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Option Agreement for Indonesia

Option Agreement Template for Indonesia

A legally binding agreement governed by Indonesian law that grants one party (the option holder) the right, but not the obligation, to either buy from or sell to another party (the option grantor) specific assets, shares, or rights at a predetermined price within a specified period. The agreement must comply with Indonesian Civil Code requirements and, where applicable, capital market regulations under OJK supervision. It includes detailed provisions on exercise mechanics, pricing, conditions precedent, and completion procedures, all structured to ensure enforceability under Indonesian law.

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What is a Option Agreement?

An Option Agreement is a crucial legal instrument in Indonesian business transactions that provides flexibility and risk management in various commercial contexts. This document type is commonly used for share purchases, asset acquisitions, real estate transactions, and strategic investments in Indonesia. The agreement must comply with Indonesian Civil Code (Kitab Undang-undang Hukum Perdata) requirements and, where applicable, capital market regulations overseen by the Financial Services Authority (OJK). Option Agreements are particularly valuable in situations requiring future flexibility, such as corporate restructurings, joint venture exits, or phased investments. They typically include detailed provisions on option exercise mechanisms, pricing formulas, conditions precedent, and regulatory compliance requirements specific to the Indonesian legal framework.

What sections should be included in a Option Agreement?

1. Parties: Identification of the option grantor and grantee, including full legal names and addresses

2. Background: Recitals explaining the context and purpose of the option agreement

3. Definitions: Key terms used throughout the agreement, including Option, Exercise Price, Exercise Period, and Underlying Asset

4. Grant of Option: Core provision establishing the option, its nature (call/put), and basic terms

5. Option Price: Details of any premium payable for the option itself

6. Exercise Price and Payment: Specification of the exercise price and payment mechanisms

7. Exercise Period and Mechanics: Timeframe and procedure for exercising the option

8. Completion/Settlement: Process and obligations upon exercise of the option

9. Representations and Warranties: Standard assurances from both parties regarding capacity, authority, and underlying assets

10. Covenants: Ongoing obligations of the parties during the option period

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

12. Notices: Communication procedures between parties

13. Governing Law and Jurisdiction: Confirmation of Indonesian law application and dispute resolution provisions

14. General Provisions: Standard boilerplate clauses including assignment, amendments, and severability

What sections are optional to include in a Option Agreement?

1. Regulatory Approvals: Required when the option exercise requires governmental or regulatory consent

2. Security Provisions: Used when collateral is provided to secure option obligations

3. Tag-Along/Drag-Along Rights: Included for share options where other shareholders' rights need to be addressed

4. Non-Competition/Non-Solicitation: Added when the option relates to business acquisitions

5. Tax Provisions: Detailed tax clauses when complex tax implications exist

6. Foreign Investment Provisions: Required when the option involves foreign investors and Indonesian investment law compliance

7. Multiple Tranches: When the option can be exercised in multiple parts or phases

8. Force Majeure: Extended force majeure provisions when required for long-term options

What schedules should be included in a Option Agreement?

1. Form of Exercise Notice: Template notice for exercising the option

2. Description of Option Assets: Detailed description of the underlying assets subject to the option

3. Calculation of Exercise Price: If the exercise price involves complex calculations or adjustments

4. Required Approvals: List of necessary regulatory or third-party approvals

5. Deed of Adherence: For share options where existing shareholders' agreements apply

6. Corporate Documents: Relevant corporate authorizations and registrations

7. Security Documents: If security/collateral is involved

8. Completion Checklist: List of actions and documents required upon exercise

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

Agreement Contract

Cost

Free to use
Relevant legal definitions













































Clauses


































Relevant Industries

Financial Services

Real Estate

Mining

Agriculture

Manufacturing

Technology

Retail

Energy

Infrastructure

Telecommunications

Private Equity

Venture Capital

Relevant Teams

Legal

Finance

Corporate Development

Mergers & Acquisitions

Treasury

Compliance

Risk Management

Corporate Secretariat

Business Development

Investment

Strategic Planning

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Corporate Secretary

Investment Manager

Business Development Manager

Risk Manager

Compliance Officer

Finance Director

Managing Director

Investment Banker

Corporate Lawyer

Treasury Manager

Portfolio Manager

Strategic Planning 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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