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Sale Of Shares Contract Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that documents the transfer of ownership of shares from one party (seller) to another (buyer). This document must comply with Law No. 40 of 2007 on Limited Liability Companies and related Indonesian regulations. It details the terms and conditions of the share transfer, including purchase price, payment terms, warranties, and conditions precedent, while ensuring compliance with Indonesian investment regulations, particularly those administered by the Investment Coordinating Board (BKPM). The agreement includes provisions for regulatory approvals, tax obligations, and specific requirements for share transfers under Indonesian corporate law.

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What is a Sale Of Shares Contract?

The Sale Of Shares Contract is a crucial document used in Indonesian business transactions when transferring ownership of shares in a company. This agreement is essential for both domestic and foreign investment transactions, requiring compliance with Indonesian Company Law (Law No. 40 of 2007) and investment regulations. It's particularly important when documenting share transfers in private companies, mergers and acquisitions, or strategic investments. The document typically includes detailed provisions on share valuation, payment terms, warranties, and regulatory compliance requirements. Special attention must be paid to foreign ownership restrictions, mandatory reporting to Indonesian authorities, and tax implications. The contract serves as the primary evidence of the transaction and must be executed in accordance with Indonesian legal requirements, often requiring notarization and registration with relevant authorities.

What sections should be included in a Sale Of Shares Contract?

1. Parties: Identification of the Seller(s) and Buyer(s), including complete legal names and addresses

2. Background: Context of the transaction, including details about the Company whose shares are being sold

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

4. Sale and Purchase: Core transaction terms including number of shares, percentage of ownership being transferred

5. Purchase Price: Specified purchase price, payment terms, and payment method

6. Conditions Precedent: Conditions that must be satisfied before completion, including regulatory approvals

7. Completion: Details of the completion process, timing, and deliverables

8. Seller's Warranties: Warranties regarding share ownership, authority to sell, and company status

9. Buyer's Warranties: Warranties regarding authority to purchase and financial capacity

10. Covenants: Pre and post-completion obligations of the parties

11. Tax Matters: Allocation of tax liabilities and obligations

12. Confidentiality: Obligations regarding confidential information

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

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

What sections are optional to include in a Sale Of Shares Contract?

1. Anti-dilution Provisions: Used when protecting against future share issuances, particularly in partial stake sales

2. Tag-Along Rights: Include when minority shareholders need protection in partial stake sales

3. Drag-Along Rights: Include when majority shareholders want to ensure ability to force sale of minority stakes

4. Non-Competition: Include when seller is required to restrict future competitive activities

5. Employee Matters: Include when the transaction affects key employees or management

6. Intellectual Property Rights: Include when IP is a significant company asset

7. Break Fee: Include when parties want to specify compensation for transaction failure

8. Earn-out Provisions: Include when part of purchase price is contingent on future performance

What schedules should be included in a Sale Of Shares Contract?

1. Share Details: Details of shares being transferred including share certificates numbers and class of shares

2. Company Information: Key corporate information including registration details, licenses, and permits

3. Warranties: Detailed warranties and representations by the seller regarding the company and shares

4. Completion Checklist: List of all documents and actions required for completion

5. Encumbrances: List of any existing encumbrances on the shares

6. Corporate Structure: Pre and post-completion corporate structure diagrams

7. Required Consents: List of third-party and regulatory consents required

8. Disclosure Letter: Seller's disclosures against the warranties

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

Document Type

Stock Agreement

Cost

Free to use

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