Joint Venture in Indonesia: Legal Structure, Key Agreements and Investor Risks

A joint venture can allow a foreign investor and an Indonesian business partner to combine capital, local market knowledge, technical expertise, commercial relationships and operational resources within one business project.

This structure may be attractive when neither party can achieve the same commercial objective alone.

A foreign investor may contribute funding, technology, international experience, intellectual property, management systems or access to overseas markets. A local partner may contribute industry knowledge, operational capacity, supplier relationships, personnel, property access or an established network in Indonesia.

However, a joint venture is not protected simply because the parties trust one another or share the same initial business objective.

The relationship must be supported by a clear legal and commercial structure.

Before the project begins, the parties should understand:

- what each party must contribute;
- how ownership will be allocated;
- which party will manage daily operations;
- how important decisions will be approved;
- how additional funding will be provided;
- how profits and losses will be shared;
- who owns intellectual property and business assets;
- what happens if one party fails to perform;
- how a deadlock will be resolved;
- how either party may exit the joint venture.

These questions become particularly important where the parties have different financial resources, different levels of operational involvement or different expectations about the future of the business.

For example, one party may expect to participate actively in management, while the other expects to provide capital only.

One party may believe that profits should be distributed regularly, while the other wants to reinvest earnings for expansion.

A foreign investor may expect access to financial information and banking controls, while the local partner may expect broad authority over daily operations.

These differences do not necessarily make the joint venture unworkable. The risk arises when they are not discussed and documented before the business begins.

The term “joint venture” can also describe different legal and commercial arrangements.

The parties may establish a separate Indonesian company and become shareholders in that company. They may also cooperate through a contractual arrangement for a specific project without creating a jointly owned entity.

The correct structure depends on the business activity, investment model, licensing requirements, ownership restrictions, tax position, operational needs and long-term objectives of the parties.

For foreign investors, the legal entity is only one part of the structure.

A properly organised joint venture may require several connected documents, including a joint venture agreement, shareholder agreement, articles of association, shareholder loan agreements, intellectual property licences, service agreements, management agreements and other operational contracts.

These documents should work together.

If the joint venture agreement promises one governance structure but the company’s articles of association provide another, the parties may face uncertainty when an important decision must be approved.

If a shareholder is expected to provide management services but there is no clear service agreement, disputes may arise over authority, fees, performance and termination.

If intellectual property is contributed to the project but ownership and licensing are unclear, the joint venture may become dependent on an asset it does not legally control.

A strong joint venture structure should therefore connect ownership, governance, funding, operations and exit within one coordinated contractual framework.

The purpose is not to predict every possible disagreement. The purpose is to make sure that the parties have an agreed process for making decisions, managing risk and protecting the business when expectations change.

A joint venture in Indonesia can be structured in different ways. The parties may establish a jointly owned company, or they may cooperate through one or more contracts without creating a separate jointly owned legal entity.

The correct structure depends on the business activity, required licences, intended duration, ownership model, investment size, operational control, tax position and level of risk.

A corporate joint venture is usually created through a separate Indonesian limited liability company.

Where foreign investment is involved, the company may be structured as a PT PMA, subject to the rules applicable to the relevant business activity and investment sector. The foreign ownership percentage should not be assumed in advance. It must be checked against the current business classification, licensing requirements and applicable investment restrictions.

In a corporate joint venture, the parties become shareholders of the company.

The company then becomes the main operating vehicle for the business. It may hold licences, employ staff, enter contracts, receive revenue, own business assets and maintain company bank accounts.

The relationship is regulated through several connected layers:

- Indonesian company law;
- the company’s deed of establishment;
- articles of association;
- shareholder resolutions;
- the shareholder or joint venture agreement;
- licences and regulatory approvals;
- operational agreements with the shareholders or third parties.

This structure can be appropriate where the parties intend to operate an ongoing business, share ownership, employ personnel, hold assets, receive investment and build a separate commercial enterprise.

However, forming a company does not by itself resolve the commercial relationship between the parties.

The shareholders must still agree on ownership, capital contributions, voting rights, management appointments, reserved matters, financial reporting, additional funding, profit distribution, transfer restrictions, deadlock and exit.

A contractual joint venture does not necessarily involve a jointly owned company.

Instead, the parties cooperate under a contract for a particular project, transaction or commercial objective. Each party may continue operating through its own existing legal entity.

The agreement may regulate:

- the purpose and duration of the project;
- the responsibilities of each party;
- financial contributions;
- allocation of revenue and expenses;
- ownership of equipment and project assets;
- use of intellectual property;
- personnel and management responsibilities;
- reporting and approval procedures;
- liability to third parties;
- termination and project completion.

A contractual structure may be suitable for a limited project, temporary collaboration, market test, co-development arrangement, shared marketing activity, construction project, distribution relationship or another form of cooperation where a separate company is not commercially necessary.

However, the parties should not assume that calling the arrangement a contractual joint venture removes licensing, tax, employment or regulatory obligations.

The real activities of the parties matter more than the title of the agreement.

If the parties conduct regulated business, employ staff, receive revenue, provide services, hold assets or create a permanent operating presence in Indonesia, the legal and licensing structure should be reviewed separately.

The distinction between a corporate and contractual joint venture also affects control.

In a corporate joint venture, control is generally exercised through share ownership, shareholder meetings, directors, commissioners, reserved matters and company procedures.

In a contractual joint venture, control is created primarily through the agreement. The contract must define who can make decisions, incur costs, bind the project, communicate with clients and approve changes.

Asset ownership may also differ.

A corporate joint venture may own the project’s equipment, contracts, intellectual property and operating assets directly.

In a contractual joint venture, those assets may remain with one party, be jointly funded, be licensed to the project or be transferred after completion. These arrangements should be documented clearly.

Liability requires careful consideration in both structures.

A separate company may provide a degree of separation between the business and its shareholders, but shareholder guarantees, direct contractual obligations, regulatory responsibility or misconduct may still create exposure.

In a contractual joint venture, each party may have more direct exposure because there is no separate jointly owned entity standing between the parties and the project.

The parties should also consider how the joint venture will end.

A corporate joint venture may require a share sale, buyout, transfer of ownership, company sale, restructuring or liquidation.

A contractual joint venture may end through expiration, completion of the project, termination for breach or another agreed event.

Neither structure is automatically better.

A corporate joint venture may provide a stronger framework for a long-term operating business. A contractual joint venture may offer greater flexibility for a defined project.

