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Negative Pledge Agreement Template for Indonesia

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Key Requirements PROMPT example:

Negative Pledge Agreement

"I need a Negative Pledge Agreement under Indonesian law for a syndicated loan facility closing in March 2025, where multiple international banks are lending to a local mining company, with specific carve-outs for equipment financing and existing security arrangements."

Document background
The Negative Pledge Agreement serves as a crucial protective mechanism in Indonesian financing arrangements where direct security might be impractical, restricted, or undesirable. This document type is commonly used in unsecured lending facilities, bond issuances, and corporate financings where lenders seek contractual protection without the complexity of taking direct security interests under Indonesian law. The agreement restricts the borrower's ability to grant security interests to other creditors, thereby maintaining the lender's relative position in the borrower's capital structure. It typically includes detailed provisions on permitted exceptions, monitoring requirements, and enforcement mechanisms, all structured to comply with Indonesian legal requirements and market practice. The document becomes particularly important in the context of Indonesian corporate law where certain security interests require specific regulatory approvals or registrations.
Suggested Sections

1. Parties: Identifies the parties to the agreement, typically the promisor (entity giving the negative pledge) and the beneficiary (often a lender)

2. Background: Sets out the context of the agreement, including reference to any related facility agreements or other financing arrangements

3. Definitions: Defines key terms used throughout the agreement, including 'Security Interest', 'Permitted Security', and 'Assets'

4. Negative Pledge Covenant: The core provision where the promisor commits not to create or permit to subsist any security interest over its assets

5. Permitted Exceptions: Lists specific types of security interests or transactions that are permitted despite the negative pledge

6. Representations and Warranties: Statements about the promisor's current position regarding existing security interests and capacity to enter into the agreement

7. Duration and Termination: Specifies how long the negative pledge remains in effect and circumstances for termination

8. Events of Default: Defines what constitutes a breach of the agreement and its consequences

9. Governing Law and Jurisdiction: Specifies Indonesian law as governing law and sets out jurisdiction for disputes

Optional Sections

1. Further Assurance: Additional commitments to execute documents or perform actions to give effect to the agreement - include when enhanced enforcement mechanisms are required

2. Information Undertakings: Obligations to provide information about assets and potential security interests - relevant for high-value transactions or where ongoing monitoring is important

3. Positive Covenants: Additional positive obligations of the promisor - include when specific affirmative obligations are needed to support the negative pledge

4. Assignment and Transfer: Provisions regarding the ability to transfer rights under the agreement - include when transferability is a concern

5. Costs and Expenses: Allocation of costs related to the agreement - include for complex transactions with significant potential costs

6. Notices: Detailed provisions for how formal communications should be made - include for complex or long-term arrangements

Suggested Schedules

1. Schedule 1 - Covered Assets: Detailed list or description of assets subject to the negative pledge

2. Schedule 2 - Permitted Security Interests: Comprehensive list of pre-approved security interests that are exempt from the negative pledge

3. Schedule 3 - Existing Security Interests: List of security interests already in existence at the time of the agreement

4. Schedule 4 - Form of Compliance Certificate: Template for periodic confirmation of compliance with the negative pledge obligations

5. Appendix A - Corporate Authorizations: Copies of relevant corporate approvals and authorizations for entering into the agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions



































Clauses

























Relevant Industries

Banking and Financial Services

Corporate Finance

Real Estate and Property Development

Manufacturing

Mining and Natural Resources

Infrastructure and Construction

Telecommunications

Retail and Consumer Goods

Energy and Utilities

Transportation and Logistics

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Corporate Secretariat

Credit Administration

Investment

Corporate Finance

Banking Operations

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Legal Counsel

Corporate Secretary

Risk Manager

Compliance Officer

Credit Manager

Investment Manager

Corporate Finance Manager

Senior Finance Analyst

General Counsel

Banking Relationship Manager

Loan Officer

Security Trustee

Industries






Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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