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Share Retention Agreement

Share Retention Agreement Template for Indonesia

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Key Requirements PROMPT example:

Share Retention Agreement

"I need a Share Retention Agreement under Indonesian law for our upcoming IPO in March 2025, requiring major shareholders (holding >5%) to retain their shares for 24 months, with specific provisions for permitted transfers to family members."

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Document background
A Share Retention Agreement is a crucial document in Indonesian corporate transactions, particularly used in contexts such as initial public offerings (IPOs), strategic investments, or corporate restructurings. The agreement ensures stability in company ownership by requiring certain shareholders to maintain their shareholding for a specified period. It must comply with Indonesian regulatory requirements, including OJK regulations for public companies and the Indonesian Company Law (Law No. 40 of 2007). The document typically outlines retention obligations, transfer restrictions, compliance requirements, and enforcement mechanisms. It's particularly important in sectors with foreign ownership restrictions and for companies seeking to maintain strategic control or comply with regulatory requirements. The agreement often needs to be drafted in both English and Bahasa Indonesia to ensure enforceability.
Suggested Sections

1. Parties: Identification of the parties entering into the agreement, including the company, the retaining shareholders, and any other relevant parties

2. Background: Context of the agreement, including the company's current shareholding structure and the purpose of the share retention arrangement

3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation

4. Retention Obligation: Core provisions specifying the number of shares to be retained, duration of retention, and minimum shareholding requirements

5. Transfer Restrictions: Specific restrictions on transfer, pledge, or encumbrance of the retained shares

6. Permitted Transfers: Circumstances under which transfers of retained shares may be permitted, including any conditions or requirements

7. Compliance and Reporting: Obligations to comply with relevant regulations and report any changes in shareholding

8. Representations and Warranties: Standard declarations by the parties regarding their capacity, authority, and ownership of shares

9. Events of Default: Circumstances constituting breach of the agreement and their consequences

10. Remedies: Available remedies in case of breach, including specific performance and damages

11. Term and Termination: Duration of the agreement and circumstances for early termination

12. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

13. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

Optional Sections

1. Tag-Along Rights: Include when certain shareholders are given the right to join in the sale of shares by other shareholders

2. Drag-Along Rights: Include when majority shareholders can force minority shareholders to join in the sale of shares

3. Public Company Compliance: Include for publicly listed companies to address specific OJK regulations and reporting requirements

4. Foreign Ownership Provisions: Include when there are foreign shareholders to ensure compliance with Indonesian foreign ownership restrictions

5. Share Pledge Restrictions: Include when there are specific requirements regarding the pledge of shares as collateral

6. Right of First Refusal: Include when existing shareholders are to be given priority rights to purchase shares before they can be offered to third parties

7. Lock-up Period Extensions: Include when there are provisions for extending the initial retention period under certain circumstances

Suggested Schedules

1. Schedule 1 - Details of Retained Shares: List of shareholders and their respective shareholdings subject to retention

2. Schedule 2 - Deed of Adherence: Form of deed to be executed by new shareholders joining the agreement

3. Schedule 3 - Permitted Transfer Procedures: Detailed procedures and requirements for executing permitted transfers

4. Schedule 4 - Compliance Certificate: Form of certificate confirming compliance with retention obligations

5. Schedule 5 - Shareholder Information: Detailed information about each shareholder including contact details and shareholding history

6. Appendix A - Corporate Approvals: Copies of relevant corporate approvals and resolutions

7. Appendix B - Regulatory Confirmations: Copies of any required regulatory approvals or confirmations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Affiliate
Articles of Association
Board
Board of Commissioners
Board of Directors
Business Day
Company
Confidential Information
Deed of Adherence
Effective Date
Encumbrance
Event of Default
Financial Year
Free Float
General Meeting of Shareholders (GMS)
Governmental Authority
IDX
Lock-up Period
Material Adverse Effect
OJK
Permitted Transfer
Prohibited Transfer
Relevant Shares
Restricted Period
Retention Obligation
Retained Shares
Securities
Share Capital
Shareholder
Shareholders Agreement
Shares
Subsidiary
Transfer
Ultimate Beneficial Owner
Voting Rights
Relevant Industries

Financial Services

Banking

Technology

Mining

Energy

Manufacturing

Telecommunications

Real Estate

Infrastructure

Healthcare

Retail

Agriculture

Transportation

Education

Relevant Teams

Legal

Corporate Secretarial

Compliance

Finance

Risk Management

Corporate Governance

Investor Relations

Board Secretariat

Executive Management

Shareholder Services

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

Legal Director

Compliance Officer

Investment Relations Manager

Board Director

Managing Director

General Counsel

Legal Manager

Corporate Governance Officer

Risk Management Officer

Company Director

Shareholder Relations Manager

Chief Legal Officer

Industries
Law No. 40 of 2007 on Limited Liability Companies (Company Law): The fundamental law governing Indonesian companies, including provisions on share ownership, transfer restrictions, and shareholder rights and obligations
Law No. 8 of 1995 on Capital Markets: Regulates securities trading, public offerings, and share retention requirements for publicly listed companies
OJK Regulation No. 25/POJK.04/2017: Restrictions on Share Capital Reduction in Public Companies, including provisions on share retention periods
Presidential Regulation No. 10 of 2021 on Investment Business Fields: Provides framework for foreign investment restrictions and ownership limitations in various business sectors
Law No. 25 of 2007 on Investment: General framework for foreign and domestic investment, including provisions affecting share ownership and transfers
OJK Regulation No. 11/POJK.04/2017: Reporting requirements for ownership of substantial shares in public companies
Indonesian Civil Code (Kitab Undang-undang Hukum Perdata): Basic contract law principles applicable to share retention agreements
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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