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Stock Swap Agreement Template for Indonesia

A Stock Swap Agreement under Indonesian law is a legally binding document that facilitates the exchange of shares between two or more parties. This agreement is governed by Indonesian corporate law, particularly Law No. 40 of 2007 on Limited Liability Companies and, where applicable, capital market regulations under Law No. 8 of 1995. The document outlines the terms and conditions of the share exchange, including the exchange ratio, representations and warranties, conditions precedent, and completion mechanics. It must comply with Indonesian regulatory requirements, including OJK regulations for public companies and foreign investment restrictions where applicable.

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What is a Stock Swap Agreement?

The Stock Swap Agreement is a crucial document used in Indonesian corporate transactions where parties wish to exchange shares instead of conducting cash transactions. This type of agreement is commonly utilized in mergers, acquisitions, corporate restructurings, and strategic alliances. The document must comply with Indonesian regulatory framework, including the Company Law (Law No. 40 of 2007), Capital Market Law (Law No. 8 of 1995), and relevant OJK regulations. It typically includes detailed provisions on share valuation, exchange mechanics, regulatory compliance requirements, and post-completion obligations. The agreement is particularly important in scenarios where companies seek to maintain cash reserves, achieve strategic alignment, or create business synergies through share ownership exchange.

What sections should be included in a Stock Swap Agreement?

1. Parties: Identification of the parties entering into the stock swap agreement

2. Background: Context of the transaction, including brief description of the companies involved and purpose of the stock swap

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

4. Subject Matter of the Swap: Details of the shares being exchanged, including number, class, and relevant companies

5. Exchange Ratio: The ratio at which shares will be exchanged between the parties

6. Representations and Warranties: Statements of fact and assurances from each party regarding their authority, share ownership, and company status

7. Conditions Precedent: Conditions that must be satisfied before the stock swap can be completed

8. Completion Mechanics: Detailed process for executing the stock swap, including timing and documentation requirements

9. Post-Completion Obligations: Actions required after the swap is completed, including regulatory filings and share certificate issuance

10. Confidentiality: Provisions regarding the confidential treatment of information exchanged

11. Tax Provisions: Allocation of responsibility for taxes arising from the transaction

12. Governing Law and Dispute Resolution: Specification of Indonesian law as governing law and dispute resolution mechanisms

13. General Provisions: Standard contractual provisions including notices, amendments, and severability

What sections are optional to include in a Stock Swap Agreement?

1. Regulatory Compliance: Additional section when either party is subject to specific regulatory requirements or when foreign investment regulations apply

2. Employee Matters: Required when the stock swap affects employment arrangements or involves employee stock ownership plans

3. Non-Competition: Include when parties wish to restrict competitive activities post-transaction

4. Break Fee: Include when parties want to specify compensation if either party terminates the transaction

5. Interim Covenants: Include when there's a significant period between signing and completion, to govern conduct of business during this period

6. Foreign Exchange Provisions: Required when the transaction involves cross-border elements or foreign currency considerations

What schedules should be included in a Stock Swap Agreement?

1. Share Details Schedule: Detailed description of shares being exchanged, including share certificates numbers and shareholding history

2. Company Information: Corporate information for both companies, including registration details and corporate structure

3. Valuation Report: Independent valuation report supporting the exchange ratio

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

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

6. Encumbrances: Details of any existing encumbrances on the shares being exchanged

7. Corporate Approvals: Copies of board and shareholder resolutions approving the swap

8. Form of Transfer Instruments: Template documents for executing the share transfers

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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