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The Convertible Loan Agreement serves as a crucial financing instrument in the Indonesian market, particularly for companies seeking growth capital while maintaining flexibility in their capital structure. This document is typically used when investors want to provide funding with the option to convert their loan into equity shares at a later stage, often during a subsequent funding round or upon specific trigger events. The agreement must carefully navigate Indonesian regulatory requirements, including the Investment Law (Law No. 25 of 2007), Company Law (Law No. 40 of 2007), and relevant OJK regulations. It includes detailed provisions on conversion mechanics, valuation methodologies, investor protection rights, and compliance with local foreign investment restrictions where applicable. The document is particularly valuable for startups and growth-stage companies as it provides immediate funding while deferring complex valuation discussions to a later date.

1. Parties: Identification of the Lender and Borrower, including complete legal names, company registration numbers, and addresses

2. Background: Context of the agreement, relationship between parties, and purpose of the convertible loan

3. Definitions: Detailed definitions of key terms used throughout the agreement, including financial, technical, and legal terms

4. Loan Amount and Purpose: Specification of the loan amount, currency, and intended use of funds

5. Interest: Interest rate, calculation method, payment periods, and default interest provisions

6. Drawdown: Conditions precedent to drawdown, drawdown mechanics, and notice requirements

7. Conversion Rights: Triggers for conversion, conversion price/mechanism, and timing of conversion rights

8. Conversion Procedure: Step-by-step process for executing the conversion, including notice requirements and documentation

9. Representations and Warranties: Standard and specific representations and warranties from both parties

10. Covenants: Positive and negative covenants of the Borrower, including information rights and operational restrictions

11. Events of Default: List of events triggering default and consequences thereof

12. Repayment Terms: Repayment schedule, prepayment provisions, and payment mechanics

13. Security: Details of any security or guarantees provided for the loan

14. Assignment and Transfer: Rights and restrictions regarding transfer of the agreement or conversion rights

15. Notices: Communication requirements and contact details for formal notices

16. Governing Law and Jurisdiction: Confirmation of Indonesian law as governing law and jurisdiction for disputes

17. Miscellaneous: Standard boilerplate provisions including severability, entire agreement, and amendments