Loan Sharing Agreement Template for Indonesia

You need a Loan Sharing Agreement when multiple lenders want to participate in providing financing to a borrower in Indonesia. This legal document creates a structured framework that governs how lenders collaborate, share risks, and manage their collective loan facility while ensuring compliance with Indonesian banking and civil law requirements.

When do you need this document?

You require a Loan Sharing Agreement when organizing syndicated loans for major infrastructure projects, corporate acquisitions, or large working capital facilities where the loan amount exceeds what a single lender can or wants to provide. Banks and financial institutions use this agreement when forming lending consortiums for real estate developments, manufacturing expansions, or energy projects. The document is also essential when establishing club deals among select lenders who want to maintain closer control over the lending relationship compared to widely syndicated facilities.

Key legal considerations

Your agreement must clearly define each lender's participation percentage, voting rights, and decision-making authority for key matters such as amendments, waivers, and enforcement actions. You need to establish robust information sharing protocols while respecting confidentiality requirements, particularly regarding borrower financial data and loan performance. The document should specify payment waterfall mechanisms, ensuring proper allocation of principal, interest, and fees among participating lenders. You must include comprehensive default and enforcement provisions that allow coordinated action while protecting minority lender rights. Security arrangements require careful structuring to ensure all lenders benefit equally from collateral, often necessitating appointment of a security trustee or agent.

Legal requirements in Indonesia

Your Loan Sharing Agreement must comply with Indonesian Civil Code provisions on contracts and obligations, particularly Articles 1233-1456 governing contractual relationships and Articles 1754-1773 covering lending arrangements. You need to ensure compliance with Law No. 7 of 1992 on Banking as amended by Law No. 10 of 1998, which regulates financial institution lending activities and sets requirements for loan documentation. If your arrangement involves fintech platforms or peer-to-peer elements, you must consider OJK Regulation No. 77/POJK.01/2016 governing alternative lending services. When security interests are involved, your agreement must align with Law No. 42 of 1999 on Fiduciary Security to ensure proper collateral arrangements. The document requires proper execution under Indonesian law, including notarization if specified parties are Indonesian entities, and must include dispute resolution mechanisms that comply with Indonesian jurisdiction requirements.