Nominee Agreement For Shares Template for Indonesia

A Nominee Agreement For Shares is a legal document that establishes a formal arrangement where one party (the nominee) holds shares on behalf of another party (the beneficial owner) in an Indonesian company. This agreement creates a trust-like relationship while ensuring compliance with Indonesian corporate and investment laws, particularly when foreign ownership restrictions apply to certain business sectors.

When do you need this document?

You need a Nominee Agreement For Shares when establishing foreign investment structures that require local shareholding compliance. This typically occurs when foreign investors want to invest in sectors listed in Presidential Regulation No. 44 of 2016 (Negative Investment List) that have ownership restrictions. The agreement is also necessary when structuring corporate ownership for tax optimization, estate planning purposes, or when maintaining anonymity in business transactions. Indonesian companies often use nominee arrangements during mergers and acquisitions, joint ventures with local partners, or when establishing subsidiary companies that must meet local ownership requirements. Additionally, this document becomes essential when beneficial owners are unable to directly hold shares due to regulatory restrictions or when creating complex corporate structures for business expansion.

Key legal considerations

The agreement must clearly define the roles and responsibilities of both the nominee shareholder and beneficial owner to avoid conflicts and ensure legal compliance. Critical clauses include voting rights arrangements, where the beneficial owner typically retains control over major corporate decisions while the nominee exercises day-to-day voting rights. Dividend distribution provisions must specify how profits are transferred from the nominee to the beneficial owner, including tax implications and timing. The agreement should include termination clauses that outline circumstances for ending the arrangement and procedures for transferring shares back to the beneficial owner. Confidentiality provisions are essential to protect the beneficial owner's identity and business interests. Additionally, the document must include indemnification clauses protecting both parties from potential legal liabilities arising from the nominee arrangement.

Legal requirements in Indonesia

Indonesian law imposes strict requirements on nominee arrangements under Law No. 40 of 2007 (Company Law) and Law No. 25 of 2007 (Investment Law). Article 33 of the Investment Law specifically prohibits nominee arrangements designed to circumvent foreign ownership restrictions, making compliance documentation crucial. The agreement must ensure transparency with relevant authorities and avoid any appearance of circumventing investment regulations. All parties must be properly identified with complete legal documentation, including registration numbers and addresses. The nominee shareholder must be an Indonesian citizen or legal entity with proper standing under Indonesian law. Corporate secretaries and witnesses may be required depending on the company structure and specific regulatory requirements. The document must also comply with capital market regulations under Law No. 8 of 1995 if the arrangement involves publicly listed companies. Proper notarization and registration procedures must be followed according to Indonesian corporate law requirements.