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Guarantee Facility Agreement Template for Indonesia

A comprehensive legal document governed by Indonesian law that establishes and regulates a guarantee facility arrangement between parties. The agreement sets out the terms under which a guarantor provides financial assurance for the obligations of a principal debtor to a beneficiary. It incorporates specific requirements under Indonesian banking regulations and civil law, including mandatory language requirements, and contains detailed provisions for enforcement, demands, and payment mechanisms. The document must comply with regulations from the Indonesian Financial Services Authority (OJK) and relevant banking laws.

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What is a Guarantee Facility Agreement?

The Guarantee Facility Agreement is a crucial financial instrument in Indonesian business operations, particularly used in scenarios where financial assurance is required for commercial transactions, project financing, or business operations. This document type is specifically structured to comply with Indonesian law, including the Civil Code (KUH Perdata) and banking regulations issued by the Financial Services Authority (OJK). The agreement details the scope of the guarantee, conditions for demands, payment mechanisms, and enforcement procedures. It's commonly used in various business contexts where a party requires financial backing or security for their obligations, such as in construction projects, trade finance, or corporate lending. The Guarantee Facility Agreement must be drafted in both Indonesian and English languages to comply with Law No. 24 of 2009, with the Indonesian version prevailing in case of inconsistency.

What sections should be included in a Guarantee Facility Agreement?

1. Parties: Identification of the Guarantor, Principal Debtor, and Beneficiary with their complete details

2. Background: Context of the guarantee facility, including reference to the underlying obligations or facilities being guaranteed

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. The Guarantee: Core terms of the guarantee, including scope, amount, and nature of the guaranteed obligations

5. Conditions Precedent: Conditions that must be satisfied before the guarantee becomes effective

6. Representations and Warranties: Standard representations and warranties from the Guarantor

7. Payment Mechanics: Procedures and requirements for making payments under the guarantee

8. Demand Requirements: Process and formalities for making demands under the guarantee

9. Indemnity: Guarantor's indemnification obligations

10. Tax Provisions: Allocation of tax liabilities and gross-up provisions

11. Currency Provisions: Rules regarding currency of payment and exchange rate mechanisms

12. Costs and Expenses: Allocation of costs related to the preparation and enforcement of the guarantee

13. Communications: Notice requirements and communication procedures

14. Assignment and Transfer: Rules regarding transfer of rights under the guarantee

15. Governing Law and Jurisdiction: Choice of Indonesian law and jurisdiction provisions

16. Language: Language requirements complying with Indonesian Law No. 24 of 2009

What sections are optional to include in a Guarantee Facility Agreement?

1. Security Provisions: Required when the guarantee is secured by specific assets or collateral

2. Counter-Indemnity: Used when there is a separate counter-indemnity from the Principal Debtor to the Guarantor

3. Multiple Guarantors: Required when there is more than one guarantor, addressing joint and several liability

4. Bank Authority Provisions: Required for bank-issued guarantees, including specific regulatory compliance provisions

5. Automatic Extension: Used when the guarantee may be automatically extended under certain conditions

6. Islamic Banking Provisions: Required when the guarantee needs to comply with Sharia principles

7. Step-In Rights: Used in project finance contexts where the guarantor may need step-in rights

What schedules should be included in a Guarantee Facility Agreement?

1. Form of Demand: Template for making valid demands under the guarantee

2. Form of Certificate: Standard form certificates required for various purposes under the guarantee

3. Guaranteed Obligations: Detailed description of the obligations covered by the guarantee

4. Security Documents: List and copies of related security documents, if applicable

5. Conditions Precedent Documents: List of required documents and evidence for conditions precedent

6. Fee Schedule: Details of guarantee fees, commissions, and payment schedules

7. Contact Details: Complete contact information for all parties and authorized representatives

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

Financing Agreement

Cost

Free to use

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