Security Account Control Agreement Template for Indonesia

A Security Account Control Agreement is a specialized legal document that establishes a secured party's control over financial assets held in designated accounts under Indonesian law. This agreement creates a triangular relationship between the account holder (debtor), secured party (lender), and securities intermediary or bank, providing the lender with enhanced security and control mechanisms over the debtor's financial assets.

When do you need this document?

You need a Security Account Control Agreement when entering into secured financing arrangements where account control is required as part of the security package. This commonly occurs in project finance transactions where lenders need control over project cash flows, corporate lending arrangements involving substantial credit facilities, and structured finance deals requiring enhanced security measures. The agreement is particularly crucial when dealing with securities accounts, investment portfolios, or cash management accounts that form part of the collateral structure. Indonesian banks and financial institutions often require this agreement to comply with prudential banking requirements and OJK regulations when extending credit facilities secured by financial assets.

Key legal considerations

The agreement must clearly define the scope of control granted to the secured party, including rights to give instructions to the securities intermediary and restrictions on the account holder's ability to withdraw or transfer funds. Critical clauses include the trigger events that activate full control, notification procedures, and the securities intermediary's obligations and limitations. You must address the ranking of security interests, especially in transactions involving multiple secured parties or existing encumbrances. The document should specify the treatment of interest, dividends, and other account proceeds, along with clear procedures for enforcement and realization of security. Insurance and indemnity provisions protecting the securities intermediary are essential, as Indonesian banks require comprehensive protection when participating in these arrangements.

Legal requirements in Indonesia

Under Indonesian law, Security Account Control Agreements must comply with Law No. 10 of 1998 on Banking, which governs banking operations and account management procedures. OJK Regulation requirements mandate specific disclosure obligations and operational procedures for securities intermediaries participating in control arrangements. The agreement must align with Law No. 42 of 1999 on Fiduciary Security for creating and perfecting security interests over financial assets. Corporate parties must ensure proper board resolutions and authorized signatory appointments under Indonesian company law. The document typically requires notarization and may need registration with relevant authorities depending on the underlying security structure. Compliance with foreign exchange regulations under Bank Indonesia requirements is mandatory when dealing with foreign currency accounts or cross-border transactions.