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Debt To Equity Conversion Agreement for Indonesia

Debt To Equity Conversion Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian law that facilitates the conversion of outstanding debt obligations into equity shares in the debtor company. This agreement outlines the terms and conditions of the conversion, including the valuation methodology, conversion ratio, and regulatory compliance requirements under Indonesian corporate and financial services laws. It incorporates necessary provisions for corporate approvals, shareholder rights, and regulatory filings with relevant Indonesian authorities such as the OJK (Financial Services Authority) and Ministry of Law and Human Rights.

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Debt To Equity Conversion Agreement

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What is a Debt To Equity Conversion Agreement?

The Debt To Equity Conversion Agreement is a crucial instrument in Indonesian corporate restructuring and debt reorganization scenarios. It is typically employed when a company seeks to improve its balance sheet structure by converting existing debt obligations into equity shares, thereby reducing its debt burden and strengthening its capital structure. This document is particularly relevant in the context of Indonesian corporate law and financial regulations, requiring careful consideration of various regulatory requirements including OJK regulations, Company Law (Law No. 40 of 2007), and foreign investment restrictions if applicable. The agreement needs to address specific Indonesian legal requirements for share issuance, corporate approvals, and regulatory filings, while also considering tax implications and foreign exchange regulations where relevant. It's commonly used in financial distress situations, strategic corporate restructuring, or as part of larger reorganization plans.

What sections should be included in a Debt To Equity Conversion Agreement?

1. Parties: Identification of the creditor(s) and debtor company, including registration details as required under Indonesian law

2. Background: Recitals explaining the existing debt arrangement and the parties' intention to convert the debt to equity

3. Definitions: Key terms used throughout the agreement, including specific Indonesian legal and regulatory terms

4. Acknowledgment of Debt: Confirmation of the existing debt amount and its validity

5. Conversion Terms: Core terms of the conversion including conversion ratio, share price, and number of shares to be issued

6. Conditions Precedent: Prerequisites for the conversion, including corporate and regulatory approvals required under Indonesian law

7. Conversion Mechanics: Detailed process of how the conversion will be implemented, including timing and documentation requirements

8. Representations and Warranties: Standard and specific warranties from both parties, including corporate authority and compliance with Indonesian regulations

9. Completion Requirements: Actions required to complete the conversion, including registration with relevant Indonesian authorities

10. Post-Conversion Rights: Rights of the creditor as new shareholder and any specific arrangements post-conversion

11. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction provisions

12. Notices: Communication procedures between parties

13. General Provisions: Standard boilerplate clauses adapted to Indonesian law requirements

What sections are optional to include in a Debt To Equity Conversion Agreement?

1. Security Arrangements: Required if any existing security needs to be released or new security created as part of the conversion

2. Foreign Investment Provisions: Required if the creditor is a foreign entity, addressing Indonesian foreign investment regulations

3. Tax Provisions: Detailed tax treatment section required if specific tax arrangements are agreed between parties

4. Shareholder Rights: Required if special rights are being granted to the creditor as new shareholder

5. Currency Provisions: Required if the debt is in foreign currency, addressing exchange rate mechanisms

6. Step-In Rights: Optional provisions for creditor intervention rights in specific circumstances

7. Anti-Dilution Protection: Optional provisions protecting the creditor's equity position post-conversion

What schedules should be included in a Debt To Equity Conversion Agreement?

1. Debt Details Schedule: Detailed breakdown of the debt being converted, including principal, interest, and other amounts

2. Conversion Calculations: Detailed calculations showing conversion ratio, share price, and number of shares

3. Form of Shareholders Resolution: Template of required corporate approvals under Indonesian law

4. Form of Board Resolution: Template of required board approvals

5. Form of Completion Certificate: Template certificate confirming completion of conversion requirements

6. Required Regulatory Filings: List and templates of required filings with OJK, Ministry of Law and Human Rights, and other authorities

7. New Constitutional Documents: Updated company constitution reflecting new shareholding structure

8. Existing Security Documents: Copies of security documents to be released or modified

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Indonesia

Publisher

Ƶ

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions














































Clauses
































Relevant Industries

Banking & Financial Services

Manufacturing

Real Estate & Property

Mining & Resources

Infrastructure

Technology

Retail & Consumer

Agriculture

Healthcare

Transportation & Logistics

Telecommunications

Energy

Relevant Teams

Legal

Finance

Treasury

Corporate Secretarial

Compliance

Risk Management

Corporate Planning

Tax

Accounting

Board Secretariat

Corporate Communications

Investor Relations

Relevant Roles

Chief Financial Officer

Chief Legal Officer

Corporate Secretary

Finance Director

Legal Director

Treasury Manager

Financial Controller

Corporate Finance Manager

Legal Counsel

Compliance Officer

Risk Manager

Investment Manager

Restructuring Officer

Company Director

Board Member

Financial Advisor

Corporate Planning Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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