Only if the business sector allows it under the Positive Investment List.
A Shares Purchase Agreement (SPA) under Indonesian Law is more than just a formal contract — it is the legal heartbeat of any share acquisition transaction. Whether you are buying or selling shares in a private limited company (PT) or foreign investment company (PT PMA), the SPA governs the entire deal, from negotiation to execution.
In today’s fast-paced business climate, share transactions occur across borders and cultures. That’s why understanding the Indonesian legal framework and how it governs SPAs is crucial. For businesses, investors, and entrepreneurs, an SPA is the safeguard that ensures your rights are respected and obligations are met.
The SPA must comply with Indonesia’s legal system. Key regulations include:
Each of these laws directly shapes, structures, executes, and enforces an SPA in Indonesia.
In Indonesia, a verbal agreement is rarely enforceable in complex transactions. A written Shares Purchase Agreement (SPA) provides:
It is also essential when dealing with regulatory bodies like the BKPM or OJK who may request documentation post-closing.
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Every SPA transaction typically involves:
Each party should clearly define their role and obligations to avoid future misunderstandings.
A strong Shares Purchase Agreement contains legally enforceable provisions including:
These ensure the seller provides accurate disclosures about the company. If false, the seller may have to compensate the buyer.
How much will be paid? Lump sum or installment? What currency? This section sets financial clarity.
The parties must meet conditions before closing, such as obtaining regulatory approvals or ensuring no material adverse change occurs.
The parties define when they transfer the shares and what obligations follow, such as board changes and notifications to the MoLHR.
Protects the buyer from financial loss due to breach and explains under what conditions the agreement may be terminated.
Before any Shares Purchase Agreement is signed, the buyer should conduct thorough due diligence. This may include:
Skipping this step can result in costly surprises post-transaction.
Not all Shares Purchase Agreement can be executed freely. Regulatory oversight includes:
Shares Purchase Agreement effectiveness may depend on these approvals.
Foreign investors must be aware of:
Shares Purchase Agreement (SPA) under Indonesian Law must align with these investment restrictions.
Taxes can impact your transaction cost significantly:
Tax structuring and advice are crucial — we recommend engaging professionals early.
Many confuse signing with closing. In Indonesian practice:
Separating the two allows for proper sequencing of approvals, compliance, and documentation.
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Risks include:
Mitigations:
An experienced legal team is your best defense.
Your Shares Purchase Agreement must specify the governing law (usually Indonesian Law) and preferred forum:
In cross-border deals, arbitration is often preferred due to enforceability under the New York Convention.
Most failed share deals we’ve encountered stem from either poor due diligence or rushed documentation. At Kusuma & Partners, we prioritize pre-transaction preparation and tailor each Shares Purchase Agreement with precision. We’ve successfully guided multinational and local investors through complex Shares Purchase Agreement negotiations, ensuring both compliance and strategic advantage.
A well-drafted Shares Purchase Agreement (SPA) under Indonesian Law is not just a formality — it’s a legal shield. It protects your investment, provides clarity, and ensures compliance with local regulations. Whether you’re a buyer or seller, partnering with legal professionals is critical to navigating Indonesia’s unique corporate landscape.
Looking to secure your next share acquisition transaction? Our expertise in drafting and negotiating Shares Purchase Agreement ensures your transaction is smooth, compliant, and successful.
Fill in the form below to get our expert guidance.
“DISCLAIMER: This content is intended for general informational purposes only and should not be treated as legal advice. For professional advice, please consult with us.”
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