses key aspects such as profit calculation methodologies, payment mechanisms, performance metrics, and regulatory compliance requirements under Indonesian law. It is particularly relevant for companies looking to attract and retain top executive talent, while maintaining transparency and accountability in director compensation. The agreement must comply with Law No. 40 of 2007 on Limited Liability Companies and related regulations, making it suitable for both private and public companies operating in Indonesia.
Suggested Sections

1. Parties: Identification of the company and the director entering into the profit-sharing agreement

2. Background: Context of the agreement, director's role, and general purpose of the profit-sharing arrangement

3. Definitions: Key terms used in the agreement, including 'Profit', 'Financial Year', 'Performance Metrics', etc.

4. Term and Appointment: Duration of the profit-sharing arrangement and its relationship to the director's appointment

5. Profit Sharing Structure: Core terms of how profits will be shared, including calculation methodology and percentages

6. Performance Metrics: Specific targets or KPIs that may affect profit share calculations

7. Payment Terms: Timing, method, and conditions for profit share payments

8. Clawback Provisions: Circumstances under which the company may recoup paid amounts

9. Tax Obligations: Responsibilities for tax payments and compliance with Indonesian tax regulations

10. Confidentiality: Provisions protecting sensitive financial and commercial information

11. Termination: Circumstances and processes for ending the profit-sharing arrangement

12. Governing Law: Confirmation of Indonesian law as governing law and jurisdiction

Optional Sections

1. Non-Competition: Restrictions on competitive activities, recommended for senior directors

2. Corporate Governance Compliance: Additional provisions for listed companies subject to OJK regulations

3. International Operations: Special provisions for companies with international presence

4. Share Option Link: Connection between profit sharing and any share option schemes

5. Force Majeure: Provisions for extraordinary circumstances affecting profit calculations

6. Alternative Dispute Resolution: Mediation or arbitration procedures before court litigation

Suggested Schedules

1. Schedule 1: Profit Calculation Methodology: Detailed formula and accounting principles for calculating relevant profit

2. Schedule 2: Performance Metrics Detail: Comprehensive description of KPIs and their measurement

3. Schedule 3: Payment Structure: Detailed breakdown of payment timing and thresholds

4. Schedule 4: Corporate Approval Process: Required authorizations and documentation for profit share payments

5. Appendix A: Relevant Board Resolutions: Copies of board resolutions approving the profit-sharing arrangement

6. Appendix B: Tax Treatment Summary: Summary of applicable tax regulations and compliance requirements

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Annual Profit
Applicable Laws
Board of Commissioners
Board Resolution
Business Day
Calculation Period
Change of Control
Company
Confidential Information
Director
Effective Date
Financial Statements
Financial Year
Force Majeure Event
General Meeting of Shareholders
Good Cause
Gross Profit
IDR
Indonesian GAAP
Net Profit
Operating Profit
Performance Metrics
Profit Share
Profit Share Payment Date
Quarter
Related Parties
Relevant Percentage
Target Performance
Tax
Term
Termination Date
Threshold Amount
Relevant Industries

Manufacturing

Technology

Financial Services

Real Estate

Mining

Agricultural

Retail

Healthcare

Energy

Transportation

Construction

Hospitality

Professional Services

Media and Entertainment

Relevant Teams

Legal

Human Resources

Finance

Corporate Secretarial

Compliance

Board of Directors

Executive Committee

Compensation Committee

Audit

Relevant Roles

Managing Director

Executive Director

Finance Director

Operations Director

Commercial Director

Technical Director

Regional Director

Country Director

Chief Executive Officer

Chief Financial Officer

Chief Operating Officer

Chief Commercial Officer

Board Member

Executive Board Member

Industries
Law No. 40 of 2007 on Limited Liability Companies (PT Law): The fundamental law governing Indonesian companies, including provisions on director appointments, rights, responsibilities, and remuneration
Law No. 13 of 2003 on Employment: Regulates employment relationships and benefits, including provisions that may affect director compensation and profit-sharing arrangements
Government Regulation No. 78 of 2015 on Wages: Contains provisions on remuneration structures and payment methods that may apply to director compensation
Law No. 36 of 2008 on Income Tax: Governs the taxation of income, including treatment of profit sharing and director compensation
OJK Regulation No. 33/POJK.04/2014: For publicly listed companies, this regulation provides guidelines on directors' duties and remuneration
Minister of Manpower Regulation No. 6 of 2016: Guidelines on holiday allowance and other benefits that may apply to director compensation packages
Law No. 11 of 2020 on Job Creation (Omnibus Law): Recent reforms affecting various aspects of business law, including employment and corporate regulations
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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