Jun 16, 2015

Pledge of Shares Under Indonesian Law

Shares as Movable Intangible Assets
Shares under Indonesian law are considered as movable intangible assets; therefore, a pledge over shares is created by a “delivery” of the shares to the pledgee and notification of such pledge to the party against whom the pledge is to be exercised (that is, the Company whose shares are pledged). “Delivery” for movable tangible rights is conducted by an authentic deed or an agreement delivering such rights to the transferee. By the Pledge of Shares Agreement stating the delivery of the rights over the shares and the notification to the Company, the pledge over the shares is created. No physical possession of the share certificate is required. The delivery of the share certificates is a contractual term under the Pledge of Shares Agreement and does not impact on the creation of the pledge over the shares. The “movable intangible” nature of shares is also expressed under the company law.