SECURED TRANSACTION (Transaksi Berjamin) Economic and Business Law in Indonesia International Undergraduate Program Faculty of Economics – University of Indonesia 20 November 2006

Purposes and Objectives To avoid any default by Debtor; To avoid the risk of loss that shall be borne by Creditor; To avoid any default occurred by Debtor; and To avoid the risk of loss that shall be borne by Creditor.

Purposes and Objectives To give Creditor (generally to Bank) right and authorization to acquire a compensation if the Debtor defaults, i.e. failure to repay on time. To make Debtor repays on time and fulfills his obligations pursuant to the contract.

Good Secured Transaction If it smoothens the credit facility to be given by Creditor Gives privilege right to the holder (read: Creditor); The right attached to the object; In line with principles of: Spesialitas and Publikasi; Business as usual; Gives certainty to Creditor; in a way that such object is easy to be exercised and the repayment.

Types of Security General Security (Jaminan Umum) - occurred by the operation of law. Legal Basis: Art. 1131 Indonesian Civil Code. All belongings of Debtor become security for the Creditor. Special Security (Jaminan Khusus) – occurred by a contract.

Article 1131 Indonesian Civil Code “Segala kebendaan si berutang, baik yang bergerak maupun tidak bergerak, baik yang sudah ada maupun yang baru akan ada di kemudian hari, menjadi tanggungan untuk segala perikatan perseorangan”

Article 1132 Indonesian Civil Code “Kebendaan tersebut menjadi jaminan bersama-sama bagi semua orang yang mengutangkan padanya; pendapatan penjualan benda-benda itu dibagi-bagi menurut keseimbangannya, yaitu menurut besar kecilnya piutang masing-masing, kecuali apabila di antara para berpiutang itu ada alasan-alasan yang sah untuk didahulukan.”

Special Security Security upon Benda (Asset) Security by Legal Entity: Security right over the land (Hak Tanggungan) Pledge (Gadai) Fiduciary Security (Jaminan Fiducia) Assignment of right (Cessie) Security by Legal Entity: Personal guarantee Corporate guarantee Bank guarantee

Hak Tanggungan: Security right over the land Legal Basis: Articles 25, 33, 39, and 51 of Agrarian Law; Laws No.4 of 1996 regarding the Security Rights over the Land and the Objects related to the Land. Government Regulation No.24 of 1997 regarding Registration of Land; Regulation of Minister of State Minister of Agrarian/the Head of BPN No.3 of 1997 regarding the Implementation Regulation of Government Regulation No.24 of 1997 regarding registration of Land; Etc.

Security right over the Land Characteristics: Creditor has privilege rights (“droit de preference”) Attached to the object, not to the holder of object (“droit de suite”) Fulfill the registration and publication principles; Has the certainty of execution.

Security right over the Land Registration at relevant Kantor Wilayah Pertanahan or Badan Pertanahan Nasional (BPN): See Art.13 Execution of security rights: See Art.6: by public auction and sale.

Fiduciary Security/Jaminan Fidusia Legal Basis: Law No.42 of 1999 regarding the Fiduciary Security. Definition: transfer of ownership right based on TRUST provided that the occupation of the relevant object hold by the owner.

Fiduciary Security/Jaminan Fidusia Characteristics: The holder has privilege right; Cover the loan that already exist in the present and in the future; Oblige to be registered; Has executorial title ; Attached to the object, whosoever the holder of the object.

Fiduciary Security/Jaminan Fidusia Registration of security rights and formalities: See Arts. 14-18 Execution of security rights: Chapter V, arts. 29-34

Pledge/Gadai Legal Basis: Art 1150 Indonesian Civil Code. Definition: Suatu hak yang diperoleh seorang berpiutang atas suatu barang bergerak, yang diserahkan kepadanya oleh seorang berutang atau orang lain atas namanya, dan memberikan kekuasaan kepada di berpiutang untuk mengambil pelunasan dari barang tersebut secara didahulukan daripada orang berpiutang lainnya, dengan pengecualian biaya untuk lelang tersebut dan biaya uang telah dikeluarkan untuk menyelamatkannya, setelah barang tersebut digadaikan, biaya-biaya mana harus didahulukan.

Pledge/Gadai Registration of Pledge: Execution of security rights: No formalities of registration, except required by certain law, i.e: shares. Execution of security rights: By sale

Assignment of Right/Cessie Legal Basis: Book II Indonesian Civil Code: as part of Hukum Benda, the transfer of ownership. Book III Indonesian Civil Code: as part of contract, replacing of Creditor’s position. Assignment effective: Art. 613 ICC - after notification or acknowledgement from the debtor.

Personal/Company/Bank Guarantee Jaminan Perorangan/Perusahaan/Bank Legal Basis: 1820 – 1850 Indonesian Civil Code. Definition: Art. 1820: Suatu persetujuan dengan mana seorang pihak ketiga guna kepentingan si berpiutang mengikatkan diri untuk memenuhi perikatannya di berutang manakala orang ini sendiri tidak memenuhinya.