Third Party Security Agreement Template for Indonesia

The Third Party Security Agreement is essential in Indonesian financial and commercial transactions where a party other than the primary debtor provides security for the debtor's obligations. This document is commonly used in various scenarios, such as parent companies securing subsidiaries' debts, directors securing company obligations, or related companies providing cross-security arrangements. The agreement must be drafted in compliance with Indonesian law, particularly Law No. 42 of 1999 on Fiduciary Security, Law No. 4 of 1996 on Land Mortgage, and the Indonesian Civil Code. It should detail the security arrangement, including asset description, secured obligations, enforcement mechanisms, and registration requirements. The document becomes crucial when the creditor requires additional security beyond the debtor's assets, and a third party is willing to provide security support. Given Indonesian law requirements, the agreement must be properly executed, often requiring notarization and registration with relevant authorities for enforceability.

1. Parties: Identifies and defines the three main parties: Creditor, Debtor, and Security Provider

2. Background: Explains the context of the security arrangement, including reference to the underlying debt obligation

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Security Interest Creation: Establishes the creation and nature of the security interest over the secured assets

5. Secured Obligations: Defines the obligations being secured under the agreement

6. Representations and Warranties: Contains representations and warranties from the Security Provider regarding ownership and authority

7. Security Provider Covenants: Details the ongoing obligations of the Security Provider regarding the secured assets

8. Protection of Security: Specifies measures to maintain and protect the security interest

9. Enforcement: Details the circumstances and procedures for enforcing the security interest

10. Power of Attorney: Grants specific powers to the Creditor for security perfection and enforcement

11. Expenses and Indemnity: Addresses costs, expenses, and indemnification obligations

12. Termination: Specifies when and how the security arrangement terminates

13. Notices: Sets out the procedure for giving notices under the agreement

14. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and determines jurisdiction for disputes