In Indonesia, acquisition finance remains predominantly bank-led, with local banks, particularly major state-owned and private commercial banks, continuing to be the most significant lenders in domestic transactions. This reflects the central role of commercial banks in Indonesia’s credit market and their familiarity with local borrowers, security structures, and enforcement mechanics.

International banks also remain important, particularly in larger-cap, cross-border and foreign currency transactions, as well as syndicated or structured financings involving multinational sponsors. From an Indonesian law perspective, foreign lenders may participate in lending transactions involving Indonesian borrowers, typically on a non-solicitation basis.

By contrast, direct lenders and debt funds are still less prominent in Indonesia than in more developed leveraged finance markets, although private credit is gaining momentum across Asia-Pacific. In practice, they tend to appear in more bespoke or sponsor-backed transactions rather than as a mainstream substitute for bank-led acquisition financing in Indonesia.

Corporates are generally seen as acquirers or borrowers in acquisition finance transactions rather than as lenders. Where sponsor-backed deals are involved, the equity is typically provided by private equity or other financial sponsors, while the acquisition debt is usually arranged through commercial banks or other structured financing sources.

Private equity activity in Indonesia has increased in recent years, but the market remains smaller and less mature than in some other Asian jurisdictions. As a result, sponsor-backed acquisitions are present and growing, but they are still more selective and less standardised than in more developed leveraged finance markets.

Leveraged buyouts (LBOs) do exist in Indonesia, but they are not as common as in the US or Europe and tend to arise in larger or more structured transactions. In practice, LBO financing is typically provided by major commercial banks, often through syndicated or bespoke structures, rather than through a deep domestic leveraged loan or private credit market.

Indonesia recognises the principle of freedom of contract, which allows contracting parties to determine the terms and conditions of their agreements. This principle also extends to the structuring of the principal transaction documents, including acquisition financing agreements, and, accordingly, the parties may agree on their preferred governing law for the main financing agreement.

However, financing transactions typically also involve security documents, such as fiduciary security, mortgages and pledges. As these security documents are generally regarded as accessory agreements to the main financing agreement, and where they relate to assets located in Indonesia, the parties will usually agree that they be governed by Indonesian law to ensure their enforceability within Indonesian jurisdiction.

It appears that there is no express provision under Indonesian law requiring acquisition finance documents to follow a single mandatory standard form, and parties are generally free to agree on the form of facility agreement they wish to use. In practice, however, Loan Market Association (LMA) and Asia Pacific Loan Market Association (APLMA)-based documents are often used, particularly in cross-border, syndicated or more sophisticated financings.

For bilateral domestic bank financings, Indonesian banks more commonly use their own in-house loan forms rather than full LMA or APLMA templates. Even where LMA or APLMA-style documentation is used, it is typically adapted to reflect Indonesian law requirements, transaction structure and market practice.

By contrast, security documents are usually not standardised in the same way and are primarily driven by the type of Indonesian law security being taken, such as fiduciary security, mortgages or pledges. Accordingly, while the main facility agreement may follow LMA or APLMA-style drafting, the security package is usually prepared in a more bespoke manner to comply with the applicable Indonesian legal requirements and where it is necessary to be drawn in the form of a notarial deed, the security package usually follows the format and style of a notarial deed commonly used by public notary in Indonesia.

Article 31(1) of Law No 24 of 2009 on the National Flag, Language, Symbol and Anthem (Law 24/2009) requires the Indonesian language to be used in any agreement and/or memorandum of understanding involving an Indonesian party. In practice, such agreements and/or memoranda of understanding are commonly prepared and executed in a bilingual, side-by-side format to ensure compliance with Law 24/2009 while maintaining international drafting standards.

It does not appear that Indonesian law expressly prescribes a single mandatory standard form of legal opinion generally applicable to acquisition finance transactions. The scope of the opinion generally depends on the lenders’ requirements, the transaction structure and the nature of the security package. In practice, legal opinions commonly address:

• the borrower’s due incorporation, capacity and authority to enter into the finance documents;
• the due execution and enforceability of those documents;
• the validity and perfection requirements of the relevant Indonesian law security; and
• certain regulatory or corporate approvals relevant to the transaction.

However, specific mandatory requirements may arise in particular regulated contexts, such as capital markets transactions, but these do not amount to a universal standard form for acquisition finance legal opinions.

