Nominee Director Contract Template for Indonesia
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What is a Nominee Director Contract?
The Nominee Director Contract is a crucial document in Indonesian business practice, particularly in contexts involving foreign investment or complex corporate structures. This agreement is essential when companies need to appoint a local director to comply with Indonesian regulations while maintaining effective control through the beneficial owner. The contract carefully balances the requirements of Indonesian Company Law, investment regulations, and practical business needs. It provides a framework for the nominee director's authority, protecting both the appointer's interests and the nominee's legal position. The document is particularly relevant in situations where foreign companies establish presence in Indonesia or when local companies require specific directorship arrangements for regulatory compliance. It includes comprehensive provisions for corporate governance, operational procedures, and risk management, while ensuring alignment with Indonesian legal requirements for director duties and responsibilities.
About the Nominee Director Contract
A Nominee Director Contract is a specialized legal agreement that allows you to appoint a local director for your Indonesian company while retaining beneficial control over business operations. Under Indonesian law, this arrangement enables foreign investors and companies to comply with local directorship requirements while maintaining effective management control through carefully structured legal frameworks.
When do you need this document?
You need a Nominee Director Contract when establishing a foreign-owned company in Indonesia that requires local directorship under Law No. 40 of 2007 on Limited Liability Companies. This document is essential when your business structure involves complex ownership arrangements where beneficial owners cannot serve as directors themselves. The contract becomes crucial when you need to satisfy regulatory requirements for local representation while ensuring operational control remains with the appointer. You'll also require this agreement when restructuring existing companies to comply with evolving Indonesian investment regulations or when establishing joint ventures that require specific directorship configurations.
Key legal considerations
The contract must clearly define the scope of the nominee director's authority and decision-making powers to prevent conflicts with your business objectives. You need to establish comprehensive indemnification clauses that protect the nominee from personal liability while ensuring they fulfill their fiduciary duties under Indonesian Company Law. The agreement should include detailed provisions for corporate governance, including board meeting procedures, voting rights, and reporting requirements. You must address potential conflicts of interest and establish clear protocols for decision-making that require appointer consent. The contract should specify termination conditions, succession planning, and procedures for transferring directorship responsibilities to ensure business continuity.
Legal requirements in Indonesia
Under Indonesian Company Law, nominee directors must be Indonesian citizens or foreign nationals with proper work permits and must fulfill the same fiduciary duties as any company director. The agreement must comply with Law No. 25 of 2007 on Investment, which governs foreign ownership structures and management arrangements in Indonesian companies. Your contract must ensure the nominee director can legally represent the company in all corporate matters while maintaining transparency with regulatory authorities. The document must address disclosure requirements under Indonesian corporate governance standards and ensure compliance with employment law provisions that may affect the nominee arrangement. You need to structure the agreement to satisfy both the Capital Markets Law requirements for public companies and general corporate compliance obligations for private entities.
GOVERNING LAW
Applicable law
This Nominee Director Contract is drafted to comply with Indonesia law. Key legislation includes:
Law No. 25 of 2007 on Investment: Regulates foreign investment in Indonesia, including requirements for foreign ownership and management structures, which is crucial for nominee arrangements.
Law No. 8 of 1995 on Capital Markets: Provides regulatory framework for public companies and their management, including disclosure requirements and corporate governance standards.
Law No. 13 of 2003 on Employment: Governs employment relationships and may affect the structure of nominee director agreements, particularly regarding employment status and benefits.
Law No. 31 of 1999 on Eradication of Criminal Acts of Corruption: Sets out anti-corruption provisions that nominee directors must comply with, including provisions against bribery and corrupt practices.
Government Regulation No. 29 of 2016 on Changes in Capital in Limited Liability Companies: Regulates capital requirements and changes in company ownership, which may affect nominee arrangements.
OJK Regulation No. 33/POJK.04/2014: Provides guidelines on corporate governance, particularly regarding the roles and responsibilities of directors in Indonesian companies.
Law No. 36 of 2008 on Income Tax: Governs taxation of director compensation and corporate income, relevant for structuring nominee director remuneration.
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