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Fund Distribution Agreement for Indonesia

Fund Distribution Agreement Template for Indonesia

A Fund Distribution Agreement under Indonesian law establishes the legal framework for the distribution of investment funds or financial products between parties. The agreement complies with Indonesian Financial Services Authority (OJK) regulations and relevant banking laws, incorporating necessary provisions for fund management, distribution channels, compliance requirements, and risk management. This document addresses key aspects such as distribution mechanisms, fee structures, regulatory compliance, reporting obligations, and risk allocation, while ensuring alignment with Indonesian banking and investment regulations, anti-money laundering laws, and consumer protection requirements.

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What is a Fund Distribution Agreement?

The Fund Distribution Agreement is a crucial document used in Indonesian financial markets to formalize arrangements between fund managers, distributors, and other financial institutions for the distribution of investment products or funds. This agreement becomes necessary when establishing new distribution channels for financial products, expanding distribution networks, or setting up partnerships between financial institutions. The document must comply with Indonesian Financial Services Authority (OJK) regulations, banking laws, and other relevant financial sector regulations. It typically includes comprehensive provisions covering distribution rights, territorial scope, compliance requirements, fee structures, and operational procedures. The agreement is particularly important in the context of Indonesia's growing financial services sector, where proper documentation and regulatory compliance are essential for fund distribution activities.

What sections should be included in a Fund Distribution Agreement?

1. Parties: Identification of all parties to the agreement, including their legal status and registered addresses

2. Background: Context of the agreement, including the purpose of the fund distribution arrangement and parties' authority to enter into the agreement

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Appointment and Authority: Formal appointment of the distributor and scope of their authority

5. Fund Distribution Mechanism: Detailed process for fund distribution, including channels, methods, and timing

6. Fees and Charges: Structure of fees, charges, and commission arrangements

7. Compliance Requirements: Regulatory compliance obligations, including AML/CTF requirements

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

9. Rights and Obligations: Detailed responsibilities and rights of each party

10. Record Keeping and Reporting: Requirements for maintaining records and providing reports

11. Confidentiality: Protection and handling of confidential information

12. Term and Termination: Duration of agreement and circumstances for termination

13. Indemnification: Provisions for compensation in case of losses or breaches

14. Governing Law and Dispute Resolution: Applicable law and method of resolving disputes

15. Miscellaneous: Standard boilerplate provisions including notices, amendments, and severability

What sections are optional to include in a Fund Distribution Agreement?

1. Electronic Transactions: Include when distribution involves digital platforms or electronic payment systems

2. Marketing and Promotion: Include when distributor will conduct marketing activities

3. Insurance Requirements: Include when specific insurance coverage is required for the distribution activities

4. Service Level Agreement: Include when specific performance metrics need to be maintained

5. Force Majeure: Include when parties want specific provisions for unforeseen circumstances

6. Data Protection: Include when personal data processing is involved in fund distribution

7. Sub-distributor Arrangements: Include when sub-distributors may be appointed

8. Training Requirements: Include when specific training is required for distribution staff

What schedules should be included in a Fund Distribution Agreement?

1. Schedule 1 - Distribution Territory: Detailed description of geographical areas covered by the agreement

2. Schedule 2 - Fee Structure: Detailed breakdown of all fees, charges, and commission calculations

3. Schedule 3 - Operating Procedures: Step-by-step procedures for fund distribution operations

4. Schedule 4 - Compliance Checklist: Detailed compliance requirements and procedures

5. Schedule 5 - Reporting Templates: Standard formats for required reports and documentation

6. Schedule 6 - Key Personnel: List of key personnel responsible for agreement implementation

7. Appendix A - Required Documentation: List of documents required for fund distribution

8. Appendix B - System Requirements: Technical specifications for electronic systems if applicable

Authors

Alex Denne

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

Jurisdiction

Indonesia

Publisher

Genie AI

Cost

Free to use

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