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Shareholder Redemption Agreement for Indonesia

Shareholder Redemption Agreement Template for Indonesia

This document governs the process and terms under which a company redeems shares from its shareholder(s) under Indonesian law. It complies with Law No. 40 of 2007 on Limited Liability Companies and related regulations, setting out the redemption price, payment terms, conditions precedent, and completion mechanics. The agreement includes necessary provisions for regulatory compliance, tax considerations, and corporate approvals specific to the Indonesian jurisdiction, while addressing both parties' rights and obligations throughout the redemption process.

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What is a Shareholder Redemption Agreement?

The Shareholder Redemption Agreement is a crucial document used when an Indonesian company wishes to buy back its shares from existing shareholders, either for treasury stock, capital reduction, or as part of a broader corporate restructuring. This document is essential in situations involving shareholder exits, capital structure optimization, or implementation of employee stock ownership programs. It must comply with Indonesian Company Law (Law No. 40 of 2007) and related regulations, including requirements for corporate approvals, maintaining minimum capital requirements, and protecting creditor interests. The agreement details the redemption process, valuation methodology, payment terms, and necessary regulatory compliance steps, while ensuring appropriate risk allocation between the company and the selling shareholder(s). It's particularly important in the Indonesian context due to specific regulatory requirements for share redemptions, including mandatory timelines, pricing regulations, and corporate governance considerations.

What sections should be included in a Shareholder Redemption Agreement?

1. Parties: Identification of the company and the shareholder(s) whose shares are being redeemed

2. Background: Context of the redemption, including company details and reason for redemption

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Agreement to Redeem: Core agreement on the redemption of shares, including number and class of shares

5. Redemption Price: Specification of the price per share and total redemption amount

6. Payment Terms: Terms and method of payment, including any installment arrangements

7. Conditions Precedent: Conditions that must be satisfied before the redemption can proceed

8. Completion: Process and requirements for completing the redemption transaction

9. Representations and Warranties: Standard representations by both parties regarding capacity, authority, and share ownership

10. Tax Matters: Allocation of responsibility for taxes arising from the redemption

11. Confidentiality: Obligations to keep the transaction and related information confidential

12. Notices: Process and requirements for giving notices under the agreement

13. General Provisions: Standard boilerplate provisions including governing law, dispute resolution, and amendments

What sections are optional to include in a Shareholder Redemption Agreement?

1. Foreign Investment Compliance: Required when the redemption involves foreign shareholders and must comply with Indonesian foreign investment laws

2. Stock Exchange Requirements: Required for listed companies to ensure compliance with IDX and OJK regulations

3. Minority Shareholder Protection: Required when the redemption might affect minority shareholder rights

4. Installment Payment Security: Required when the redemption price is to be paid in installments, including security arrangements

5. Tag-Along Rights: Required when other shareholders have pre-existing tag-along rights that might be triggered

6. Corporate Governance Changes: Required when the redemption will result in significant changes to board composition or voting rights

7. Competition Law Compliance: Required when the redemption might trigger competition law thresholds or requirements

What schedules should be included in a Shareholder Redemption Agreement?

1. Share Details: Details of the shares being redeemed, including share certificates numbers and share history

2. Calculation of Redemption Price: Detailed methodology and calculations used to determine the redemption price

3. Required Corporate Approvals: Copies or details of board and shareholder resolutions approving the redemption

4. Payment Schedule: If applicable, detailed schedule of installment payments and payment mechanics

5. Form of Transfer Documents: Pro forma share transfer forms and other documents required to effect the transfer

6. Company Constitutional Documents: Relevant excerpts from articles of association relating to share redemptions

7. Regulatory Approvals: List and copies of required regulatory approvals or notifications

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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