Share Subscription Agreement And Share Purchase Agreement Template for Indonesia

You need a Share Subscription Agreement And Share Purchase Agreement when you're planning to acquire both newly issued shares and existing shares from an Indonesian company in a single transaction. This hybrid document combines elements of share subscription (acquiring new shares from the company) and share purchase (buying existing shares from current shareholders), making it ideal for complex investment scenarios where you want to inject fresh capital while also providing exit opportunities for existing investors.

When do you need this document?

You'll require this agreement in several key scenarios. Growth-stage companies often use this structure when bringing in new investors who want to purchase both new shares to fund expansion and existing shares to provide liquidity to early investors or founders. Private equity transactions frequently involve this dual approach, allowing investors to acquire significant stakes while enabling partial exits for current shareholders. Corporate restructuring situations also benefit from this arrangement, particularly when consolidating ownership or facilitating strategic partnerships. Additionally, if you're a foreign investor entering the Indonesian market, this agreement helps you navigate ownership restrictions by structuring your investment optimally across new and existing share classes.

Key legal considerations

Your agreement must address several critical legal aspects to ensure enforceability and compliance. Share valuation mechanisms require careful consideration, as you'll need fair market value assessments for both subscription and purchase components. Payment structures should account for different treatment of funds going to the company versus existing shareholders, including any escrow arrangements or staged payments. Conditions precedent are crucial and typically include regulatory approvals, due diligence completion, and board resolutions. You must include comprehensive representations and warranties from both the company and selling shareholders, covering corporate standing, financial accuracy, and legal compliance. Additionally, your agreement should specify completion mechanics, including share transfer procedures, certificate delivery, and updating of company records with the Ministry of Law and Human Rights.

Legal requirements in Indonesia

Indonesian law imposes specific requirements that your agreement must satisfy. Under Law No. 40 of 2007 on Limited Liability Companies, share subscriptions require board of directors' resolutions and may need shareholder approval depending on the percentage increase in authorized capital. The agreement must comply with foreign ownership restrictions outlined in Presidential Regulation No. 10 of 2021, which specifies maximum foreign ownership percentages for different business sectors. For transactions involving public companies, you must adhere to OJK Regulation No. 32/POJK.04/2015 regarding capital increases and disclosure requirements. The document requires notarization by an Indonesian notary public, and share transfers must be recorded in the company's shareholder register. Additionally, if your transaction triggers reporting thresholds under competition law or involves strategic sectors, you may need approval from relevant authorities including the Indonesian Investment Coordinating Board (BKPM) or sector-specific regulators.