Joint Venture Agreement for Indonesia

Joint Venture Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes and regulates a joint venture between two or more parties, typically involving at least one Indonesian entity and one foreign entity. The document outlines the terms and conditions for the formation, operation, and management of a joint venture company (PT PMA) in Indonesia, including capital contributions, shareholding structure, management responsibilities, and profit-sharing arrangements, while ensuring compliance with Indonesian foreign investment regulations and sector-specific requirements.

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What is a Joint Venture Agreement?

The Joint Venture Agreement is a crucial document used when two or more parties wish to establish a shared business enterprise in Indonesia. It is particularly relevant for foreign investors seeking to enter the Indonesian market in compliance with local ownership requirements and investment regulations. The agreement comprehensively addresses all aspects of the joint venture relationship, including capital structure, management control, technology transfer, and profit sharing. It must comply with Indonesian investment laws, particularly Law No. 25 of 2007 and Law No. 40 of 2007, and may require approval from the Investment Coordinating Board (BKPM) depending on the sector and investment size. The document serves as the foundation for the ongoing relationship between the parties and typically precedes the creation of more detailed operational agreements.

What sections should be included in a Joint Venture Agreement?

1. Parties: Identification of the joint venture partners, including their complete legal names, registration numbers, and addresses

2. Background: Context of the joint venture formation, including the business objectives and contributions of each party

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules for interpreting the agreement

4. Formation of Joint Venture Company: Details of the new company formation, including name, business objectives, and registration requirements

5. Capital Structure: Details of initial capitalization, shareholding ratios, and future funding obligations

6. Share Subscription and Payment: Terms and conditions for share subscription, payment schedule, and issuance of shares

7. Management and Governance: Structure of management, appointment of directors/commissioners, and decision-making processes

8. Shareholders' Rights and Obligations: Detailed rights and responsibilities of each shareholder

9. Business Plan and Budget: Initial business plan, budget requirements, and process for future updates

10. Transfer of Shares: Restrictions on share transfers, right of first refusal, and tag-along/drag-along rights

11. Deadlock Resolution: Procedures for resolving management deadlocks and serious disagreements

12. Termination: Circumstances and procedures for terminating the joint venture

13. Confidentiality: Protection of confidential information and trade secrets

14. Governing Law and Dispute Resolution: Choice of law and mechanisms for dispute resolution

15. General Provisions: Standard clauses including notices, amendments, and entire agreement provisions

What sections are optional to include in a Joint Venture Agreement?

1. Intellectual Property Rights: Used when the JV involves significant IP contributions or will develop new IP

2. Non-Competition: Include when parties need restrictions on competing activities

3. Technology Transfer: Required when the JV involves transfer of technology from foreign partner

4. Employee Matters: Include when specific arrangements for employee transfers or hiring are needed

5. Environmental Compliance: Important for JVs in industries with environmental impacts

6. Foreign Exchange Provisions: Include when dealing with significant cross-border transactions

7. Marketing and Distribution Rights: Used when JV involves specific marketing or distribution arrangements

8. Force Majeure: Include when operating in industries susceptible to external disruptions

9. Corporate Social Responsibility: Important for JVs in sectors with significant community impact

What schedules should be included in a Joint Venture Agreement?

1. Schedule 1 - Details of the Parties: Complete corporate information and shareholding structure of each party

2. Schedule 2 - Initial Business Plan: Detailed 3-5 year business plan including market analysis and financial projections

3. Schedule 3 - Capital Contributions: Detailed breakdown of initial and future capital contributions

4. Schedule 4 - Assets and Property: List of assets to be transferred to or used by the JV

5. Schedule 5 - Key Personnel: Details of key management positions and initial appointees

6. Schedule 6 - Reserved Matters: List of decisions requiring special majority or unanimous approval

7. Schedule 7 - Initial Budget: Detailed first-year operational budget

8. Schedule 8 - Technical Services Agreement: Terms for technical support or knowledge transfer if applicable

9. Schedule 9 - License Agreements: Details of any IP or technology licenses granted to the JV

10. Schedule 10 - Company Documents: Draft Articles of Association and other corporate documents

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

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Agreement Contract

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Manufacturing

Technology

Mining and Natural Resources

Agriculture

Infrastructure

Retail and Consumer Goods

Financial Services

Healthcare

Education

Transportation and Logistics

Energy

Telecommunications

Tourism and Hospitality

Construction

Professional Services

Relevant Teams

Legal

Corporate Affairs

Finance

Mergers & Acquisitions

Business Development

Strategy

Compliance

Risk Management

International Operations

Corporate Secretariat

Investment

Commercial

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Managing Director

Investment Director

Corporate Secretary

Legal Counsel

Business Development Manager

Commercial Director

Strategy Director

Compliance Officer

Risk Manager

Board of Directors

Board of Commissioners

General Counsel

Head of Mergers & Acquisitions

Investment Manager

Country Manager

Regional Director

Industries
Law No. 25 of 2007 on Investment (Investment Law): The primary law governing foreign and domestic investment in Indonesia, including joint venture arrangements. It provides the basic framework for investment activities and business establishment.
Law No. 40 of 2007 on Limited Liability Companies: Regulates the establishment, management, and dissolution of companies in Indonesia, including joint venture companies (PT PMA).
Presidential Regulation No. 44 of 2016 on Negative Investment List: Specifies business sectors that are closed or conditionally open to foreign investment, which affects the permitted ownership structure in joint ventures.
Law No. 5 of 1999 on Anti-Monopoly and Unfair Business Competition: Ensures the joint venture doesn't create monopolistic practices or unfair business competition.
Law No. 13 of 2003 on Employment: Governs employment relationships and must be considered for staffing and employment terms in the joint venture.
Government Regulation No. 29 of 2016 on Changes in Capital in Investment Companies: Regulates capital requirements and changes in investment companies, including joint ventures.
BKPM Regulation No. 6 of 2018: Provides guidelines for investment licensing and facilities, including procedures for establishing joint ventures.
Law No. 24 of 2009 on National Flag, Language, Emblem and Anthem: Requires agreements involving Indonesian parties to be drafted in Indonesian language alongside any foreign language version.
Minister of Trade Regulation No. 11 of 2006: Regulates provisions for agency and distributorship agreements which might be relevant if the JV involves distribution activities.
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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