Pre Financing Agreement Template for Indonesia

A Pre Financing Agreement is a critical preliminary document that establishes the foundation for major financing transactions in Indonesia. You'll need this agreement when entering into substantial financing arrangements that require extensive preparation, due diligence, and regulatory compliance before executing the final facility agreement.

When do you need this document?

You require a Pre Financing Agreement when securing large-scale project financing, infrastructure development funding, or complex commercial loans in Indonesia. This document becomes essential when your financing involves multiple parties including banks, guarantors, security agents, and project sponsors who need preliminary terms before committing to detailed facility documentation. Financial institutions typically insist on this agreement for transactions exceeding significant thresholds or when dealing with foreign exchange components that require OJK approval. You'll also need this document when your project involves technical advisors and requires staged disbursements tied to specific milestones or conditions precedent.

Key legal considerations

Your Pre Financing Agreement must clearly define all parties' roles and responsibilities, particularly distinguishing between the facility agent, security agent, and account bank functions. Pay careful attention to the conditions precedent clauses, as these determine when funds can be disbursed and what documentation must be completed first. Security arrangements should be outlined preliminarily, referencing compliance with Law No. 42 of 1999 on Fiduciary Security for any collateral requirements. Include clear termination provisions and default triggers, as well as governing law clauses that specify Indonesian jurisdiction. Consider confidentiality obligations carefully, especially when multiple parties have access to sensitive financial and technical information about your project.

Legal requirements in Indonesia

Your agreement must comply with the Indonesian Civil Code governing contractual relationships and Law No. 7 of 1992 as amended by Law No. 10 of 1998 on Banking for all lending activities. If your financing involves foreign currency or cross-border elements, ensure compliance with Law No. 24 of 1999 on Foreign Exchange Flow and Exchange Rate System. Financial institutions must adhere to OJK Regulation No. 77/POJK.01/2016 regarding lending services, particularly if technology systems are involved in the financing process. Include proper Indonesian language provisions as required for agreements involving Indonesian entities, and ensure all parties have proper legal capacity and authorization under Indonesian corporate law. Consider stamp duty requirements and proper execution formalities to ensure the agreement's enforceability in Indonesian courts.