Under Indonesian law, unsecured creditors generally rank pari passu in accordance with Articles 1131 and 1132 of the Indonesian Civil Code (ICC), while creditors holding valid security interests enjoy priority over unsecured creditors to the extent of the secured assets. Accordingly, the concept of a “senior loan” in Indonesia is typically achieved through contractual subordination and, more importantly, by taking perfected security interests rather than through a standalone statutory category of senior debt.

In practice, senior loans in acquisition finance are most commonly structured as secured term or syndicated facilities made available under a loan agreement, supported by an Indonesian law security package over the borrower’s or obligors’ assets, such as pledges, fiduciary security and mortgages, depending on the asset class involved. Where there is more than one tranche or creditor class, the senior lenders will usually rank pari passu among themselves and share the collateral through a security agent or facility agent structure, with priority and enforcement mechanics governed by the finance documents and, where relevant, an intercreditor arrangement.

Accordingly, rather than being defined solely by the existence of security, senior loans in Indonesia are more accurately understood as the principal secured debt layer in the financing structure, typically sitting ahead of any subordinated or mezzanine debt by virtue of the agreed contractual framework and the priority created by the relevant security interests.

Mezzanine loans and payment-in-kind (PIK) loans are not specifically regulated as financial instruments under Indonesian statutory law. Instead, they are typically structured based on market practice, relying on the principle of freedom of contract under Indonesian law.

In Indonesia, mezzanine loans are generally treated as subordinated loans, ranking below senior loans in terms of repayment priority. As such, mezzanine loans are commonly unsecured, as they do not benefit from the priority rights typically associated with secured lending.

Similarly, PIK loans are not specifically regulated under Indonesian statutory law. A PIK loan refers to a loan arrangement under which interest is not paid periodically in cash, but instead accrues and is capitalised into the principal amount of the loan. In practice, PIK loans are generally treated as subordinated loans, ranking below senior loans that benefit from repayment priority. The exact structure may vary depending on the parties’ commercial needs. However, because PIK loans do not require periodic cash interest payments, they are commonly structured as unsecured or contractually subordinated financing rather than secured lending arrangements.

Bridge loans in Indonesia are typically used as short-term interim financing pending the availability of permanent funding, including in acquisition financings and other time-sensitive transactions. As bridge loans do not appear to be expressly regulated under Indonesian law as a distinct financing product, their structure is generally determined by contractual agreement and market practice.

In practice, bridge loans are usually documented as short-term facilities intended to be refinanced, replaced or rolled into a longer-term financing package once take-out financing becomes available. Depending on the transaction, they may be secured or unsecured, although, in acquisition financings, they are commonly aligned with the broader financing structure contemplated for the transaction.

In Indonesia, bonds are debt securities issued through the capital markets, whether by way of a public offering or a private placement, and may be issued by both government and corporate issuers. In practice, corporate bonds are more commonly issued under the public offering regime, while private placements are generally used for more limited or bespoke offerings.

As for structure, Indonesian bonds typically take the form of conventional debt securities issued under Indonesian capital markets regulations, with terms covering tenor, interest, covenants, events of default, and trustee or agency arrangements as applicable. High-yield bonds are not subject to a separate, standalone legal regime but are generally distinguished by their commercial risk profile, pricing and investor base rather than by a fundamentally different legal structure.

In practice, high-yield issuances involving Indonesian credits are more commonly seen in cross-border or international capital markets transactions than in the domestic market. Accordingly, while domestic bond issuances remain an important funding tool, high-yield bonds are usually used in more sophisticated financings involving offshore structures, international investors or issuers seeking broader access to capital.

Pursuant to Financial Services Authority (Otoritas Jasa Keuangan or OJK) Regulation No 30/POJK.04/2019 on the Issuance of Debt Securities and/or Sukuk Without a Public Offering (OJK Reg 30/2019), debt securities issued through a private placement may have a maturity of either more than one year or less than one year, with issuance amounts typically IDR1 billion.

The issuance of debt securities through a private placement must comply with several requirements, including the following:

• they must be issued in scripless form and deposited in collective custody with a depository and settlement institution;
• they must be rated or guaranteed/insured for at least 100% of the nominal value of the private placement, if issued by an entity other than a securities-issuing company or a public company;
• they may only be repurchased after one year from the date of issuance or the distribution date of the private placement; and
• the book-entry transfer unit must be at least IDR25 million, or a multiple thereof, and the number of holders of the private placement must not exceed 49 parties.

