Jun 15, 2015
Indonesian Legal Digest - Corporate Guarantee in Indonesia
Corporate guarantee in Indonesia is primarily governed by the Indonesian Civil Code. Please find below the key characteristics of Indonesian law-governed corporate guarantee that you
need to know:
- It is not a security interest - A corporate guarantee is not a security interest under Indonesian law. Accordingly the claims of a beneficiary of corporate guarantee to the guarantor rank pari passu against other unsecured and unsubordinated creditors of the guarantor.
- It is an accessory in nature - This means that the existence and validity of the corporate guarantee depend on the existence and validity of the guaranteed agreement. If the guaranteed agreement is invalid the corporate guarantee will fall away.
- It can only guarantee payment obligations - A corporate guarantee under Indonesian law can only guarantee payment obligations and therefore it cannot guarantee performance obligations.