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Shareholder Buy Sell Agreement Template for Indonesia

This document is a comprehensive Shareholder Buy Sell Agreement governed by Indonesian law, specifically structured under Law No. 40 of 2007 on Limited Liability Companies. It establishes the framework for share transfers between shareholders, including mandatory sale events, valuation mechanisms, and transfer procedures. The agreement incorporates specific Indonesian legal requirements while providing practical mechanisms for implementing share transfers, protecting shareholder interests, and maintaining business continuity. It includes provisions for both voluntary and involuntary transfers, ensuring compliance with local corporate governance requirements and foreign investment restrictions where applicable.

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What is a Shareholder Buy Sell Agreement?

The Shareholder Buy Sell Agreement is a crucial document for Indonesian private companies (PT) that provides a clear framework for managing ownership transitions. This agreement becomes essential when shareholders need predetermined mechanisms for share transfers, whether triggered by voluntary sales, retirement, death, or other significant events. It typically includes specific provisions required under Indonesian Company Law (Law No. 40 of 2007), addressing share valuation methods, transfer restrictions, right of first refusal, and compliance with foreign investment regulations where applicable. The agreement helps prevent potential disputes by establishing clear procedures while ensuring business continuity and protecting both majority and minority shareholder interests. It's particularly important for family-owned businesses, joint ventures, and companies with multiple shareholders where ownership changes need to be managed systematically.

What sections should be included in a Shareholder Buy Sell Agreement?

1. Parties: Identification of all shareholders and the company as parties to the agreement

2. Background: Context of the agreement, company information, and current shareholding structure

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Transfer Restrictions: General restrictions on transfer of shares and exceptions

5. Right of First Refusal: Process and terms for existing shareholders to purchase shares before third-party sales

6. Mandatory Transfer Events: Circumstances requiring mandatory share transfers (death, disability, retirement, termination)

7. Valuation Mechanism: Methods and procedures for determining share price

8. Payment Terms: Terms and conditions for payment of purchase price

9. Transfer Process: Procedures and documentation requirements for share transfers

10. Representations and Warranties: Standard representations regarding share ownership and authority to sell

11. Confidentiality: Obligations regarding confidential information

12. Dispute Resolution: Procedures for resolving disputes, including choice of forum

13. Governing Law: Specification of Indonesian law as governing law

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

What sections are optional to include in a Shareholder Buy Sell Agreement?

1. Tag-Along Rights: Rights of minority shareholders to join in sale of majority stake

2. Drag-Along Rights: Rights of majority shareholders to force minorities to join in sale

3. Put and Call Options: Optional rights to force purchase or sale of shares

4. Insurance Provisions: Requirements for life/disability insurance to fund purchase obligations

5. Non-Competition: Restrictions on competing business activities post-transfer

6. Family Transfer Provisions: Special rules for transfers to family members

7. Foreign Investment Compliance: Special provisions for compliance with foreign investment restrictions

8. Tax Matters: Specific provisions dealing with tax implications of transfers

What schedules should be included in a Shareholder Buy Sell Agreement?

1. Schedule 1 - Current Shareholding Structure: Details of current shareholders and their shareholdings

2. Schedule 2 - Share Valuation Formula: Detailed methodology for share valuation

3. Schedule 3 - Transfer Notice Form: Standard form for notifying intent to transfer shares

4. Schedule 4 - Deed of Adherence: Form for new shareholders to become bound by the agreement

5. Schedule 5 - Company Information: Key company details including registration numbers and addresses

6. Appendix A - Board Resolutions: Required board resolutions for implementation

7. Appendix B - Shareholder Resolutions: Required shareholder resolutions for implementation

8. Appendix C - Insurance Policies: Details of any required insurance policies

Authors

Alex Denne

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

Jurisdiction

Indonesia

Publisher

Ƶ

Cost

Free to use

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