Sub Advisor Agreement Template for Indonesia

When operating investment advisory services in Indonesia, you may need to engage specialized professionals to handle specific aspects of your client portfolios. A Sub Advisor Agreement provides the legal foundation for these professional relationships, ensuring compliance with Indonesian financial regulations while protecting all parties involved. This document establishes clear terms for delegating investment responsibilities while maintaining regulatory oversight and client protection standards required under OJK supervision.

When do you need this document?

You need a Sub Advisor Agreement when your investment advisory firm lacks specific expertise in certain asset classes, geographic markets, or investment strategies that your clients require. This commonly occurs when managing international portfolios, specialized sectors like Islamic finance, or complex derivatives trading that requires particular technical knowledge. Investment management companies also use these agreements when expanding into new market segments without hiring additional permanent staff, or when regulatory requirements demand local expertise in foreign jurisdictions. The document becomes essential when your primary advisory license covers broad investment activities, but you need specialized sub-advisors to deliver comprehensive services to institutional clients or high-net-worth individuals.

Key legal considerations

The agreement must clearly define the scope of delegated authority, ensuring the sub-advisor operates within the boundaries of your primary advisory license and client mandates. Risk management provisions are critical, establishing how investment risks will be monitored, reported, and controlled between both parties. Compliance obligations require detailed specification of regulatory reporting responsibilities, with clear protocols for OJK filings and client disclosures. Fee arrangements must transparently outline compensation structures, ensuring clients understand all costs associated with sub-advisory services. Termination clauses should address portfolio transition procedures, protecting client interests during any change in sub-advisory relationships. Confidentiality provisions must safeguard sensitive client information and proprietary investment strategies shared during the advisory relationship.

Legal requirements in Indonesia

Indonesian law requires both primary advisors and sub-advisors to hold appropriate licenses from OJK under the Capital Market Law framework. The agreement must comply with OJK Regulation No. 25/POJK.03/2016 regarding investment advisory company licensing, ensuring all parties meet ongoing professional and financial requirements. Documentation must align with Indonesian Company Law No. 40 of 2007 when corporate entities serve as sub-advisors, establishing proper legal capacity and authorization. Risk management protocols must satisfy OJK prudential requirements, with regular reporting to ensure continued compliance with capital adequacy and operational risk standards. Client disclosure obligations under Indonesian securities regulations require specific language regarding sub-advisory arrangements, fees, and potential conflicts of interest. The agreement structure must conform to Indonesian Civil Code contract principles, ensuring enforceability and proper legal remedy procedures in case of disputes.