Founders Service Agreement Template for Indonesia

A Founders Service Agreement is a legal contract that formalizes the relationship between a company founder and their Indonesian business entity. This document establishes clear terms for services, compensation, intellectual property rights, and governance responsibilities while ensuring compliance with Indonesian corporate law.

When do you need this document?

You need a Founders Service Agreement when establishing a new PT (Perseroan Terbatas) company in Indonesia, particularly during the initial setup phase when founder roles and responsibilities must be clearly defined. This agreement becomes essential when multiple founders are involved and you need to prevent disputes over equity, decision-making authority, or intellectual property ownership. You should also use this document when restructuring an existing company, bringing in new founders, or when investors require formal documentation of founder commitments. The agreement is particularly important in technology startups where intellectual property rights and ongoing service obligations need clear legal definition under Indonesian law.

Key legal considerations

Your Founders Service Agreement must address several critical legal elements to ensure enforceability under Indonesian law. The service scope clause should clearly define your duties, working hours, and performance expectations while distinguishing between employee and independent contractor relationships under Law No. 13 of 2003 on Manpower. Intellectual property provisions are crucial and must comply with Law No. 28 of 2014 on Copyright and Law No. 13 of 2016 on Patents, ensuring all innovations and creative works developed during your service belong to the company. Compensation terms should specify salary, equity arrangements, and benefit structures while complying with Indonesian tax obligations. Confidentiality clauses must protect sensitive business information, and termination provisions should address notice periods, severance, and post-termination restrictions. You must also include dispute resolution mechanisms, preferably arbitration, to avoid lengthy court proceedings.

Legal requirements in Indonesia

Indonesian law imposes specific requirements for Founders Service Agreements that you must follow to ensure validity and enforceability. Under Law No. 40 of 2007 on Limited Liability Companies, the agreement must clearly distinguish between your role as founder-service provider and any directorship positions you may hold within the company structure. The document must be prepared in Indonesian language as the primary version, though English translations are acceptable for international stakeholders. You must ensure the agreement complies with Indonesian Civil Code (KUHPerdata) requirements for contract formation, including mutual consent, legal capacity, specific subject matter, and lawful cause. The agreement should specify Indonesian law as governing law and Indonesian courts or arbitration as the dispute resolution forum. Additionally, any equity arrangements must comply with Indonesian foreign investment regulations under Law No. 25 of 2007, particularly if foreign founders are involved. Proper notarization may be required for certain provisions, and the agreement should be registered with relevant authorities if it affects company ownership structures.