Private Equity Subscription Agreement Template for Indonesia

A Private Equity Subscription Agreement is your essential legal document when structuring private equity investments in Indonesian companies through new share issuances. Unlike share purchase agreements that involve existing shareholders, this agreement creates new shares specifically for the investor, providing fresh capital to fuel company growth while ensuring compliance with Indonesia's complex investment regulatory framework.

When do you need this document?

You need this agreement when your private equity fund or institutional investor seeks to invest in an Indonesian target company through a capital injection rather than acquiring existing shares. This is particularly common in growth capital scenarios where the company requires additional funding for expansion, market penetration, or operational scaling. The document is also essential when the investment involves foreign investors, as it must navigate Indonesia's foreign ownership restrictions under Presidential Regulation No. 44 of 2016 (Negative Investment List). You'll also require this agreement when the investment amount triggers regulatory approvals from the Financial Services Authority (OJK) or when the target company operates in sectors with specific foreign investment limitations.

Key legal considerations

Your subscription agreement must address several critical legal elements to protect both parties and ensure enforceability under Indonesian law. The subscription price and valuation methodology require careful documentation, particularly regarding currency regulations under Law No. 24 of 2004, which may restrict foreign currency transactions. Conditions precedent are crucial and typically include regulatory approvals, due diligence satisfaction, and compliance certificates. You must also structure comprehensive representations and warranties covering the company's legal status, financial condition, and regulatory compliance. Post-completion provisions should address board representation rights, information access, anti-dilution protections, and exit mechanisms. Tag-along and drag-along rights become particularly important in Indonesian contexts where local partnership requirements may affect future liquidity.

Legal requirements in Indonesia

Indonesian law imposes specific requirements that your subscription agreement must satisfy for validity and enforceability. Under Law No. 40 of 2007 on Limited Liability Companies, new share issuances require formal board resolutions and, depending on the amount, shareholder approval through a General Meeting of Shareholders. The agreement must comply with OJK Regulation No. 30/POJK.05/2014 governing private equity fund activities, including reporting obligations and investment restrictions. Foreign investors must ensure compliance with sectoral ownership limits and obtain necessary approvals from the Investment Coordinating Board (BKPM) when required. The document must also address Indonesian notarization requirements for certain corporate actions and specify dispute resolution mechanisms that recognize Indonesian court jurisdiction or acceptable international arbitration venues under Indonesian law.