Under OJK Reg 30/2019, private placements may be conducted by the following entities:

• securities-issuing companies or public companies;
• business entities or legal entities in Indonesia other than securities-issuing companies or public companies;
• supranational agencies; or
• collective investment contracts that may issue debt securities and/or sukuk in accordance with the prevailing laws and regulations in the capital market sector.

In acquisition financings, asset-based financing in Indonesia is typically structured as a secured lending arrangement, under which the borrower or another obligor grants security over identified assets to secure repayment of the loan. The core structure usually consists of a loan agreement as the principal finance document, supported by an Indonesian law security package tailored to the relevant asset class, such as fiduciary security for movable assets and receivables, mortgages over land, and pledges over shares or bank accounts.

In practice, the secured assets may include the financed assets themselves, assets of the target, or other assets of the borrower or group, depending on the transaction structure and available collateral. Asset-based financings also commonly include collateral coverage and other asset-value-based covenants, reflecting the fact that repayment support is driven not only by cash flow but also by the value of the secured asset pool.

Under Indonesian law, intercreditor agreements are generally permissible based on the principle of freedom of contract. The terms of such agreements largely depend on the parties’ mutual agreement, as the primary purpose of an intercreditor agreement is to regulate and allocate the respective rights and obligations of multiple creditors.

In practice, intercreditor agreements commonly govern:

• priority of payment, which determines the order of repayment among creditors;
• the ranking of security interests, which determines which creditors have priority over secured assets;
• enforcement provisions, including which creditor has the right to enforce the security; and
• sharing provisions, which regulate how proceeds from the enforcement of the security are distributed among creditors.

In Indonesia, combined bank/bond structures are less common in straightforward acquisition financings than pure bank-led deals, particularly because bank loans are generally more flexible and faster to deploy for transaction execution, while bond issuances are subject to a separate capital markets process and regulatory framework. That said, bank and bond financing may still be used within the same broader financing strategy, especially in larger or more sophisticated transactions.

In practice, the more typical approach is for the acquisition to be initially funded through bank financing, with bonds being considered separately as part of a subsequent refinancing, liability management or longer-term capital structure optimisation exercise. Accordingly, bank loans and bonds are usually documented and regulated as distinct financing arrangements, even where they form part of the same overall funding plan.

Please note that the role of hedge counterparties, as the parties providing hedging instruments such as swaps, options or futures contracts, will generally depend on how the relevant parties structure the arrangement contractually, as the prevailing laws and regulations do not specifically regulate this matter.

However, certain matters need to be taken into account. For example, Bank Indonesia (BI), through BI Regulation No 16/21/PBI/2014 on the Implementation of the Prudential Principle in the Management of Offshore Loans of Non-Bank Corporations, as amended by BI Regulation No 18/4/PBI/2016, requires a minimum hedging ratio of 25% based on:

• the negative difference between foreign currency assets and foreign currency liabilities maturing within three months from the end of the last quarter; and
• the negative difference between foreign currency assets and foreign currency liabilities maturing between three and six months from the end of the last quarter.

In common market practice, hedge counterparties are typically financial institutions, such as banks or other licensed financial institutions, that enter into hedging arrangements with the borrower or the relevant obligor under a separate hedging agreement.

Indonesia’s financing arrangements commonly use different types of security, depending on the nature of the secured assets. These include the following.

Fiduciary Security

Fiduciary security is governed by Law No 42 of 1999 on Fiduciary Security as amended by Law No 1 of 2026 (the “Fiduciary Security Law”), which sets out the fiduciary security regime, including the registration and recording of fiduciary security with the Indonesian fiduciary registry office. Fiduciary security may be created over movable assets, whether tangible or intangible, as well as over immovable assets that are not subject to mortgage, hypothec or pledge, such as certain assets other than land, buildings, vessels and shares.

The key features of fiduciary security are as follows:

• the fiduciary objects remain in the possession of the fiduciary grantor (Article 1(1) of the Fiduciary Security Law);
• fiduciary security may be granted in favour of more than one fiduciary grantee or their appointed proxy (Article 8 of the Fiduciary Security Law);
• fiduciary security may cover one or more fiduciary objects (Article 9 of the Fiduciary Security Law);
• the fiduciary grantee is entitled to receive any proceeds derived from the fiduciary objects, including proceeds from insurance claims (Article 10 of the Fiduciary Security Law); and
• the fiduciary grantee benefits from a priority right in relation to the settlement of debts secured by the fiduciary security (Article 27 of the Fiduciary Security Law).

