Security Assignment Agreement Template for Indonesia

A Security Assignment Agreement is a vital legal instrument that allows you to create enforceable security interests over receivables, contractual rights, and other assignable assets in Indonesian financing transactions. This document serves as the foundation for secured lending arrangements, enabling creditors to protect their interests by taking assignment of specified rights as collateral for underlying obligations.

When do you need this document?

You require a Security Assignment Agreement whenever you're entering into secured financing arrangements where receivables or contractual rights serve as collateral. This includes project financing deals where future revenue streams are assigned as security, loan transactions secured by trade receivables or contract proceeds, and refinancing arrangements where existing rights are transferred to new lenders. The agreement is also essential in syndicated lending structures, asset-based financing where accounts receivable provide security, and Islamic financing transactions that require Sharia-compliant security structures.

Key legal considerations

The agreement must clearly identify all assigned rights and specify the secured obligations to ensure enforceability under Indonesian law. You need to include comprehensive representations and warranties regarding the validity and enforceability of assigned rights, along with detailed covenants governing the assignor's ongoing obligations. The document should address perfection requirements, including mandatory registration procedures and notice provisions to account debtors. Critical clauses include enforcement mechanisms that comply with Indonesian procedural requirements, governing law provisions that ensure consistent interpretation, and dispute resolution mechanisms. You must also consider the impact on existing security interests and ensure proper priority arrangements with other creditors.

Legal requirements in Indonesia

Indonesian law imposes specific requirements that you must satisfy for valid security assignments. Under Law No. 42 of 1999 on Fiduciary Security, assignments over movable assets require registration with the Fiduciary Registry Office within 30 days of execution. The Indonesian Civil Code governs the fundamental principles of assignment, including requirements for valid transfer of contractual rights and notification obligations to account debtors. You must ensure compliance with OJK Regulation No. 31/POJK.05/2018 for financing transactions, which establishes additional disclosure and documentation requirements. The agreement must be executed in Indonesian language or accompanied by certified translations, and stamp duties must be paid according to Law No. 13 of 1985. For assignments involving immovable property rights, compliance with Law No. 4 of 1996 on Land Mortgage may be required, including registration with the National Land Agency.