The safest approach is to choose the structure only after the parties have reviewed the actual business activity, licensing requirements, ownership rules, funding model, tax position, control rights and exit plan.

A joint venture is rarely protected by one document alone.

The parties may sign a joint venture agreement, but the commercial arrangement may also depend on the company’s articles of association, shareholder agreement, shareholder loans, intellectual property licences, service agreements, management arrangements and other operational contracts.

These documents should be designed as one coordinated legal structure.

If each agreement is prepared separately without checking the others, the parties may create conflicting obligations, inconsistent approval thresholds or uncertainty about which document controls a particular issue.

The first document is usually the joint venture agreement.

This agreement describes the overall commercial relationship between the parties. It may regulate:

- the purpose and business scope of the joint venture;
- the legal structure selected by the parties;
- initial contributions;
- ownership percentages;
- implementation steps;
- management responsibilities;
- funding commitments;
- profit-sharing principles;
- confidentiality;
- intellectual property;
- exclusivity;
- deadlock;
- default;
- termination and exit.

The joint venture agreement may also regulate the period before the operating company is established.

This can include completion conditions, due diligence, incorporation responsibilities, licensing applications, capital contributions, approval of the business plan and execution of supporting agreements.

If the parties establish a jointly owned company, a shareholder agreement may also be required.

The shareholder agreement regulates the continuing relationship between the shareholders after the company has been established.

It may include:

- voting rights;
- reserved matters;
- director and commissioner nomination rights;
- information and inspection rights;
- dividend policy;
- additional funding;
- share transfer restrictions;
- pre-emption rights;
- tag-along and drag-along rights;
- shareholder default;
- valuation;
- buyout and exit mechanisms.

The joint venture agreement and shareholder agreement may overlap, but they should not contradict one another.

In some transactions, the parties combine both functions into one document. In others, the joint venture agreement regulates the initial project and establishment process, while the shareholder agreement regulates the long-term corporate relationship.

The correct approach depends on the structure and complexity of the transaction.

The company’s articles of association are another essential document.

They form part of the company’s formal corporate framework and regulate matters such as capital, shares, directors, commissioners, shareholder meetings and corporate approvals.

Any contractual governance rights should be coordinated with the articles of association.

For example, if the shareholder agreement states that a particular investor has the right to nominate a director, the corporate documentation should support the practical implementation of that right.

If reserved matters require enhanced approval, the parties should consider how those controls interact with the company’s formal voting procedures.

Funding documents may also be necessary.

The shareholders may provide capital through equity contributions, shareholder loans or a combination of both.

A shareholder loan agreement should define:

- the loan amount;
- currency;
- interest;
- maturity;
- repayment conditions;
- subordination;
- security;
- conversion rights;
- events of default.

Without clear funding documentation, disagreements may arise over whether a payment was a capital contribution, a refundable loan, an advance or an operational expense.

Service and management agreements may also form part of the joint venture structure.

One shareholder may provide technical services, management personnel, marketing, procurement, administration, construction supervision, licensing support or access to business systems.

These services should not be left as informal expectations.

A separate agreement may be needed to define:

- scope of services;
- fees;
- performance standards;
- authority;
- reporting;
- liability;
- termination;
- ownership of work product.

This is particularly important where one shareholder receives management fees or service payments in addition to dividends.

The documents should distinguish between payment for services and return on share ownership.

Intellectual property agreements may also be required.

A party may contribute a brand, software, operational system, design, technology, know-how, content, database, process or other intellectual property to the joint venture.

The parties should clarify whether the intellectual property is:

- transferred to the joint venture;
- licensed for a limited period;
- licensed exclusively or non-exclusively;
- restricted to a particular territory or business activity;
- returned or no longer usable after termination.

The joint venture should not become commercially dependent on intellectual property that it has no reliable right to use.

Property-related agreements may also be relevant.

The business may operate from land, offices, commercial premises, hospitality property, warehouses or another location controlled by one shareholder or a related party.

The relationship should be documented through an appropriate lease, licence, management or usage agreement.

The contract should regulate rent, duration, access, improvements, maintenance, utilities, permits, termination and treatment of investments made into the property.

Supply, distribution or exclusivity agreements may also be necessary.

One shareholder may supply products, raw materials, equipment or access to a distribution network.

If the joint venture depends on that relationship, the agreement should define pricing, quality, delivery, exclusivity, minimum volumes, termination and alternative supply rights.

Employment and secondment arrangements should also be considered.

A shareholder may assign employees or managers to the joint venture. The parties should define who employs them, who pays compensation, who controls their work, how liability is allocated and what happens when the arrangement ends.

Confidentiality and non-disclosure obligations may be included in the main agreements or documented separately.

These protections should apply not only during negotiations but also during operations and after the joint venture ends.

The complete contract structure should answer one practical question:

Which document regulates each important part of the relationship?

A coordinated joint venture document package may include:

- joint venture agreement;
- shareholder agreement;
- articles of association;
- shareholder loan agreement;
- service or management agreement;
- intellectual property licence;
- property agreement;
- supply or distribution agreement;
- confidentiality agreement;
- employment or secondment documentation.

Not every joint venture requires every document.

However, the parties should identify which obligations belong in the main agreement and which require separate operational contracts.

A strong joint venture structure is created not by the number of documents, but by the consistency between them.

A joint venture should clearly define what each party is expected to contribute and how those contributions relate to ownership, control and economic rights.

This is one of the most important parts of the joint venture structure.

The parties may enter the relationship with different expectations. One party may provide most of the capital, while the other contributes local market knowledge, licences, business relationships, technical expertise, property access, management capacity or intellectual property.

These contributions are not always easy to compare.

Cash contributions can usually be measured directly. Non-cash contributions may require valuation, documentation and clear rules on ownership and use.

The joint venture agreement should therefore identify each contribution in practical detail.

Possible contributions may include:

- cash investment;
- equipment;
- inventory;
- intellectual property;
- technology;
- brand rights;
- software;
- business systems;
- property access;
- licences or regulatory support;
- customer relationships;
- supplier networks;
- management time;
- technical personnel;
- marketing resources;
- distribution channels.

The agreement should also state when each contribution must be provided.

A promise to contribute assets or expertise is not enough if there is no deadline, delivery standard or consequence for non-performance.

For example, if one party agrees to provide equipment, the agreement should clarify:

- what equipment must be provided;
- whether ownership is transferred or only usage rights are granted;
- who is responsible for transport, maintenance and insurance;
- when the equipment must be operational;
- what happens if the equipment is defective or delayed.