Mortgage

A mortgage is governed by Law No 4 of 1996 on Security Rights over Land and Objects Related to Land (the “Mortgage Law”), which provides security over land and immovable objects attached to it under rights of ownership (hak milik), rights to cultivate (hak guna usaha or HGU) and rights to build (hak guna bangunan or HGB). A mortgage must be registered with the relevant land registry office.

Under the Mortgage Law, a mortgage grants priority right to the creditor holding the mortgage (Article 1(1) of the Mortgage Law). A land title may also be encumbered with more than one mortgage, allowing multiple ranks of security to exist over the same object. In this regard, the ranking of mortgages is determined based on the order in which the mortgages are registered with the land registry office (Article 5(1) and (3) of the Mortgage Law).

Pledge

A pledge is a form of security over movable assets that are delivered into the possession of the creditor (pledgee) or an agreed third party (Article 1150 of the ICC). In financing transactions, pledges are commonly used to secure movable assets such as shares, bank accounts, receivables and other intangible rights.

Hypothec Over Vessels

In general, a hypothec, as provided under Article 1162 of the ICC, is a security right over immovable property. However, under Indonesian law, the application of hypothec is currently limited primarily to vessels rather than other types of immovable property.

A hypothec over vessels is regulated under Law No 17 of 2008 on Shipping, as amended by Law No 66 of 2024 (the “Shipping Law”). Under Article 60 of the Shipping Law, a hypothec must be created in the form of a deed made before the Registration Officer and Ship Name Transfer Registrar and must be recorded in the Vessel Registration List.

Please note that, pursuant to Article 61 of the Shipping Law, a vessel may be encumbered with more than one hypothec, allowing multiple ranks to apply. The ranking of such hypothecs is determined based on the date and number of the hypothec deed.

Warehouse Receipt

Article 1(2) of Law No 9 of 2006 on the Warehouse Receipt System, as amended by Law No 9 of 2011 (Law 9/2006), defines a warehouse receipt as a document evidencing title to goods stored in a warehouse and issued by the warehouse manager. A warehouse receipt may be encumbered with a security right, which must be established in the form of a Security Agreement Deed. However, it should be noted that a warehouse receipt may only be encumbered in respect of one debt security (Articles 12 and 14(1) of Law 9/2006).

Each type of security interest is subject to its own specific requirements. For instance, fiduciary security, mortgages and hypothecs over vessels must be executed in the form of a deed and registered with the relevant government authorities in order to be valid and enforceable.

Furthermore, with respect to pledges, the pledged assets must generally be “delivered” to the pledgee or otherwise placed under the pledgee’s control. In the case of a pledge over company shares, the pledge must also be recorded in the company’s shareholder register.

Fiduciary Security

The Fiduciary Security Law requires any fiduciary security to be registered with the Fiduciary Registration Office by the fiduciary grantee or its proxy. As further provided under Article 4 of Government Regulation No 21 of 2015 on Procedures for the Registration of Fiduciary Security and Fees for the Execution of Fiduciary Security Deeds (GR 21/2015), the registration of fiduciary security must be carried out within 30 days from the date of the notarial deed of fiduciary security.

The following steps must be taken to register fiduciary security:

• the fiduciary grantor and the fiduciary grantee must first co-ordinate with a notary to prepare the Deed of Fiduciary Security (Article 5(1) of the Fiduciary Security Law);
• the fiduciary grantee or its proxy must register the Deed of Fiduciary Security with the Fiduciary Registration Office by submitting a fiduciary registration statement (Article 13(1) of the Fiduciary Security Law) and obtaining proof of fiduciary registration (Article 5(1) of GR 21/2015);
• the fiduciary grantee or its proxy must make payment for the fiduciary registration (Article 6(1) of GR 21/2015);
• the Fiduciary Registration Office will record the fiduciary security registration electronically, and the fiduciary security will become effective on the same date as the date on which the registration is recorded (Articles 6(2) and 7(1) of GR 21/2015); and
• the Fiduciary Registration Office will issue the Fiduciary Certificate on the same date that the fiduciary security is recorded (Article 8 of GR 21/2015).

