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Share Buyout Agreement for Indonesia

Share Buyout Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that documents the terms and conditions for the purchase and sale of shares in an Indonesian company. The agreement encompasses all aspects of the share transfer transaction, including purchase price, payment terms, conditions precedent, representations and warranties, and closing requirements. It must comply with Indonesian Company Law (Law No. 40 of 2007) and related regulations, including specific requirements for share transfers, corporate approvals, and regulatory notifications. The document includes provisions for necessary governmental approvals, particularly if foreign investment is involved, and addresses local corporate governance requirements.

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What is a Share Buyout Agreement?

The Share Buyout Agreement is a crucial document used in Indonesian corporate transactions when one party wishes to acquire shares from existing shareholders of an Indonesian company. It serves as the primary transaction document that outlines all terms and conditions of the share transfer, ensuring compliance with Indonesian Company Law and related regulations. The agreement is particularly important as share transfers in Indonesia require specific corporate and regulatory approvals, especially in cases involving foreign investment or regulated industries. The document must address local requirements such as notarial deeds, governmental approvals, and corporate governance structures unique to Indonesian companies. It includes comprehensive provisions covering purchase price mechanics, conditions precedent, representations and warranties tailored to the Indonesian context, and specific closing requirements including the execution of a deed of transfer before an Indonesian notary.

What sections should be included in a Share Buyout Agreement?

1. Parties: Identification of the buyer, seller(s), and the target company, including their complete legal names and registration details as required under Indonesian law

2. Background: Context of the share buyout, including current shareholding structure and purpose of the transaction

3. Definitions: Definitions of key terms used throughout the agreement, including Indonesian legal terminology where relevant

4. Sale and Purchase of Shares: Core transaction terms including number of shares, purchase price, and payment mechanics

5. Purchase Price and Payment: Detailed breakdown of consideration, payment method, and timing of payments

6. Conditions Precedent: Required approvals, consents, and other conditions that must be satisfied before closing

7. Pre-Closing Obligations: Obligations of parties between signing and closing, including corporate and regulatory requirements

8. Closing: Closing mechanics, deliverables, and timing requirements

9. Representations and Warranties: Standard and Indonesia-specific representations and warranties from both parties

10. Covenants: Ongoing obligations of the parties, including regulatory compliance requirements

11. Indemnification: Indemnification provisions and liability limitations

12. Termination: Circumstances under which the agreement may be terminated and consequences

13. Governing Law and Dispute Resolution: Indonesian law as governing law and dispute resolution mechanisms

14. Miscellaneous: Standard boilerplate provisions adapted to Indonesian law requirements

What sections are optional to include in a Share Buyout Agreement?

1. Seller Financing: Required if payment is to be made in installments or there is vendor financing

2. Tag-Along Rights: Necessary if there are multiple sellers and not all shares are being purchased

3. Non-Competition: Required if seller will be restricted from competing post-closing

4. Transition Services: Needed if seller will provide post-closing operational support

5. Foreign Investment Provisions: Required if buyer is a foreign entity, addressing Indonesian foreign investment requirements

6. Employee Matters: Necessary if there are specific arrangements regarding key employees or management

7. Tax Covenant: Detailed tax provisions if specific tax treatments or allocations are agreed

8. Bank Guarantee/Escrow: Required if payment security arrangements are needed

What schedules should be included in a Share Buyout Agreement?

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

2. Purchase Price Calculation: Detailed calculation of purchase price including any adjustments

3. Conditions Precedent Checklist: List of all required approvals, consents and conditions

4. Closing Checklist: List of all documents and actions required at closing

5. Corporate Documents: Copies of relevant corporate approvals, board resolutions, and powers of attorney

6. Disclosure Schedule: Seller's disclosures against representations and warranties

7. Form of Resignation Letters: Template resignation letters for retiring directors/commissioners if applicable

8. Form of Transfer Instruments: Required share transfer forms and documentation under Indonesian law

9. Regulatory Approvals: Copies of required regulatory approvals and permits

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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