A joint venture in Indonesia means that two or more organisations join forces as a single commercial enterprise. In other words, two businesses combine their resources and expertise to gain a competitive edge to go after certain projects or achieve certain goals.
Before setting up a joint venture in Indonesia, there are things that investors must pay attention to. One of those is that not only a joint venture binds resources, but it also shares risks and rewards of both businesses.
Therefore, to gain the greatest rewards and minimise risks, here are some of the considerations before forming a joint venture in Indonesia:
It is very important to include all necessary terms and conditions in a joint venture agreement, especially when it is about share ownership and share transfer.
Below are a few critical terms and conditions you should have in your joint venture agreement:
Shareholders who would like to transfer their shares must offer their shares within 30 days. This offer is only available once.
If the majority of the shareholders want to transfer their shares to an external party, the rest of the shareholders hold the right to request their shares to be bought by the external party as well. This is to protect the rights of all shareholders.
A joint venture company consists of the Board of Directors, Board of Commissioners, and General Meeting of Shareholders. Shareholders have the right to transfer their share under the General Meeting of Shareholders’ agreement.
If the majority of the shareholders want to transfer their shares to an external party, this majority of shareholders have the right to sell their shares to the external party as well. This is to protect the rights of all shareholders.
Call or put option term signifies an option for transferring – either buy or sell – of specific shares in a particular time, from and to certain shareholders or other parties under the agreement.
A fixed transfer of specific shares at a particular time, from and to certain shareholders or other parties under the agreement.
Restrictions or limitations of share transfer to a third party. The share’s owner must ensure that the new shareholder agrees and is bound by the current joint venture agreement to protect the existing owners’ rights.
Share transfer that occurs under certain conditions.
Cekindo’s contract drafting practice consists of leading legal advisors who can provide the best recommendations on your joint venture agreement in Indonesia. Our clients seek our assistance because we are their trusted consultants to help them achieve their business goals.
Before drafting your joint venture agreement in Indonesia, we will first acquire a deep understanding of how your business operates and what the key business drivers of your industry are. Cekindo’s approach will not only help you with the contract drafting process, but also throughout your business lifecycle.
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