The Parent Guarantee Agreement is a crucial document in Indonesian business transactions where a parent company provides financial backing for its subsidiary's obligations. This agreement is commonly used when a subsidiary requires additional credit support for obtaining financing, entering into significant commercial contracts, or participating in major projects. The document must comply with Indonesian law requirements, particularly the Civil Code (KUH Perdata) and Company Law (Law No. 40 of 2007), and often requires specific corporate approvals and potentially regulatory clearances. The agreement details the scope of guaranteed obligations, enforcement mechanisms, and includes provisions for currency considerations, especially relevant in cross-border transactions. It's essential for establishing clear legal obligations while ensuring compliance with Indonesian regulatory requirements regarding corporate guarantees.
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1. Parties: Identifies the guarantor (parent company), the beneficiary (creditor), and references the principal debtor (subsidiary)
2. Background: Sets out the context of the underlying obligation and the relationship between the parties
3. Definitions and Interpretation: Defines key terms and establishes interpretation principles, including currency, time references, and Indonesian law concepts
4. Guarantee and Indemnity: Core section establishing the guarantee obligations, including scope, nature (conditional/unconditional), and indemnity provisions
5. Representations and Warranties: Guarantor's confirmations regarding capacity, authority, and financial condition
6. Continuing Security: Establishes the guarantee as continuing security regardless of intermediate payment or settlement
7. Payments: Terms for making payments, including currency, timing, and method
8. Tax Gross-up: Provisions for tax deductions and requirements for gross-up payments
9. Costs and Expenses: Allocation of costs related to preparation, enforcement, and maintenance of the guarantee
10. Duration and Release: Term of the guarantee and conditions for release
11. Enforcement and Recovery: Rights and mechanisms for enforcing the guarantee under Indonesian law
12. Communications: Notice provisions and contact details
13. Governing Law and Jurisdiction: Confirms Indonesian law as governing law and jurisdiction for disputes
14. Language: Specifies Indonesian and English versions (if dual language) and which prevails
1. Currency Provisions: Required for cross-border guarantees or multi-currency facilities, addressing exchange rates and payment currencies
2. Regulatory Compliance: Required when specific Indonesian regulatory approvals or filings are needed
3. Multiple Guarantors: Required when more than one entity provides the guarantee, addressing joint and several liability
4. Subordination: Required when the guarantor's claims need to be subordinated to other creditors
5. Security Interest: Required when the guarantee is secured by specific assets
6. Foreign Investment Provisions: Required when the guarantee involves foreign investment elements under Indonesian law
1. Form of Demand: Template for making a demand under the guarantee
2. Guaranteed Obligations: Detailed description of the obligations being guaranteed
3. Corporate Authorizations: Copies of relevant board resolutions and corporate approvals
4. Regulatory Approvals: Copies of required regulatory approvals or filings
5. Confirmation of Release: Form for confirming release of guarantee obligations when completed
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