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Share Mortgage Agreement for Indonesia

Share Mortgage Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian law that creates a security interest over shares in an Indonesian company. The agreement establishes the terms and conditions under which shares are mortgaged as collateral for a loan or other obligations. It includes provisions for the creation, perfection, and enforcement of the security interest, complying with Indonesian Civil Code requirements and relevant corporate and securities regulations. The document addresses voting rights, dividend distributions, and enforcement mechanisms while incorporating specific Indonesian legal requirements for share mortgages.

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What is a Share Mortgage Agreement?

A Share Mortgage Agreement is a crucial security document used in Indonesian financing transactions where shares in an Indonesian company serve as collateral. This document is commonly utilized in corporate lending, acquisition financing, and general secured lending transactions. The agreement must comply with Indonesian law requirements, including the Civil Code, Company Law (Law No. 40 of 2007), and relevant OJK regulations. It details the creation of the security interest, parties' rights and obligations, enforcement mechanisms, and necessary registration requirements. The document is particularly important in cross-border transactions where foreign lenders require security over Indonesian company shares, necessitating compliance with both local and international banking practices while maintaining enforceability under Indonesian law.

What sections should be included in a Share Mortgage Agreement?

1. Parties: Identification of the Mortgagor (share owner), Mortgagee (security holder), and the Company whose shares are being mortgaged

2. Background: Context of the security arrangement, reference to the underlying facility/loan agreement, and purpose of the share mortgage

3. Definitions: Definitions of key terms used throughout the agreement, including specific Indonesian law terms

4. Creation of Security: Express provisions creating the mortgage over the shares, including the scope of secured assets

5. Secured Obligations: Definition and scope of the obligations being secured by the share mortgage

6. Mortgagor's Representations and Warranties: Statements regarding ownership, authority, and absence of encumbrances on the shares

7. Mortgagor's Covenants: Ongoing obligations of the mortgagor regarding the mortgaged shares

8. Rights and Obligations of the Mortgagee: Powers and duties of the security holder

9. Voting Rights and Dividends: Provisions regarding exercise of voting rights and receipt of dividends pre and post-enforcement

10. Events of Default: Circumstances triggering enforcement rights

11. Enforcement: Rights and procedures for enforcing the security in accordance with Indonesian law

12. Power of Attorney: Appointment of Mortgagee as attorney for specific purposes

13. Miscellaneous: Standard provisions including notices, amendments, governing law, and jurisdiction

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

1. Security Margin: Required when the security includes maintenance of specific collateral value ratios

2. Further Security: Used when additional security interests may be created over related rights

3. Security Agent Provisions: Required in syndicated facilities where security is held by an agent

4. Currency Provisions: Needed when secured obligations are in foreign currency

5. Tax Provisions: Detailed tax provisions required for cross-border security arrangements

6. Registration Requirements: Specific section on registration when shares are in a regulated entity

What schedules should be included in a Share Mortgage Agreement?

1. Share Details: Schedule listing the specific shares being mortgaged, including share certificate numbers and shareholding percentages

2. Form of Notice to Company: Template notice informing the Company of the share mortgage

3. Form of Acknowledgment: Template acknowledgment from the Company regarding the share mortgage

4. Power of Attorney: Form of power of attorney for specific actions (in Indonesian and English)

5. Registration Forms: Required forms for registering the security interest with relevant authorities

6. Corporate Documents: List of required corporate approvals and documents

7. Share Certificates: Copies of relevant share certificates and transfer forms

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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