Mortgage

The Mortgage Law sets out the necessary steps for the registration of a mortgage, as follows:

• the grantor and the grantee must first enter into a deed executed before a land deed official having jurisdiction over the land being mortgaged (Article 10(2) of the Mortgage Law);
• the mortgage deed must be registered with the Land Registration Office within seven days after its execution (Articles 13(1) and (2) of the Mortgage Law);
• the Land Registration Office will record the mortgage in the mortgage register and annotate the relevant land certificate accordingly, and the mortgage will become effective on the seventh day after the required documents for registration have been received in full (Articles 13(3), (4) and (5) of the Mortgage Law); and
• the Land Registration Office will issue a Mortgage Certificate (Article 14(1) of the Mortgage Law).

Pledge

Under Articles 1151, 1152 and 1153 of the ICC, a pledge is not subject to registration with any authority. However, a pledge may be validly created through the following steps:

• the pledgor and the pledgee must first enter into a pledge agreement, which must be accessory to the principal loan agreement; and
• the pledge will become effective as follows:
1. if the pledged object is a tangible asset, the object must be delivered by the pledgor to the pledgee, and the pledgee must take possession of the object in order to perfect the pledge; or
2. if the pledged object is an intangible asset, the pledge will become effective upon notification to the relevant third party, as required depending on the nature of the asset.

Hypothec Over Vessels

The registration of a hypothec over vessels must be carried out in accordance with the following procedures under the Shipping Law:

• the grantor and the grantee must first enter into a hypothec deed before the Registration Officer and Ship Name Transfer Registrar at the place where the vessel is registered and recorded in the Master List of Registered Vessels (Article 60(2) of the Shipping Law); and
• upon such registration, a First Grosse of the Hypothec Deed will be issued to the grantee (Article 60(3) of the Shipping Law), and such grosse carries executorial title.

Warehouse Receipt

Under Government Regulation No 36 of 2007 on the Implementation of the Warehouse Receipt System, as amended by Government Regulation No 70 of 2013, the registration of a warehouse receipt as security follows the procedures below:

• the grantor and the grantee must first enter into a Warehouse Receipt Security Agreement;
• the grantee must notify the existence of the Warehouse Receipt Security Agreement to the Warehouse Receipt Supervisory Institution; and
• the encumbrance of the warehouse receipt as security will be recorded by the Warehouse Receipt Registration Office, which will subsequently issue confirmation of such record.

It appears that there is no express statutory prohibition under Indonesian law on the provision of upstream security. However, the grant of upstream security must still comply with general Indonesian corporate law principles, particularly the directors’ fiduciary duties, the requirement to act in the company’s interests, and the risk that the arrangement could be challenged if it is considered contrary to corporate benefit or beyond the company’s corporate purpose.

In practice, the key restriction is therefore not a formal ban, but whether the company can properly justify the upstream security from a corporate benefit and authority perspective. Depending on the structure, lenders will often require robust corporate approvals and supporting analysis to mitigate the risk of challenge, especially where the security supports acquisition debt incurred higher up the group.

One additional point is that certain state-owned and regional government-owned entities are subject to specific restrictions on providing security or guarantees, so the analysis may differ where those entities are involved.

It appears that there is no express statutory prohibition under Indonesian law on a company providing financial assistance in connection with the acquisition of its own shares or the shares of another group company. However, the transaction must still comply with general Indonesian corporate law principles, including directors’ fiduciary duties, the requirement to act in the company’s interests, and the company’s corporate purpose, so financial assistance may still be vulnerable to challenge where corporate benefit is not adequately demonstrated.

In practice, the key issue is therefore not a formal prohibition, but whether the company can properly justify the financial assistance from a corporate benefit and authority perspective. Depending on the structure, lenders will often require appropriate corporate approvals and supporting analysis, particularly where the target or another group company is asked to guarantee or secure acquisition debt incurred elsewhere in the structure.

The most common restrictions that must be complied with relate to corporate approvals under Law No 40 of 2007 on Limited Liability Companies, as amended by Government Regulation in Lieu of Law No 2 of 2022, which was subsequently enacted into law through Law No 6 of 2023 (the “Company Law”), as well as the company’s Articles of Association (AoA). For instance, pursuant to Article 102 of the Company Law, approval from the General Meeting of Shareholders (GMS) is required for: (i) the transfer of the company’s assets; or (ii) the encumbrance of the company’s assets as security, where such assets constitute more than 50% of the company’s net assets.

