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Inventory Security Agreement for Indonesia

Inventory Security Agreement Template for Indonesia

This document establishes a security interest over inventory assets under Indonesian law, particularly complying with Law No. 42 of 1999 on Fiducia Security. It creates a legally enforceable security interest over the grantor's inventory in favor of the secured party, typically as part of a larger financing arrangement. The agreement includes detailed provisions for inventory identification, maintenance requirements, reporting obligations, and enforcement mechanisms. It must be registered with the Fiducia Registration Office to be fully effective under Indonesian law and provides the secured party with priority rights over the secured inventory in case of default.

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What is a Inventory Security Agreement?

The Inventory Security Agreement is a crucial document in Indonesian secured financing transactions, used when a borrower needs to provide security over its inventory to secure financial obligations. This agreement must comply with Indonesian Law No. 42 of 1999 on Fiducia Security and related regulations, requiring specific formalities including notarization and registration with the Fiducia Registration Office. It's commonly used in trade finance, working capital facilities, and general corporate financing where the borrower maintains significant inventory. The document details the secured inventory, storage locations, maintenance requirements, reporting obligations, and enforcement mechanisms, while addressing specific Indonesian law requirements for creating and perfecting security interests over movable assets.

What sections should be included in a Inventory Security Agreement?

1. Parties: Identification of the Secured Party (typically a lender or financial institution) and the Grantor (the entity granting security over its inventory)

2. Background: Context of the security arrangement, including reference to any underlying facility or loan agreement

3. Definitions: Definitions of key terms used throughout the agreement, including 'Inventory', 'Secured Obligations', 'Security Interest', and 'Event of Default'

4. Creation of Security Interest: Provisions establishing the security interest over the inventory, including the granting clause

5. Secured Obligations: Description of the obligations being secured by the inventory

6. Representations and Warranties: Grantor's representations regarding ownership, condition, and location of inventory

7. Covenants: Ongoing obligations regarding maintenance, insurance, and reporting of inventory

8. Perfection Requirements: Requirements for registering the security interest with relevant authorities

9. Events of Default: Circumstances constituting default under the agreement

10. Enforcement Rights: Secured party's rights and remedies upon default

11. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and choice of courts

12. Execution: Signature blocks and execution formalities

What sections are optional to include in a Inventory Security Agreement?

1. Insurance: Detailed insurance requirements if not covered in underlying facility agreement

2. Third Party Rights: Required if there are existing security interests or rights over the inventory

3. Tax Provisions: Include if specific tax implications need to be addressed

4. Further Assurance: Include if additional documentation or registration may be required in future

5. Power of Attorney: Include if secured party requires specific powers to act on behalf of grantor

6. Notices: Include if notice requirements are not covered in underlying facility agreement

What schedules should be included in a Inventory Security Agreement?

1. Schedule 1 - Inventory Description: Detailed description and categorization of secured inventory

2. Schedule 2 - Inventory Locations: List of locations where inventory is stored

3. Schedule 3 - Existing Security Interests: Details of any existing security interests over the inventory

4. Schedule 4 - Form of Inventory Report: Template for periodic inventory reporting

5. Schedule 5 - Registration Requirements: Checklist of fiducia registration requirements and forms

6. Appendix A - Power of Attorney: Form of power of attorney for security registration and enforcement

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

Security Agreement

Cost

Free to use
Relevant legal definitions



































Clauses






























Relevant Industries

Manufacturing

Retail

Wholesale Trade

Agriculture

Automotive

Consumer Goods

Electronics

Pharmaceutical

Textiles

Food and Beverage

Commodities Trading

Logistics and Warehousing

Relevant Teams

Legal

Finance

Treasury

Operations

Supply Chain

Risk Management

Compliance

Credit

Warehouse Operations

Inventory Control

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Lawyer

Compliance Officer

Risk Manager

Operations Director

Warehouse Manager

Inventory Control Manager

Supply Chain Manager

Credit Manager

Security Trustee

Facility Agent

Commercial Director

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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