Shareholder Rights Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes and regulates the rights, obligations, and relationships between shareholders in an Indonesian limited liability company (PT). The document incorporates provisions compliant with Law No. 40 of 2007 on Limited Liability Companies and related Indonesian regulations, addressing key aspects such as voting rights, share transfers, pre-emptive rights, corporate governance, and dispute resolution mechanisms. It provides essential protections for both majority and minority shareholders while ensuring alignment with Indonesian investment and company law requirements.

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What is a Shareholder Rights Agreement?

The Shareholder Rights Agreement serves as a fundamental document for Indonesian companies (PTs) with multiple shareholders, particularly those with diverse ownership structures or foreign investment components. This agreement becomes essential when establishing clear protocols for shareholder interactions, corporate governance, and share dealings. It addresses critical aspects such as share transfer restrictions, pre-emptive rights, tag-along and drag-along provisions, and information rights, all while ensuring compliance with Indonesian company law and investment regulations. The document is particularly relevant for companies experiencing ownership transitions, seeking investment, or establishing governance frameworks. Recent updates to Indonesian corporate law and OJK regulations have made such agreements increasingly important for protecting shareholder interests and maintaining corporate stability.

What sections should be included in a Shareholder Rights Agreement?

1. Parties: Identifies all parties to the agreement, including the company and all shareholders

2. Background: Sets out the context of the agreement, company information, and purpose of the arrangement

3. Definitions and Interpretation: Defines key terms and establishes rules for interpreting the agreement

4. Share Capital and Shareholders: Details the company's share capital structure and shareholding percentages

5. Shareholder Rights: Outlines fundamental rights including voting, dividends, and information rights

6. Transfer of Shares: Establishes procedures and restrictions for transferring shares

7. Pre-emptive Rights: Details shareholders' rights to maintain their percentage ownership in new share issuances

8. Tag-Along and Drag-Along Rights: Specifies minority protection and majority exit rights

9. Corporate Governance: Establishes board composition, appointment rights, and decision-making processes

10. General Meetings: Procedures for shareholder meetings, voting, and resolutions

11. Information Rights: Specifies shareholders' rights to company information and financial reports

12. Confidentiality: Obligations regarding confidential information

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

14. Governing Law and Dispute Resolution: Specifies Indonesian law as governing law and dispute resolution mechanisms

What sections are optional to include in a Shareholder Rights Agreement?

1. Share Classes and Rights: Required when multiple share classes exist with different rights and privileges

2. Weighted Voting Rights: Included when certain shareholders have enhanced voting rights

3. Anti-dilution Protection: Added for agreements involving venture capital or strategic investors

4. Put and Call Options: Included when specific share purchase or sale rights are granted to certain shareholders

5. Non-Compete and Non-Solicitation: Added when shareholders are also involved in business operations

6. Reserved Matters: Listed when certain decisions require special majority or unanimous approval

7. Foreign Investment Provisions: Required when foreign shareholders are involved, addressing compliance with Indonesian investment laws

8. Deadlock Resolution: Included for companies with equal shareholding or potential management deadlock situations

What schedules should be included in a Shareholder Rights Agreement?

1. Schedule 1: Details of the Company: Company registration details, share capital, and current shareholding structure

2. Schedule 2: Initial Shareholders and Shareholding: List of all shareholders and their initial shareholding percentages

3. Schedule 3: Reserved Matters: Detailed list of decisions requiring special approval

4. Schedule 4: Board Composition: Details of initial board members and board composition rules

5. Schedule 5: Deed of Adherence: Template for new shareholders to join the agreement

6. Schedule 6: Tag and Drag Notice Forms: Template notices for exercising tag-along and drag-along rights

7. Schedule 7: Valuation Principles: Agreed methods for share valuation in various circumstances

8. Appendix A: Corporate Governance Guidelines: Detailed procedures for corporate governance and decision-making

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

Jurisdiction

Indonesia

Publisher

Genie AI

Cost

Free to use

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