In Indonesia, a partnership agreement is an official contract by law established between parties participating in the partnership. A partnership agreement in Indonesia exists to ensure that all partners in this relationship have clear communications and understandings.
The contract is not just a verbal agreement. It includes terms and conditions and has to be put down in writing. Partners involved are not allowed to alter the agreement unless they reach a mutual consensus regarding the change.
Therefore, a legal partnership agreement in Indonesia is the best way to protect a business and each party’s interests.
You should always prepare a partnership agreement when you start a partnership with an individual or a company.
The assistance from a legal consultant or an attorney is highly necessary to ensure that you do not leave out any important details. A legal professional can also help you to identify potential risks and issues regarding the terms and conditions.
The Importance of Partnership Agreement for Business
Trust is an essential element when it comes to partnership. However, no one can predict what will happen in the future especially in the business world.
Therefore, a partnership agreement is important for almost every business in Indonesia. Here are some reasons:
- To avoid tax issues
- To prevent legal complications and liability issues
- To work out issues regarding the conflict of interest
- To deal with a partner’s life changes
- To set up every partner’s roles and responsibilities
- To solve disputes
How Partners Come to Making a Partnership Agreement in Indonesia
All partnerships conducted in Indonesia must have a partnership agreement. This is to prevent a party in a partnership to take advantage of another, avoid legal complications, and solve disputes.
Therefore, a partnership agreement in Indonesia is the foundation for a stable and fruitful partnership.
Partnership agreements are particularly helpful for foreigners working with Indonesian partners during their company setup or entry into an unfamiliar market.
A partnership agreement in Indonesia is established by partners. All parties need to agree on how a business or project is operated and managed in the order set up an agreement.
First of all, with the help of a professional, partners must lay out clear and detailed guidelines and terms to be stated in the partnership agreement. Then, they should agree on the terms in black and white.
Terms and guidelines shall include the following:
- Name of the partnership
- Names of partners in the partnership
- Procedure for conflict resolutions
- Procedure for partnership termination
- Term and length of the partnership
- Details of ownership transfer
- Share ownership
- Duties and responsibilities of each partner
- Distribution of profits and losses
- And other important details based on the business processes
If one or more of the parties involved in the partnership agreement is not sure about what a partnership shall cover, seeking professional advice is crucial. Cekindo has competent legal experts to guide you all the way when setting up a partnership.
How Cekindo Can Assist in Drafting Your Partnership Agreement
A cohesive partnership agreement in Indonesia is the backbone of client and service provider relationships for many industries in the country.
Although getting into a partnership requires prior due diligence and market research, at the end of the day, it is also somewhat of a leap of faith.
Therefore, a thorough consideration of the financial and legal terms regarding the partnership via a partnership agreement is critical.
An official partnership agreement in Indonesia can ensure a fulfilling and successful collaboration among parties. It also allows each party to know their obligations and protect their rights, when things do not work out.
Over the years, Cekindo has helped countless companies draft a variety of partnership agreements in Indonesia, based on their business categories, activities, and types of partnership.
Our other agreement drafting services include employment agreements, sales agreements, contractor agreements, non-disclosure agreements, distribution agreements, service agreements, and other commercial contracts.
Different Indonesian provinces have different rules and regulations. Therefore, our legal team will customise your partnership agreement based on the provincial distinction.
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