Loan Pledge Agreement Template for Indonesia

An Indonesian law-governed Loan Pledge Agreement is a legally binding document that establishes a security interest in the form of a pledge over specific assets to secure a loan obligation. The agreement is structured in accordance with the Indonesian Civil Code (KUH Perdata) and relevant financial regulations, particularly focusing on the creation, perfection, and enforcement of pledge rights. It details the loan terms, pledge arrangements, parties' obligations, enforcement mechanisms, and complies with specific Indonesian legal requirements including proper execution before a notary when required.

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What is a Loan Pledge Agreement?

The Loan Pledge Agreement is a crucial document in Indonesian secured lending transactions, used when a borrower needs to provide specific assets as security for a loan obligation. This agreement type is governed by Indonesian law, particularly the Civil Code (KUH Perdata) and related financial regulations, and requires careful structuring to ensure enforceability. The document is essential in commercial lending practices where lenders require security over movable or immovable assets, and must comply with local registration requirements and enforcement procedures. The Loan Pledge Agreement typically includes detailed provisions on the pledged assets, creation and perfection of the pledge, maintenance obligations, enforcement rights, and default scenarios, all tailored to meet Indonesian legal requirements and market practices.

What sections should be included in a Loan Pledge Agreement?

1. Parties: Identification of the lender and borrower, including their complete legal names, addresses, and authorized representatives

2. Background: Context of the loan arrangement and purpose of the pledge agreement

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Terms: Principal amount, interest rate, repayment schedule, and other fundamental loan conditions

5. Pledge Details: Description of the pledged assets and confirmation of the pledgor's ownership rights

6. Creation and Perfection of Pledge: Process and requirements for creating and registering the pledge

7. Rights and Obligations: Detailed responsibilities of both parties regarding the pledged assets and loan obligations

8. Representations and Warranties: Statements of fact and guarantees by the pledgor regarding the pledged assets and their authority

9. Maintenance and Preservation: Requirements for maintaining and protecting the pledged assets

10. Events of Default: Circumstances constituting default and their consequences

11. Enforcement Rights: Lender's rights and procedures for enforcing the pledge upon default

12. Termination: Conditions and process for terminating the pledge agreement

13. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

14. Notices: Process and requirements for formal communications between parties

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

What sections are optional to include in a Loan Pledge Agreement?

1. Insurance Requirements: Required when pledged assets need specific insurance coverage

2. Third Party Rights: Include when there are existing encumbrances or third-party interests in the pledged assets

3. Tax Provisions: Required when specific tax implications need to be addressed

4. Currency Provisions: Include when the loan is in foreign currency or involves cross-border elements

5. Regulatory Compliance: Required when specific regulatory requirements apply to the pledged assets or parties

6. Additional Security: Include when additional forms of security are provided beyond the pledge

7. Power of Attorney: Required when specific actions need to be delegated to the lender or its agents

What schedules should be included in a Loan Pledge Agreement?

1. Schedule 1 - Asset Description: Detailed description and identification of pledged assets

2. Schedule 2 - Repayment Schedule: Detailed loan repayment schedule including dates and amounts

3. Schedule 3 - Existing Encumbrances: List of any existing liens or encumbrances on the pledged assets

4. Schedule 4 - Form of Notice: Template for various notices required under the agreement

5. Schedule 5 - Registration Requirements: List of required registrations and filings for the pledge

6. Appendix A - Asset Valuation Report: Independent valuation of the pledged assets

7. Appendix B - Title Documents: Copies of ownership documents for pledged assets

8. Appendix C - Corporate Authorizations: Required corporate approvals and authorizations

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

Jurisdiction

Indonesia

Publisher

Genie AI

Document Type

Financing Agreement

Cost

Free to use

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