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Convertible Bond Subscription Agreement Template for Indonesia

A comprehensive legal agreement governed by Indonesian law that establishes the terms and conditions under which an investor subscribes to convertible bonds issued by a company. The document details the subscription amount, interest rates, maturity period, conversion mechanisms, and investor rights. It incorporates specific requirements under Indonesian corporate law and OJK regulations, including mandatory provisions for foreign investment if applicable. The agreement outlines conditions precedent, representations and warranties, covenants, and events of default, while ensuring compliance with Indonesian capital market regulations and company law requirements.

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What is a Convertible Bond Subscription Agreement?

A Convertible Bond Subscription Agreement is a crucial document for companies seeking to raise capital while offering investors the potential for equity participation through future conversion rights. This document is particularly relevant in the Indonesian market where companies may prefer debt instruments with equity features over immediate equity dilution. The agreement must comply with Indonesian regulatory requirements, particularly Law No. 40 of 2007 on Limited Liability Companies and relevant OJK regulations. It's commonly used by growth-stage companies, established businesses seeking expansion capital, or companies planning pre-IPO funding rounds. The document contains detailed provisions on subscription terms, conversion mechanics, investor protections, and regulatory compliance requirements, making it essential for both domestic and cross-border investment transactions.

What sections should be included in a Convertible Bond Subscription Agreement?

1. Parties: Identifies the issuing company, the subscriber(s), and any guarantors or trustees

2. Background: Sets out the context of the bond issuance and the company's intention to issue convertible bonds

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation rules

4. Subscription and Issue: Details the subscription amount, issue price, and conditions for subscription

5. Conditions Precedent: Lists conditions that must be satisfied before the subscription becomes effective

6. Closing: Specifies the closing mechanics, timing, and deliverables

7. Bond Terms: Sets out the key terms including interest rate, maturity date, and payment mechanics

8. Conversion Rights: Details the conversion mechanism, timing, price, and adjustment provisions

9. Company Representations and Warranties: Contains standard and specific representations about the company's status and capacity

10. Subscriber Representations and Warranties: Contains representations about the subscriber's status and capacity

11. Covenants: Lists positive and negative obligations of the company during the bond term

12. Events of Default: Specifies circumstances constituting default and consequences

13. Transferability: Sets out rules for transfer of the bonds

14. Notices: Specifies how formal communications between parties should be made

15. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and jurisdiction for disputes

16. Miscellaneous: Contains standard boilerplate provisions

What sections are optional to include in a Convertible Bond Subscription Agreement?

1. Security: Required if the bonds are secured by company assets or third-party guarantees

2. Tag-Along Rights: Included when subscribers are given rights to participate in future share sales

3. Anti-Dilution Protection: Additional provisions protecting bondholders from dilution beyond standard conversion adjustments

4. Board Appointment Rights: Included when bondholders are given rights to appoint board members

5. Information Rights: Detailed information rights beyond statutory requirements

6. Registration Rights: Included for future IPO scenarios, particularly relevant for foreign investors

7. Foreign Investment Provisions: Required when subscribers include foreign investors

What schedules should be included in a Convertible Bond Subscription Agreement?

1. Bond Certificate Form: Template of the bond certificate to be issued

2. Conversion Notice Form: Template notice for exercising conversion rights

3. Company Corporate Documents: List of constitutional documents and corporate approvals

4. Calculation Methods: Detailed methods for calculating conversion price adjustments

5. Disclosure Schedule: Company disclosures against representations and warranties

6. Shareholder Approval: Copy of shareholder resolution approving the bond issuance

7. Security Documents: If applicable, documents creating security interests

8. Financial Statements: Recent financial statements of the company

Authors

Alex Denne

Advisor @ 蜜桃传媒AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Indonesia

Document Type

Security Agreement

Cost

Free to use

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