In addition, the AoA may impose specific restrictions or require additional approvals beyond those mandated under the Company Law. Furthermore, companies engaged in certain regulated business activities, such as financial services companies, as well as listed companies, may be subject to additional restrictions and regulatory requirements imposed by the relevant authorities.

Fiduciary Security

Under the Fiduciary Security Law, enforcement of fiduciary security is triggered when the debtor or fiduciary grantor commits an event of default. In such circumstances, enforcement may be carried out in three ways:

• the fiduciary grantee may enforce the executorial title contained in the Fiduciary Certificate (Articles 15(2) and 29(1)(a) of the Fiduciary Security Law);
• the fiduciary objects may be sold through a public auction, and the proceeds of such sale may be applied towards repayment of the debt (Article 29(1)(b) of the Fiduciary Security Law); or
• the fiduciary objects may be sold through a private sale, provided that notice of the sale has been given one month in advance and that the sale is expected to result in the highest price beneficial to all parties (Articles 29(1)(c) and 29(2) of the Fiduciary Security Law).

Mortgage

Under the Mortgage Law, a mortgage may be enforced in the following ways:

• the first-ranking mortgage holder is entitled to sell the mortgaged property on its own authority through a public auction and to obtain repayment from the proceeds of such sale (Articles 6 and 20(1)(a) of the Mortgage Law);
• the executorial title may be enforced through a public auction, and the proceeds may be used to repay the debt owed to the mortgage grantee (Article 20(1)(b) of the Mortgage Law); or
• the mortgaged property may be sold through a private sale, provided that this method is expected to result in the highest price being beneficial to the parties concerned (Article 20(2) of the Mortgage Law).

Pledge

Under Articles 1155 and 1156 of the ICC, if the pledgor or debtor fails to fulfil its obligations, the pledge may be enforced by the following methods:

• the pledgee may sell the pledged object through a private sale or public auction, and the proceeds of such sale may be used to satisfy the debt, including principal and interest; or
• the pledgee may request a court order determining the procedure for the sale of the pledged object, or determining that the pledged object be placed in the possession of the pledgee in satisfaction of the debt.

Hypothec Over Vessels

A hypothec over vessels may be enforced by:

• enforcing the executorial title by submitting an application for execution to the head of the competent District Court;
• selling the vessel directly, provided that such method is permitted under the hypothec deed; or
• selling the hypothecated vessel through a private sale, provided that the sale is expected to result in the highest price beneficial to all parties.

Warehouse Receipt

Enforcement of a warehouse receipt is triggered upon the occurrence of an event of default and may be carried out by:

• selling the encumbered warehouse receipt through a public auction; or
• selling the encumbered warehouse receipt through a private sale, provided that the sale results in a price beneficial to both parties.

Article 1820 of the ICC provides that a guarantee is an agreement under which a third party undertakes to fulfil the obligations of a debtor in favour of the creditor if the debtor defaults. While Indonesian law does not prescribe an exhaustive classification of guarantees, the most commonly used forms in acquisition finance transactions are personal guarantees, corporate guarantees and, in certain cases, bank guarantees.

In practice, personal and corporate guarantees are commonly used as forms of personal security in Indonesian financing transactions and are typically created by written agreement. Bank guarantees may also be used in specific contexts, although they are generally more common in performance, trade or other contingent payment arrangements than as the primary guarantee instrument in acquisition finance.

It appears that there is no express statutory prohibition under Indonesian law on upstream guarantees or financial assistance. However, their validity is generally assessed by reference to general corporate law principles, including corporate benefit, the company’s corporate purpose, the directors’ fiduciary duties, and the need for the relevant corporate approvals under the Company Law and the company’s AoA.

In practice, the main restriction is therefore not a formal ban, but whether the company can properly justify the guarantee or assistance as being in its interests and within its authority. Additional restrictions may also apply to regulated entities, listed companies and banks, which are subject to sector-specific regulatory requirements.

Indonesian law does not generally require a guarantee fee to be charged. Whether a guarantee fee is payable is therefore largely a matter of contractual agreement, although related-party and cross-border arrangements may also need to take into account applicable tax and transfer pricing considerations.

