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Vichi Lestari

Admin  |  28 February 2017

Loan is a form of fund raising, which has been done not only in business area but also personal for various reasoning. Loan in this article will be discussing further about business-related. In Indonesia, we have several types of loan, normal loan, convertible note, bonds, obligations, and on. All of this can be categorized as  financial instrument (negotiable instrument – surat berharga). The terms of Surat Berharga,  is so wide that it is also covers for Shares. Focusing on a simpler types of loan, we have a normal loan and  convertible loan/note.  Normal loan will be divided into two types: one that includes a security, pledges, or guarantee of payment and one that is free from all of that. Usually loan without any security can be found between friends, while the loan with securities arrangement include : pledge of shares, pledge of assets,/properties, pledge of account receivables. Pledge of assets/properties or account receivables normally accepted by banks, although some account receivable is accepted by personals but its rarely so due to the bad debt condition. Commonly, loan agreement with pledge of shares is normally used by foreign investor which by law are prohibited to enter into certain business field – this kind arrangement might be the arrangement of normal loan or it could be a nominee arrangement where a series of transaction documents are created so that the foreign investor will be the controlling party to the shares rights and authorities. To clarify, nominee arrangement is prohibited by investment law, however there is no law that prohibit any domestic to create a nominee arrangement. The next one is convertible loan or to some convertible note, the holder of the note, may have several option : 1. Interest free rate for a short term period (short term period loan is known as bridging loan, due to the nature of it is to temporarily mitigate some risks or needs) 2.  Certain interest rate (not too high to be considered as loan shark) 3. Profit participation. Each of this will be elaborated further in the next article. In Indonesia, the practice of loan documents is accompanied by acknowledgement of indebtedness- so aside from the loan agreement, acknowledgement of indebtedness shall also be included where the company or borrower acknowledged its/his debts towards the lender. In addition to this one must check the Deed of Establishment or its Amended Article of Association (as applicable) in regards to the process of loan approval, some regulates and limits loan arrangement in the company and towards some end we always recommend for a shareholder resolution to be made in entering the loan agreement.

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