Mou Investment Agreement Template for Indonesia

A Mou Investment Agreement is your preliminary roadmap for structuring investment transactions in Indonesia. This document establishes the basic framework and understanding between parties before committing to formal investment agreements, ensuring compliance with Indonesian investment laws while protecting your interests during early-stage negotiations.

When do you need this document?

You need this agreement when contemplating significant investments in Indonesian companies, particularly for cross-border transactions involving foreign investors and domestic Indonesian entities. It's essential when negotiating with state-owned enterprises (BUMN), private limited companies (PT), or establishing joint ventures where parties require a structured approach to preliminary discussions. The document becomes crucial when dealing with complex investment structures that must comply with foreign ownership limitations under Presidential Regulation No. 10 of 2021, or when multiple rounds of due diligence are anticipated before finalizing definitive agreements.

Key legal considerations

Your Mou Investment Agreement must carefully balance non-binding commercial terms with binding provisions for confidentiality and exclusivity. Under Indonesian Civil Code principles, you need clear definitions of key terms and explicit statements about which provisions are legally binding versus preliminary understandings. The agreement should address proposed investment amounts, ownership percentages, board representation, and exit mechanisms while maintaining flexibility for subsequent negotiations. Critical clauses include confidentiality obligations, exclusivity periods, expense allocation for due diligence, and termination conditions. You must also consider intellectual property protections, regulatory approval contingencies, and dispute resolution mechanisms that align with Indonesian legal requirements.

Legal requirements in Indonesia

Under Law No. 25 of 2007 on Investment, your agreement must comply with foreign investment regulations and business field restrictions specified in the Positive Investment List. You need to ensure the proposed investment structure aligns with foreign ownership limitations for your target business sector, which can range from complete prohibition to 100% foreign ownership depending on the industry. The document must be prepared in Indonesian language or include certified translations for enforceability under local courts. Presidential Regulation No. 10 of 2021 requirements must be addressed if your investment involves restricted business fields, and you should incorporate provisions for obtaining necessary investment licenses through the Online Single Submission (OSS) system. BKPM Regulation No. 4 of 2021 compliance is essential for investment facilitation procedures, and your agreement should reference applicable corporate governance requirements under Law No. 40 of 2007 on Limited Liability Companies if the target is an Indonesian PT company.