It appears that Indonesian law does not expressly recognise a doctrine of equitable subordination of the kind found in some common law jurisdictions. Instead, creditor ranking is generally determined by statute and by the nature of the creditor’s claim, including whether the creditor is secured, preferred or unsecured.

In practice, this means that a lender’s priority is not ordinarily subordinated by the court on broad equitable grounds. Rather, priority is assessed by reference to the applicable security interests, statutory preferences and any contractual subordination arrangements agreed between the creditors, such as through an intercreditor agreement.

One related point to note is that transactions entered into within a certain period before bankruptcy may still be challenged and set aside through an actio pauliana claim under Indonesian bankruptcy law. That remedy, however, is distinct from equitable subordination and concerns the avoidance of prejudicial transactions rather than the judicial re-ranking of claims on equitable grounds.

Under Indonesian law, the main claw-back risk in acquisition finance arises through the concept of actio pauliana under Article 1341 of the ICC and Articles 41 to 49 of Law No 37 of 2004 on Bankruptcy and Suspension of Debt Payment Obligations. Broadly, this allows certain transactions entered into by a debtor to be challenged and set aside if they prejudice creditors.

In the acquisition finance context, the principal risk is therefore that guarantees, security, repayments, asset transfers or other transaction steps implemented before bankruptcy could later be challenged and set aside if they are considered detrimental to the debtor’s creditors. This risk relates to the avoidance of particular pre-bankruptcy transactions, rather than to the financing structure as a whole.

Based on Article 5 of Law No 10 of 2020 on Stamp Duty as amended by Law No 1 of 2026, the applicable fixed stamp duty rate in Indonesia is IDR10,000. Stamp duty becomes payable at the time the relevant documents are executed or when they are submitted as evidence in court proceedings. In general, the following documents are subject to stamp duty:

• agreements, such as loan agreements and security agreements;
• notarial deeds, including security-related notarial deeds;
• transaction documents;
• documents stating a nominal value of more than IDR5 million; and
• other documents as may be stipulated by the government.

Indonesian law does not generally use a formal “qualifying lender” concept in the same way as some other jurisdictions. In practice, however, the concept is relevant from a tax perspective, particularly where the lender is a foreign lender seeking to benefit from a reduced withholding tax rate under an applicable tax treaty.

As a general rule, interest paid by an Indonesian borrower to a foreign lender is subject to 20% withholding tax under Article 26, unless a lower treaty rate or exemption applies. To obtain treaty relief, the foreign lender must satisfy the relevant treaty requirements and provide the required Directorate General of Taxes (DGT) form or certificate of domicile documentation.

By contrast, interest paid to an Indonesian tax resident lender is generally subject to 15% withholding tax under Article 23, although different tax treatment may apply in certain cases, including where the lender is an Indonesian bank. Accordingly, in acquisition finance transactions, the identity and tax status of the lender remain important in determining the effective withholding tax position.

In the context of thin-capitalisation rules, which impose restrictions on the level of debt a company may use compared to its equity, such rules in Indonesia are primarily regulated for income tax purposes. According to Article 2(1) of Minister of Finance Regulation No 169/PMK.010/2015 on the Determination of the Debt-to-Equity Ratio (DER) for Companies to Calculate Income Tax, the highest ratio allowed between debt and equity for income tax purposes is 4:1.

However, this requirement does not apply to certain sectors, including:

• the banking sector;
• financial institutions;
• the insurance and reinsurance sector;
• the oil and gas sector operating under production sharing contracts, contracts of work, or other mining co-operation agreements that do not stipulate a debt-to-equity ratio requirement;
• businesses whose income is subject to final income tax; and
• the infrastructure sector.

Under Indonesian law, there is no strict “certain funds” concept of the kind seen in some other jurisdictions. However, in the context of an acquisition of a public company, the bidder must be able to demonstrate sufficient financial capability to complete the mandatory tender offer (MTO), including through a statement confirming the availability of funds for that purpose.

Additional requirements apply where the target is a bank. In that case, any change of control or ownership is subject to OJK approval and fit and proper requirements, and the funds used to acquire ownership of a bank must not originate from loans or financing facilities provided by banks or other parties in Indonesia, which makes acquisition financing for bank targets more tightly regulated.

There are no specific requirements applicable to a financing company or lender in relation to the acquisition financing of a publicly listed company in Indonesia. However, the principal issue that may arise for a prospective buyer in such a transaction, particularly where financing support is required, is the MTO process in connection with the takeover of a listed company.