If one party contributes intellectual property, the agreement should explain:

- who owns the intellectual property before the joint venture begins;
- whether ownership is transferred;
- whether the joint venture receives a licence;
- whether the licence is exclusive;
- the permitted territory and business use;
- whether the rights continue after termination.

If one party contributes management or technical expertise, the agreement should define the role more precisely.

It should identify:

- the personnel involved;
- expected time commitment;
- reporting obligations;
- decision-making authority;
- performance standards;
- replacement procedures;
- compensation, if any;
- consequences of non-performance.

The relationship between contributions and ownership should also be clear.

The parties may agree that ownership percentages reflect the value of initial contributions. However, ownership may also reflect strategic value, future commitments, operational involvement, risk allocation or negotiation leverage.

The agreement should not assume that ownership percentages explain every obligation.

A shareholder may own 40% of the company but still be responsible for most daily operations. Another shareholder may own 60% but act only as a financial investor.

These roles should be documented separately from ownership.

Operational responsibilities should therefore be allocated clearly.

The agreement should explain which party is responsible for areas such as:

- business development;
- finance and accounting;
- tax coordination;
- licensing and compliance;
- staffing;
- procurement;
- marketing;
- technology;
- property management;
- customer relations;
- supplier management;
- reporting;
- banking administration.

The parties should also define approval boundaries.

One party may manage routine operations, but major decisions may still require joint approval.

The agreement should distinguish between:

- day-to-day management;
- budgeted operational decisions;
- decisions above agreed financial thresholds;
- reserved matters;
- emergency decisions;
- decisions involving a conflict of interest.

This helps prevent two opposite problems.

The first problem is excessive centralisation, where one party controls the business without sufficient oversight.

The second problem is operational paralysis, where every minor decision requires approval from all parties.

A balanced structure should allow management to act efficiently while preserving control over important financial, strategic and ownership-related matters.

The agreement should also address changes in roles.

A party may initially provide active management but later reduce its involvement. A technical partner may stop supplying expertise. A shareholder may no longer have the personnel, licences, assets or commercial relationships originally promised.

The agreement should explain what happens if a contribution or role becomes unavailable.

Possible responses may include:

- a replacement obligation;
- a revised fee;
- additional funding;
- suspension of certain rights;
- dilution;
- damages;
- termination of a service arrangement;
- compulsory transfer in serious cases.

The consequences should be proportionate to the importance of the failed contribution.

The parties should also consider whether some contributions should be documented in separate agreements.

For example:

- management services may require a service agreement;
- intellectual property may require a licence;
- shareholder funding may require a loan agreement;
- property use may require a lease or licence;
- equipment may require a transfer or usage agreement.

This helps distinguish between ownership rights and operational obligations.

A shareholder should not automatically receive management fees, licence fees, rent or supplier payments simply because it owns shares. Each payment should have a clear commercial basis, approval process and supporting agreement.

Related-party transactions should therefore be disclosed and controlled.

If a shareholder or affiliate provides goods, services, property or financing to the joint venture, the agreement should explain:

- how the terms are approved;
- whether pricing must be commercially reasonable;
- whether the interested party must abstain from voting;
- what information must be disclosed;
- how performance is monitored.

A strong joint venture agreement should make one point clear:

Ownership, contribution and operational control are connected, but they are not the same thing.

The agreement should define each of them separately so that the parties understand what they own, what they must provide and what authority they have in the business.

A joint venture should clearly define how decisions are made and which party has authority over different areas of the business.

This is especially important where the parties have different ownership percentages, different operational roles or different levels of financial exposure.

Ownership alone does not always provide an adequate governance framework.

A party may hold a minority interest but contribute essential technology, licences, market access or operating expertise. Another party may hold a majority interest but have limited involvement in daily management.

The joint venture agreement should therefore distinguish between:

- shareholder-level decisions;
- board decisions;
- daily management decisions;
- decisions requiring special approval;
- emergency decisions;
- decisions involving conflicts of interest.

For a corporate joint venture, governance normally operates through the company’s formal corporate organs.

These may include the shareholders, board of directors and board of commissioners.

The agreement should be coordinated with the company’s articles of association so that contractual rights can be implemented through valid corporate procedures.

For example, if one investor has the right to nominate a director or commissioner, the corporate documents should support that nomination structure.

If certain decisions require unanimous approval under the joint venture agreement, the parties should consider how those controls interact with the voting thresholds in the articles of association.

The agreement should define board composition.

This may include:

- the number of directors;
- the number of commissioners;
- nomination rights of each party;
- appointment and removal procedures;
- minimum qualifications;
- replacement rights;
- meeting frequency;
- quorum;
- voting procedures.

The parties should also identify who is responsible for daily management.

One party may nominate the president director or another key executive. The agreement should define the scope of authority and ensure that daily management remains subject to agreed budgets, reporting obligations and approval thresholds.

Routine operational decisions should not require shareholder approval every time.

Otherwise, the joint venture may become slow and difficult to manage.

At the same time, major strategic, financial and ownership decisions should not be left entirely to one party.

This is why joint venture agreements commonly use reserved matters.

Reserved matters are decisions that require a higher approval threshold than ordinary business decisions.

Depending on the ownership structure, they may require:

- unanimous approval;
- approval by a supermajority;
- consent of each joint venture partner;
- approval of a nominated director;
- approval by a designated committee.

Reserved matters may include:

- changing the principal business activity;
- amending the articles of association;
- issuing new shares;
- changing ownership rights;
- admitting new investors;
- increasing or reducing capital;
- borrowing above an agreed threshold;
- granting guarantees or security;
- approving major capital expenditure;
- entering transactions outside the approved budget;
- acquiring or selling significant assets;
- appointing or removing senior management;
- entering related-party transactions;
- changing banking arrangements;
- declaring dividends;
- approving material litigation or settlement;
- entering a new business sector or territory;
- selling, restructuring or liquidating the joint venture.

The reserved matters list should be carefully tailored.

If the list is too short, one party may be able to make decisions that materially change the investment without sufficient consent.

If the list is too broad, routine operations may be delayed because almost every decision requires joint approval.

Financial thresholds can help create balance.

For example, management may be authorised to enter contracts and make expenditures within an approved annual budget and below specified limits.

Transactions above those limits may require board or shareholder approval.

The agreement should also regulate annual budgets and business plans.

