Equity Participation Agreement Template for Indonesia

The Equity Participation Agreement is a crucial document used in Indonesian corporate transactions when an investor seeks to acquire shares or establish a stake in a target company. This document is particularly relevant in the context of Indonesian investment law, which has specific requirements for both domestic and foreign investment transactions. The agreement must comply with Law No. 40 of 2007 on Limited Liability Companies, Law No. 25 of 2007 on Investment, and other relevant regulations, including the Investment Priority List under Presidential Regulation No. 10 of 2021. It is commonly used in various scenarios including foreign direct investment, joint ventures, startup funding rounds, and strategic corporate investments. The document typically details share subscription terms, payment mechanisms, governance rights, and regulatory compliance requirements, while also addressing specific foreign ownership limitations where applicable.

1. Parties: Identification of all parties to the agreement, including full legal names, registration numbers, and addresses

2. Background: Context of the transaction, including description of the target company and purpose of the equity participation

3. Definitions and Interpretation: Detailed definitions of terms used throughout the agreement and rules of interpretation

4. Subscription of Shares: Details of the shares being subscribed to, including number, class, and nominal value

5. Purchase Price and Payment Terms: Specification of the purchase price, payment schedule, and payment mechanisms

6. Conditions Precedent: Prerequisites that must be fulfilled before the agreement becomes effective

7. Completion: Process and requirements for completing the transaction, including timing and documentation

8. Representations and Warranties: Statements of fact and assurances from both parties regarding their capacity, authority, and business condition

9. Covenants: Ongoing obligations of the parties, including pre-completion and post-completion commitments

10. Corporate Governance: Management structure, voting rights, and decision-making processes post-investment

11. Transfer Restrictions: Limitations on the transfer of shares and procedures for permitted transfers

12. Termination: Circumstances under which the agreement may be terminated and the consequences

13. Confidentiality: Obligations regarding the protection of confidential information

14. Governing Law and Dispute Resolution: Applicable law and mechanisms for resolving disputes

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability