Inventory Security Agreement Template for Indonesia

The Inventory Security Agreement is a crucial document in Indonesian secured financing transactions, used when a borrower needs to provide security over its inventory to secure financial obligations. This agreement must comply with Indonesian Law No. 42 of 1999 on Fiducia Security and related regulations, requiring specific formalities including notarization and registration with the Fiducia Registration Office. It's commonly used in trade finance, working capital facilities, and general corporate financing where the borrower maintains significant inventory. The document details the secured inventory, storage locations, maintenance requirements, reporting obligations, and enforcement mechanisms, while addressing specific Indonesian law requirements for creating and perfecting security interests over movable assets.

1. Parties: Identification of the Secured Party (typically a lender or financial institution) and the Grantor (the entity granting security over its inventory)

2. Background: Context of the security arrangement, including reference to any underlying facility or loan agreement

3. Definitions: Definitions of key terms used throughout the agreement, including 'Inventory', 'Secured Obligations', 'Security Interest', and 'Event of Default'

4. Creation of Security Interest: Provisions establishing the security interest over the inventory, including the granting clause

5. Secured Obligations: Description of the obligations being secured by the inventory

6. Representations and Warranties: Grantor's representations regarding ownership, condition, and location of inventory

7. Covenants: Ongoing obligations regarding maintenance, insurance, and reporting of inventory

8. Perfection Requirements: Requirements for registering the security interest with relevant authorities

9. Events of Default: Circumstances constituting default under the agreement

10. Enforcement Rights: Secured party's rights and remedies upon default

11. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and choice of courts

12. Execution: Signature blocks and execution formalities