The budget process may include:

- preparation by management;
- delivery by a fixed date;
- review by the board;
- approval by the shareholders;
- permitted deviations;
- procedures if the budget is not approved.

Failure to approve a budget can itself become a deadlock.

The agreement should therefore explain whether the previous budget continues temporarily, whether only essential expenditure is permitted, or whether another interim mechanism applies.

Information rights are another core governance issue.

Each party should receive sufficient information to monitor performance and make informed decisions.

The agreement may require:

- monthly management reports;
- quarterly financial statements;
- bank statements;
- tax filings;
- operational reports;
- major contract summaries;
- regulatory updates;
- notices of disputes or material events;
- access to supporting documents.

Inspection and audit rights may also be required.

This is particularly important where one party controls daily operations and the other party is primarily an investor.

Banking authority should be defined clearly.

The agreement may provide that:

- all accounts must be held in the joint venture company’s name;
- payments above specified amounts require dual approval;
- changes to bank signatories require reserved-matter approval;
- cash withdrawals are restricted;
- personal use of company funds is prohibited;
- regular bank reconciliation is mandatory.

Conflict-of-interest procedures should also be included.

A shareholder, director or affiliate should not be able to approve a transaction that benefits them personally without disclosure and appropriate independent approval.

The agreement may require the interested party to abstain from voting.

For contractual joint ventures, governance must be created directly through the contract because there may be no separate company board or shareholder meeting.

The agreement should identify:

- the joint management committee;
- representatives appointed by each party;
- meeting procedures;
- quorum;
- voting rights;
- authority to bind the project;
- budget approval;
- escalation procedures.

The parties should also define who may communicate with clients, suppliers, employees, regulators and other third parties on behalf of the joint venture.

Without clear authority, one party may make commitments that the other party did not approve.

A balanced governance framework should achieve two objectives:

- allow the business to operate efficiently;
- protect each party against major decisions being made without the agreed level of consent.

The goal is not to create control over every operational detail. The goal is to make sure that important decisions follow a transparent and enforceable process.

A joint venture agreement should clearly regulate how the business will be funded, how financial decisions will be approved, and how profits and losses will be allocated between the parties.

These issues should be agreed before the joint venture begins.

Many joint venture disputes arise because the parties agree on the initial investment but do not plan for future funding needs, operating losses, unexpected expenses, delayed revenue or business expansion.

The agreement should first identify the initial financial contributions of each party.

It should state:

- the amount each party must contribute;
- the currency of the contribution;
- the payment deadline;
- the bank account into which funds must be paid;
- whether the contribution is equity, debt or another form of funding;
- whether any non-cash contribution is included;
- what evidence confirms that the contribution has been completed.

Where the parties establish a corporate joint venture, capital contributions should remain consistent with the company’s formal capital structure and corporate documentation.

Payments should not be described informally if they are intended to create equity, shareholder debt, reimbursement rights or another financial entitlement.

The agreement should distinguish clearly between:

- paid-up capital;
- additional equity;
- shareholder loans;
- operational advances;
- reimbursable expenses;
- payments for services;
- payments for assets or intellectual property.

This distinction is important because each category may have different corporate, accounting, tax, approval and repayment consequences.

The parties should also plan for additional funding.

A joint venture may require further capital for:

- operating expenses;
- working capital;
- licensing and compliance;
- hiring;
- equipment;
- construction or renovation;
- technology;
- marketing;
- expansion;
- unexpected liabilities;
- temporary cash-flow shortages.

The agreement should explain how a funding requirement is identified and approved.

A typical process may include:

1. management prepares a written funding request;
2. the request explains the amount and purpose;
3. the board or joint management committee reviews the request;
4. the parties decide whether funding will be equity, debt or external finance;
5. each party receives a defined participation deadline;
6. the consequences of non-participation are applied.

The agreement should state whether additional funding is mandatory.

The parties may agree that additional contributions must be made in proportion to ownership. They may also agree that funding is voluntary and subject to separate approval.

If funding is not mandatory, the agreement should explain what happens when one party contributes and the other does not.

Possible consequences may include:

- funding through a shareholder loan;
- preferential repayment;
- interest on the additional funding;
- issuance of additional shares;
- dilution of the non-participating party;
- suspension of certain contractual rights;
- a revised ownership structure;
- default remedies in serious cases.

Any dilution or compulsory funding mechanism should be drafted carefully.

The agreement should define the calculation method, notice process, valuation basis and required corporate approvals.

Shareholder loans may be an important funding tool.

A shareholder loan agreement should normally address:

- principal amount;
- currency;
- interest;
- maturity;
- repayment schedule;
- subordination;
- security;
- conversion rights;
- events of default;
- restrictions on repayment;
- approval requirements.

The parties should also decide whether shareholder loans are repaid before profits are distributed.

Without clear priority rules, one shareholder may expect repayment while the other expects the available cash to be distributed or reinvested.

Profit-sharing principles should also be defined.

In a corporate joint venture, economic distributions will normally depend on the company’s share structure, available profits and valid corporate approvals.

However, the parties may still agree on a commercial framework for deciding whether profits should be:

- retained as working capital;
- reinvested in the business;
- used to repay debt;
- placed in reserves;
- distributed to shareholders.

The agreement should not promise automatic distributions without considering the company’s financial position and applicable corporate requirements.

The parties may agree that no distribution will be considered until:

- financial statements are available;
- tax obligations have been addressed;
- operating liabilities have been reviewed;
- adequate working capital is maintained;
- financing obligations are satisfied;
- required approvals are obtained.

The agreement should distinguish dividends from other payments.

A shareholder may also receive:

- salary;
- management fees;
- service fees;
- licence fees;
- rent;
- loan repayments;
- expense reimbursements;
- supplier payments.

These payments should not be treated as substitutes for profit distribution.

Each payment category should have a clear commercial basis, supporting agreement, approval process and documentation.

This is especially important where one joint venture partner or its affiliate provides services, property, technology, financing or supplies to the business.

Related-party transactions can reduce the joint venture’s available profit before any distribution is considered.

The agreement should therefore require:

- advance disclosure;
- commercially reasonable terms;
- independent approval;
- supporting documentation;
- abstention by the interested party where appropriate;
- regular reporting.

Financial transparency is equally important.

Each party should receive sufficient information to understand the financial position of the joint venture.

Reporting may include:

- monthly management accounts;
- quarterly financial statements;
- annual financial statements;
- bank statements;
- cash-flow reports;
- budgets and forecasts;
- tax filings;
- accounts payable and receivable;
- debt and shareholder loan schedules;
- major expenditure reports;
- related-party payment reports.

The agreement should state when reports must be delivered, who prepares them and what supporting documents may be requested.

Inspection and audit rights may also be required.

A party may need the right to inspect accounting records, invoices, bank documents, tax records, contracts and other financial information, subject to reasonable confidentiality and operational procedures.

Banking controls should be defined clearly.

The parties may agree that:

- all revenue must be paid into accounts held in the joint venture’s name;
- payments above a specified threshold require dual approval;
- bank signatories cannot be changed without special consent;
- cash withdrawals are restricted;
- personal accounts cannot be used for joint venture funds;
- regular bank reconciliation is required.

For contractual joint ventures, the financial structure may be more complex because there may be no jointly owned company receiving all revenue and paying all expenses.

The agreement should then define:

- which party invoices customers;
- which party collects revenue;
- where project funds are held;
- how expenses are approved;
- how accounts are reconciled;
- how net revenue is calculated;
- when distributions are made;
- what audit rights each party has.

The term “net profit” should not be used without definition.

The agreement should specify which expenses, taxes, reserves, fees and deductions are applied before the parties calculate their economic shares.

A strong financial framework should make the movement of money understandable and verifiable.

The parties should know who contributes funding, who controls expenditure, how performance is reported, how related-party payments are approved and when profits may be distributed.

Financial clarity does not guarantee commercial success, but it significantly reduces the risk that disagreement about money will destabilise the joint venture.

A joint venture may depend on intellectual property, confidential information and business assets contributed by one or both parties.

These assets can be central to the commercial value of the project.

They may include:

- trademarks;
- brand names;
- software;
- source code;
- technical systems;
- operating manuals;
- designs;
- formulas;
- know-how;
- customer databases;
- supplier information;
- marketing materials;
- business plans;
- financial models;
- domain names;
- websites;
- social media accounts;
- digital platforms;
- licences;
- project documents.

The joint venture agreement should clearly identify which assets already belong to each party before the relationship begins.

This is often referred to as background intellectual property.

Background intellectual property may remain owned by the contributing party while being licensed to the joint venture for a specific purpose.

The agreement should define:

- the owner of the asset;
- the scope of the licence;
- whether the licence is exclusive or non-exclusive;
- the territory;
- the permitted business activities;
- the duration;
- whether sublicensing is allowed;
- whether the licence can be terminated;
- what happens after the joint venture ends.

The agreement should also address intellectual property created during the joint venture.

This may include:

- new software;
- product designs;
- marketing content;
- operational systems;
- research;
- documentation;
- databases;
- technical improvements;
- customer materials;
- brand assets;
- project-specific know-how.

The parties should decide whether newly created intellectual property is owned by:

- the joint venture company;
- one of the parties;
- both parties jointly;
- the party that created it;
- another entity under a separate licence arrangement.

Ownership should not be left to assumption.

One party may believe that the joint venture owns all work created for the business, while the other party may believe that the work remains part of its own technology or professional know-how.

This can become especially problematic if the relationship ends.

The agreement should therefore distinguish between:

- pre-existing intellectual property;
- project-specific intellectual property;
- general know-how;
- improvements to existing technology;
- jointly developed materials;
- third-party intellectual property.

Third-party rights also require attention.

The joint venture may use licensed software, stock images, technical systems, databases, trademarks, content or other assets owned by external parties.

The agreement should explain who is responsible for obtaining the required licences and ensuring that the joint venture is legally permitted to use those materials.

The parties should also consider infringement risk.

If one party contributes intellectual property, it may be appropriate for that party to confirm that it has the right to provide or license the asset.

The agreement may also allocate responsibility if a third party claims that the joint venture is using protected material without permission.

Confidentiality is equally important.

During negotiation and operation, the parties may exchange sensitive information concerning:

- pricing;
- financial performance;
- customers;
- suppliers;
- technology;
- business opportunities;
- property;
- licences;
- investment plans;
- tax matters;
- internal processes;
- personnel;
- negotiations;
- disputes;
- expansion strategy.

The confidentiality clause should define what information is protected.

It should also explain:

- how the information may be used;
- who may access it;
- whether disclosure to advisers is permitted;
- how information must be stored;
- what security measures apply;
- which disclosures are legally required;
- how long confidentiality continues;
- what happens when the joint venture ends.

The parties should also address information received during due diligence and negotiation.

If the joint venture is never established, confidential information should still remain protected.

The agreement should regulate return, deletion or destruction of confidential materials where appropriate.

Digital assets require particular attention.

A joint venture may rely on:

- websites;
- domain registrations;
- email accounts;
- cloud storage;
- booking platforms;
- advertising accounts;
- social media profiles;
- payment systems;
- customer relationship management software;
- accounting systems;
- passwords and access credentials.

The agreement should state who owns these accounts and whose name is used for registration.

Where possible, business-critical accounts should be registered in the name of the joint venture company rather than a shareholder, employee or external service provider.

Access rights should also be controlled.

The agreement may require:

- multiple authorised users;
- secure password storage;
- regular access reviews;
- restrictions on changing credentials;
- immediate transfer of access after termination;
- backup procedures;
- protection against deletion or lockout.

Business assets contributed by the parties should also be documented.

One party may provide equipment, vehicles, office space, property, inventory, databases, licences or technical infrastructure.

The agreement should clarify whether each asset is:

- transferred to the joint venture;
- leased;
- licensed;
- loaned;
- made available temporarily;
- returned after termination.

Responsibility for maintenance, insurance, damage, replacement and operating costs should also be defined.

The parties should avoid creating a structure where the joint venture becomes fully dependent on an asset controlled by one shareholder without reliable contractual access.

For example, the business may operate under a brand owned by one party, use software controlled by another party, and work from property owned by an affiliate.

If those rights can be withdrawn immediately, the joint venture may lose the ability to operate.

The agreement should therefore consider continuity.

This may involve:

- minimum licence periods;
- notice before termination;
- transition rights;
- access to replacement systems;
- ownership of customer data;
- continued use during a dispute;
- post-termination handover.

Non-compete and non-solicitation provisions may also be relevant.

A party should not necessarily be able to use confidential information, staff, customers or business opportunities from the joint venture to create a competing operation.

However, these restrictions should be proportionate and connected to the legitimate commercial interests of the joint venture.

The agreement should define the restricted activity, duration, territory and affected relationships carefully.

