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Equity Commitment Agreement for Indonesia

Equity Commitment Agreement Template for Indonesia

An Equity Commitment Agreement under Indonesian law is a legally binding document that formalizes an investor's commitment to provide equity funding to a company. The agreement is structured in accordance with Indonesian corporate law, particularly Law No. 40 of 2007 on Limited Liability Companies and related investment regulations. It details the terms and conditions of the equity investment, including the amount, timing, form of investment, conditions precedent, and closing requirements. The document must comply with Indonesian language requirements and typically includes provisions for regulatory approvals, particularly when involving foreign investment.

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Equity Commitment Agreement

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What is a Equity Commitment Agreement?

The Equity Commitment Agreement is a crucial document in Indonesian corporate and investment transactions, used when investors agree to make equity investments in a company. It serves as a binding commitment to provide specified funding and outlines the terms and conditions under which such investment will be made. The agreement must comply with Indonesian regulatory requirements, including Law No. 40 of 2007 on Limited Liability Companies, Investment Law, and where applicable, foreign investment regulations. It's particularly important in contexts where funding may be needed in stages or where certain conditions must be met before the investment is made. The document typically includes detailed provisions on investment structure, conditions precedent, representations and warranties, and regulatory compliance requirements specific to the Indonesian market.

What sections should be included in a Equity Commitment Agreement?

1. Parties: Identification of all parties to the agreement, including the company, existing shareholders, and new investors

2. Background: Context of the investment, company status, and purpose of the equity commitment

3. Definitions: Definitions of key terms used throughout the agreement

4. Equity Commitment: Details of the equity commitment, including amount, form, and timing of investment

5. Conditions Precedent: Conditions that must be satisfied before the equity commitment becomes effective

6. Closing Mechanics: Procedures and requirements for completing the investment

7. Representations and Warranties: Statements of fact and assurances from all parties

8. Covenants: Ongoing obligations and commitments of the parties

9. Default and Remedies: Consequences of failure to fulfill commitments and available remedies

10. Termination: Circumstances under which the agreement may be terminated

11. Confidentiality: Obligations regarding confidential information

12. Notices: Process for formal communications between parties

13. Governing Law and Dispute Resolution: Choice of Indonesian law and dispute resolution mechanisms

14. General Provisions: Standard boilerplate provisions including amendments, assignments, and severability

What sections are optional to include in a Equity Commitment Agreement?

1. Tag-Along Rights: Optional section for minority investor protection, used when existing shareholders retain significant stakes

2. Drag-Along Rights: Optional section for majority shareholder rights, used in cases of potential future sale

3. Anti-Dilution Protection: Optional section protecting investors from dilution in future rounds, used for minority investor protection

4. Registration Rights: Optional section for future IPO scenarios, used when public listing is contemplated

5. Management Provisions: Optional section detailing management rights and board representation, used for significant investments

6. Future Funding Commitments: Optional section for planned subsequent investment rounds

7. Currency Controls: Optional section addressing Indonesian currency control requirements, used for foreign investors

8. Tax Provisions: Optional detailed tax provisions, used when complex tax structures are involved

What schedules should be included in a Equity Commitment Agreement?

1. Schedule 1: Subscription Details: Detailed breakdown of equity commitment amounts, share classes, and pricing

2. Schedule 2: Conditions Precedent: Detailed list of all conditions that must be satisfied

3. Schedule 3: Closing Deliverables: List of documents and actions required at closing

4. Schedule 4: Form of Shareholders Agreement: Draft or key terms of accompanying shareholders agreement

5. Schedule 5: Corporate Structure: Pre and post-investment corporate structure charts

6. Schedule 6: Warranties: Detailed warranties given by the company and existing shareholders

7. Appendix A: Form of Share Certificate: Template for share certificates to be issued

8. Appendix B: Required Regulatory Approvals: List of required Indonesian regulatory approvals and status

9. Appendix C: Board Resolutions: Form of required corporate authorizations

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

Cost

Free to use
Relevant legal definitions















































Clauses







































Relevant Industries

Technology

Manufacturing

Financial Services

Infrastructure

Real Estate

Energy

Mining

Agriculture

Healthcare

E-commerce

Telecommunications

Transportation

Retail

Education

Consumer Goods

Relevant Teams

Legal

Finance

Corporate Development

Investment

Compliance

Risk Management

Strategy

Executive Leadership

Corporate Secretary Office

Treasury

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Investment Director

Corporate Finance Manager

Legal Counsel

Investment Manager

Corporate Secretary

Finance Director

Compliance Officer

Private Equity Manager

Venture Capital Manager

Board Director

Managing Partner

Investment Analyst

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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