An MTO is a mandatory requirement that must be carried out by a new controller in respect of the remaining shares of the listed company, subject to the applicable exemptions. In this regard, the new controller must submit the required documents to OJK and the listed target, and must announce the disclosure of information regarding the acquisition no later than two business days after receiving OJK’s approval, in at least one daily newspaper and through the stock exchange website.

However, the MTO requirement does not apply to the following shares:

• shares held by shareholders who have already undertaken the acquisition transaction with the new controller;
• shares held by other parties that have already received an offer from the new controller on the same terms and conditions;
• shares held by other parties that are, at the same time, also conducting an MTO or a voluntary tender offer for shares in the same listed company;
• shares held by the principal shareholder; and
• shares held by another controller of the listed company.

Accordingly, financing support may be required during the MTO process, particularly where the number of remaining shares subject to the MTO is significant.

Offshore Loans

There has been a growing trend in recent years towards the use of foreign or offshore loans (Utang Luar Negeri) in Indonesia. However, certain requirements must be taken into account in relation to offshore financing transactions.

Under BI Regulation No 21/4/PADG/2019 on the Reporting of Foreign Exchange Flow Activities in the Form of Foreign Loans and Risk Participation Transactions, as partially amended by BI Regulation No 23/28/PADG/2021, any offshore loan received by an Indonesian party must be reported to BI. This reporting obligation applies to:

• financial services entities, whether banks or non-banks;
• non-financial business entities;
• other entities; and
• individuals, provided that the loan amount is at least USD200,000.

The offshore loan report must include:

• the principal amount;
• the interest amount;
• the underlying documents, such as the loan agreement, debt securities, trade credit documents and other loan documents;
• the drawdown plan and its realisation; and
• any changes made to the offshore loan.

In addition to the above, BI also requires that any offshore loan be withdrawn through a bank licensed to conduct foreign exchange activities. This obligation applies to:

• foreign loans based on non-revolving loan agreements that are not used for refinancing purposes;
• any difference between the refinancing facility and the amount of the foreign loan; and
• foreign loans based on debt securities, such as bonds, medium-term notes, floating rate notes, promissory notes and commercial paper.

Mandatory Use of Rupiah

In general, Indonesian rupiah must be used in all transactions pursuant to Article 2 of BI Regulation No 17/3/PBI/2015 on the Mandatory Use of Rupiah.

However, several exemptions apply, including:

• certain transactions relating to the state budget;
• the receipt or provision of grants from or to overseas entities;
• international trade transactions;
• bank deposits denominated in foreign currencies; and
• international financing transactions.

Therefore, repayment of a foreign currency loan is generally permitted to be made in the same foreign currency. However, this may still be subject to exchange control requirements, under which any purchase or sale of foreign currency above certain thresholds must be supported by an underlying transaction and the relevant documentation.

Other Relevant Obligations

Please note that the prevailing laws and regulations in Indonesia do not generally prescribe a strict mechanism for private acquisitions. However, if the acquisition financing involves a listed company, there are several regulatory requirements of which lenders should be aware. Nevertheless, the obligation to comply with such requirements generally rests with the relevant parties to the transaction, namely the buyer and the seller. For example, the following requirements may apply.

Affiliated party transactions

Affiliated party transactions conducted by listed companies are regulated under OJK Regulation No 42/POJK.04/2020 on Affiliated Transactions and Conflict of Interest Transactions (OJK Reg 42/2020). In general, these transactions require the appointment of an independent appraiser, disclosure to the public, submission of the relevant documents to OJK, and, where applicable, approval from the GMS if the transaction also qualifies as a material transaction.

Material transactions

Material transactions are regulated under OJK Regulation No 17/POJK.04/2020 on Material Transactions and Changes in Business Activities and generally refer to transactions with a value of 20% or more of the listed company’s equity. These transactions typically require the appointment of an independent appraiser, public disclosure, submission of documents to OJK, and, in certain circumstances, shareholder approval through a GMS.

Conflict of interest transactions

Conflict of interest transactions are also governed by OJK Reg 42/2020. Such transactions generally require the appointment of an independent appraiser, public disclosure, submission of documents to OJK, and approval from independent shareholders through a GMS, unless the transaction falls within one of the applicable exemptions.