The objective is not to prevent ordinary competition without justification.

The objective is to prevent misuse of the assets, information and commercial opportunities created through the joint venture.

A strong joint venture agreement should therefore answer four practical questions:

- who owns the key assets;
- who may use them;
- how confidential information is protected;
- what happens to those rights when the relationship ends.

These issues are often just as important as ownership percentages and profit sharing because they determine whether the joint venture can continue operating independently if the relationship between the parties changes.

A joint venture agreement should explain what happens when the parties can no longer agree on an important matter, when one party fails to perform its obligations, or when the relationship breaks down.

These situations should not be left to informal negotiation after the problem has already become serious.

A deadlock may arise when the parties cannot approve a reserved matter, additional funding, annual budget, management appointment, major transaction, business expansion or another decision that is necessary for the joint venture to continue operating.

This risk is particularly important where the parties have equal ownership, balanced voting rights or mutual veto rights.

Without a deadlock procedure, the business may become paralysed.

The joint venture may be unable to approve payments, sign contracts, appoint management, raise funding, respond to regulatory issues or make strategic decisions.

The agreement should first define what constitutes a deadlock.

A single disagreement should not automatically trigger the full process.

The clause may require:

- repeated failed votes;
- failure to approve a reserved matter;
- written notice of deadlock;
- a defined negotiation period;
- escalation to senior representatives;
- failure to resolve the issue within a specified time.

The first stage should usually involve good-faith negotiation.

The parties may be required to meet, exchange written proposals and attempt to resolve the issue within an agreed period.

If the joint venture partners are companies, the matter may be escalated to senior representatives who were not directly involved in the original disagreement.

The next stage may involve mediation or expert determination.

Mediation may be useful where the parties still want to preserve the commercial relationship.

Expert determination may be more appropriate for technical, accounting, valuation or calculation disputes.

For example, an independent accountant or valuer may be appointed to determine:

- the value of shares;
- the amount of a funding obligation;
- the calculation of distributable profit;
- the amount owed under a shareholder loan;
- the financial impact of a breach.

If the deadlock remains unresolved, the agreement should provide a final mechanism.

Possible mechanisms include:

- a casting vote in limited circumstances;
- put or call options;
- a buy-sell procedure;
- sale of one party’s interest;
- sale of the joint venture;
- termination of the contractual joint venture;
- liquidation as a last resort.

Each mechanism has different commercial consequences.

A casting vote may be practical for limited operational matters, but it may be inappropriate for fundamental decisions.

A put or call option may allow one party to buy or sell the other party’s interest at an agreed or independently determined price.

A buy-sell mechanism may require one party to offer a price, after which the other party must either sell at that price or purchase the offering party’s interest on the same basis.

This can encourage a fair offer, but it may favour the party with greater access to financing.

The agreement should therefore consider whether the chosen deadlock mechanism is balanced for the actual parties.

Shareholder or partner default should be addressed separately.

A default occurs when one party fails to comply with its obligations under the joint venture structure.

Examples may include:

- failure to make an agreed contribution;
- failure to provide additional funding;
- breach of confidentiality;
- misuse of intellectual property;
- unauthorised competition;
- diversion of customers or business opportunities;
- misuse of company funds;
- unauthorised commitments;
- failure to perform management obligations;
- breach of transfer restrictions;
- fraud or serious misconduct.

The agreement should define which breaches are material.

It should also explain whether the defaulting party receives a cure period.

Some breaches may be capable of correction, such as delayed reporting or late payment.

Other breaches, such as fraud, intentional misuse of funds or unauthorised disclosure of confidential information, may justify immediate action.

Possible default remedies may include:

- written notice;
- cure period;
- suspension of contractual rights;
- suspension of nomination rights;
- restrictions on voting in relation to the breach;
- damages;
- indemnity;
- repayment obligations;
- termination of service or management arrangements;
- compulsory transfer of shares;
- discounted valuation for a bad leaver;
- termination of the joint venture.

Any compulsory transfer or discounted valuation mechanism should be drafted carefully.

The agreement should define:

- the default event;
- notice procedure;
- cure period;
- valuation date;
- valuation method;
- appointment of the valuer;
- discount, if any;
- payment terms;
- completion process.

The consequences should be proportionate to the breach.

A minor administrative failure should not automatically produce the same result as fraud or deliberate misuse of business assets.

Dispute resolution should also be structured clearly.

The agreement should define:

- governing law;
- language of the agreement;
- notice requirements;
- negotiation period;
- mediation;
- expert determination;
- arbitration or court jurisdiction;
- interim or emergency relief;
- allocation of costs;
- enforcement considerations.

For Indonesia-related joint ventures, the dispute clause should reflect the location of the company, assets, parties and operations.

The parties should avoid copying a foreign dispute clause without considering whether it is practical for the actual transaction.

The agreement should also distinguish between different types of disputes.

Commercial and governance disputes may require negotiation or arbitration.

Technical or accounting disputes may be better suited to expert determination.

Urgent matters, such as misuse of confidential information, transfer of assets or access to bank accounts, may require immediate interim relief.

Language should also be reviewed carefully where Indonesian parties are involved.

A bilingual English-Indonesian agreement may be appropriate, and the agreement should address which version prevails if there is inconsistency.

The objective of the dispute framework is not to make conflict more aggressive.

Its purpose is to prevent uncertainty.

A strong joint venture agreement should provide a predictable path from disagreement, to escalation, to final resolution, while protecting the business from operational paralysis.

A joint venture agreement should define how the relationship can end and what happens when one party wants to leave, must leave or can no longer continue participating.

Exit planning is often postponed because the parties prefer to focus on launching the business.

However, the absence of an agreed exit process can create serious problems later.

A party may wish to exit because of:

- a change in investment strategy;
- financial pressure;
- disagreement over management;
- failure to achieve commercial targets;
- regulatory concerns;
- loss of trust;
- retirement;
- insolvency;
- death or incapacity;
- material breach;
- sale of the business;
- completion of the project.

The agreement should distinguish between voluntary exit, compulsory exit and termination of the joint venture itself.

A voluntary exit occurs when one party decides to sell or transfer its interest.

The agreement should define:

- whether a minimum holding period applies;
- whether advance notice is required;
- whether the interest must first be offered to the other party;
- how the sale price is determined;
- whether third-party buyers require approval;
- what transfer restrictions apply;
- how long the transfer process may take;
- what corporate, notarial or regulatory steps are required.

In a corporate joint venture, the exit process may involve a transfer of shares.

The agreement may include:

- rights of first refusal;
- pre-emption rights;
- permitted transfers;
- tag-along rights;
- drag-along rights;
- consent requirements;
- restrictions on transfers to competitors;
- valuation procedures.

These rights should be coordinated with the company’s articles of association and formal corporate procedures.

A contractual joint venture may require a different process.

The parties may need to terminate the cooperation agreement, settle project accounts, transfer assets, complete customer obligations and allocate unfinished work.

The agreement should explain whether one party may continue the project after the other exits.

Compulsory exit may apply when a defined event occurs.

Possible compulsory exit events include:

- material breach;
- fraud;
- misuse of joint venture funds;
- unauthorised competition;
- failure to provide agreed funding;
- insolvency;
- loss of a required licence;
- serious reputational damage;
- prolonged failure to perform operational obligations;
- death or permanent incapacity.

The agreement should distinguish between a good leaver and a bad leaver where appropriate.

A good leaver may include a party exiting because of retirement, death, incapacity, mutual agreement or another event that does not involve wrongdoing.

A bad leaver may include a party exiting because of fraud, serious breach, misuse of assets, unauthorised competition or deliberate non-performance.

The classification may affect valuation.

A good leaver may receive fair market value.

A bad leaver may be subject to a discount, repayment obligation or another agreed adjustment.

These provisions should be proportionate and drafted carefully.

The agreement should define the valuation process before an exit occurs.

Possible valuation methods include:

- independent market valuation;
- net asset value;
- earnings multiple;
- revenue multiple;
- discounted cash flow;
- an agreed formula;
- third-party offer price;
- valuation by an appointed accountant or professional valuer.

The agreement should also define:

- the valuation date;
- treatment of shareholder loans;
- treatment of outstanding profits or losses;
- whether minority or control discounts apply;
- treatment of contingent liabilities;
- who appoints the valuer;
- who pays valuation costs;
- whether the valuation is final and binding.

Payment terms are equally important.

The purchasing party may not be able to pay the full purchase price immediately.

The agreement may permit:

- payment at completion;
- instalments;
- deferred consideration;
- interest on unpaid amounts;
- escrow;
- security;
- retention arrangements;
- set-off against valid claims.

Payment flexibility can make an exit possible, but it should not expose the departing party to unreasonable credit risk.

The agreement should also address termination of the joint venture as a whole.

Termination may occur because:

- the project has been completed;
- the agreed term has expired;
- the business is no longer commercially viable;
- required approvals cannot be obtained;
- a deadlock remains unresolved;
- a material breach continues;
- the parties agree to terminate;
- a regulatory change makes the structure impractical;
- the joint venture is sold or liquidated.

Termination should trigger a structured wind-down or transition process.

The agreement should explain:

- how ongoing contracts will be handled;
- how employees and service providers will be managed;
- how outstanding liabilities will be paid;
- how assets will be sold or transferred;
- how customer obligations will be completed;
- how licences and permits will be treated;
- how intellectual property may be used after termination;
- how confidential information must be returned or deleted;
- how bank accounts will be closed or transferred;
- how final accounts will be prepared;
- how remaining funds will be distributed.

Operational handover is particularly important.

One party may control management systems, passwords, suppliers, customer relationships, staff, licences, digital accounts or project documents.

The agreement should require:

- transfer of records;
- delivery of credentials;
- return of property;
- resignation from corporate positions;
- removal of banking authority;
- completion of final reports;
- cooperation with regulatory filings;
- continued confidentiality.

Post-exit restrictions may also apply.

The parties may agree on limited non-compete, non-solicitation or non-use obligations where necessary to protect confidential information, customer relationships, intellectual property or legitimate business interests.

These restrictions should be proportionate in duration, scope and territory.

A strong exit framework should avoid two common problems.

The first is trapping a party in the joint venture indefinitely.

The second is allowing a departing party to damage the business by withholding cooperation, information, access or approvals.

The agreement should provide a clear and commercially realistic path from participation to exit, while preserving the value and continuity of the business.

Joint ventures often fail not because the original business idea was weak, but because the parties did not define the legal, financial and operational structure clearly enough before the project began.

The first common mistake is choosing a joint venture partner based only on personal trust, introductions or verbal promises.

Trust is important, but it should not replace due diligence.

Before entering a joint venture, the parties should verify:

- legal identity;
- company ownership;
- signing authority;
- licences;
- financial position;
- litigation history;
- tax and compliance status;
- reputation;
- operational capacity;
- ownership of promised assets;
- authority over property, intellectual property or business relationships.

A party should not assume that a potential partner can legally or practically provide everything discussed during negotiations.

The second mistake is using the term “joint venture” without defining the actual legal structure.

The parties may believe they are creating a joint business, but fail to decide whether the arrangement will operate through:

- a jointly owned company;
- a PT PMA;
- an existing local company;
- a contractual project;
- a service relationship;
- a distribution arrangement;
- another commercial structure.

The title of the agreement does not determine the legal reality.

The actual activities, ownership, revenue flow, licences, employees, assets and responsibilities must support the chosen structure.

The third mistake is assuming the permitted foreign ownership percentage without checking the specific business activity.

Foreign ownership and licensing conditions may depend on the company’s business classification, sector, operational model and current regulatory requirements.

The structure should be verified before the parties agree on ownership percentages or invest significant funds.

The fourth mistake is relying on one generic joint venture agreement.

A joint venture may require several coordinated documents, including:

- joint venture agreement;
- shareholder agreement;
- articles of association;
- shareholder loan agreement;
- management or service agreement;
- intellectual property licence;
- property agreement;
- supply or distribution agreement;
- confidentiality agreement.

If these documents are prepared separately without coordination, they may contain inconsistent approval rules, payment obligations, ownership provisions or termination rights.

The fifth mistake is failing to align the commercial agreement with the company’s formal corporate documents.

For example, the joint venture agreement may promise unanimous consent for certain decisions, while the articles of association provide a different voting threshold.

The agreement may give one party nomination rights, but the corporate documentation may not support the practical appointment process.

This can create uncertainty about whether a decision is contractually prohibited, corporately valid or enforceable in practice.

The sixth mistake is using unclear partner contribution clauses.

A party may promise capital, technology, local relationships, licences, management, property access, equipment or intellectual property without defining:

- what must be delivered;
- when it must be delivered;
- how it is valued;
- whether ownership is transferred;
- what standards apply;
- what happens if the contribution is delayed or unavailable.

A contribution clause should be capable of measuring performance.

The seventh mistake is linking ownership percentages to assumptions rather than documented contributions and responsibilities.

Ownership, funding, operational roles and control are related, but they are not identical.

A party may own a minority interest but provide essential technology or operational management. Another party may provide most of the capital but remain passive.

The agreement should define each party’s rights and obligations separately.

The eighth mistake is failing to plan for additional funding.

The parties may agree on the initial capital but not address what happens when the business needs more money.

Without a clear procedure, one party may continue funding the venture while the other refuses to contribute but expects to retain the same ownership and control.

The agreement should regulate funding notices, approval, equity, shareholder loans, dilution and the consequences of non-participation.

The ninth mistake is creating an unbalanced governance structure.

If one party controls all daily operations, banking, reporting and supplier relationships, the other party may have ownership without meaningful oversight.

If every operational decision requires unanimous consent, the business may become inefficient or paralysed.

The agreement should distinguish routine management from reserved matters and define clear financial and approval thresholds.

The tenth mistake is accepting weak financial transparency.

The agreement should not rely on informal reports or access controlled by one party.

It should define rights to receive:

- management accounts;
- bank statements;
- budgets;
- tax filings;
- cash-flow reports;
- major contracts;
- debt information;
- related-party transaction reports.

Bank accounts should normally be held and controlled under the agreed joint venture structure, not through personal accounts or undocumented arrangements.

The eleventh mistake is failing to control related-party transactions.

A shareholder or affiliate may provide services, property, loans, supplies or management to the joint venture.

Without proper approval and disclosure, these payments may reduce profits or create conflicts of interest.

The agreement should require commercially reasonable terms, supporting documentation and independent approval.

The twelfth mistake is leaving intellectual property ownership unclear.

A party may contribute a brand, software, system, design, database or know-how, but the agreement may not explain whether the joint venture owns it or merely receives a temporary licence.

The agreement should distinguish existing IP, newly created IP, improvements and third-party rights.

The thirteenth mistake is allowing critical digital assets to remain under personal control.

Websites, domains, email accounts, social media profiles, cloud storage, booking systems, advertising accounts and passwords may be registered under one shareholder, employee or external contractor.

This can create serious operational risk if the relationship ends.

Business-critical accounts should be registered and controlled under the agreed business structure wherever possible.

The fourteenth mistake is failing to define deadlock.

A joint venture with equal or balanced control may become unable to approve budgets, funding, management appointments or major transactions.

The agreement should define the deadlock trigger, escalation process and final solution before a disagreement arises.

The fifteenth mistake is including exit rights without a practical valuation and payment process.

A right to sell, buy or transfer an interest is incomplete unless the agreement defines:

- valuation method;
- valuation date;
- valuer appointment;
- treatment of debt;
- payment terms;
- transfer procedure;
- required approvals.

The sixteenth mistake is failing to plan operational handover.

A departing party may control documents, staff, supplier contacts, customer data, licences, intellectual property, banking authority or digital accounts.

The agreement should require the orderly transfer of these assets and responsibilities.

The final mistake is signing before the entire structure has been reviewed together.

A joint venture should be assessed as one coordinated system involving ownership, company structure, licences, funding, management, contracts, assets, taxes, reporting and exit.

The safest approach is to identify the business model first, verify the partner and regulatory position, and only then finalise the joint venture documents.

A joint venture in Indonesia is a commercial arrangement in which two or more parties cooperate to pursue a shared business objective.

The parties may establish a jointly owned Indonesian company, including a PT PMA where foreign investment is involved, or they may cooperate through a contractual structure without creating a separate jointly owned entity.

The correct model depends on the business activity, licensing requirements, ownership restrictions, tax position, duration, funding structure and operational needs of the project.

No. Not every joint venture requires a PT PMA.

A PT PMA may be appropriate where foreign investors will hold shares in an Indonesian operating company. However, some collaborations may be structured contractually or through another lawful arrangement, depending on the nature of the business and the activities performed.

The structure should be reviewed before the parties commit capital or sign agreements because licensing, ownership and investment requirements may vary by sector.

A joint venture agreement usually describes the broader commercial relationship between the parties, including the purpose of the project, contributions, implementation steps, ownership structure, funding, operational roles and termination.

A shareholder agreement regulates the continuing relationship between shareholders of a company. It commonly covers voting rights, reserved matters, management appointments, additional funding, dividends, share transfers, minority protection, deadlock and exit.

The documents may overlap, but they should be coordinated and should not conflict with the company’s articles of association.

A joint venture agreement should normally address the legal structure, business purpose, partner contributions, ownership, governance, management roles, funding, profit sharing, financial reporting, intellectual property, confidentiality, related-party transactions, deadlock, default, dispute resolution and exit.

The exact provisions depend on whether the arrangement is corporate or contractual and on the commercial and regulatory risks of the project.

Ownership percentages may reflect cash investment, non-cash assets, intellectual property, operational responsibility, strategic value, future funding commitments and negotiation between the parties.

The parties should not rely only on a general understanding that one side contributes capital while the other contributes local knowledge or management.

Each contribution should be identified, valued where appropriate, documented and linked to clear performance obligations.

The outcome depends on the funding provisions in the joint venture agreement.

Possible consequences may include a shareholder loan from the funding party, preferential repayment, interest, dilution, issuance of additional shares, suspension of certain contractual rights or default remedies.

The agreement should define the funding notice, approval procedure, participation deadline, valuation basis and consequences of non-participation before additional capital is required.

A joint venture agreement may provide a staged process beginning with negotiation, escalation to senior representatives and mediation or expert determination.

If the deadlock remains unresolved, the agreement may provide a put or call option, buy-sell mechanism, sale of one party’s interest, sale of the joint venture, termination or liquidation as a last resort.

The chosen mechanism should be commercially balanced and realistic for the financial position of the parties.

Where an Indonesian party is involved, the language structure should be considered carefully.

A bilingual English-Indonesian agreement may be the safest practical approach for many cross-border joint ventures. The agreement should also state which language version prevails if there is any inconsistency.

The language approach should remain coordinated with the company’s corporate documents and with the way the agreement may need to be used in Indonesia.

Joint ventures are closely connected to broader shareholder, commercial and operational risks. Before entering a joint venture in Indonesia, foreign investors and local partners should also review how ownership, governance, service relationships, funding and related contracts interact with the proposed business structure.

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