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A Subscription letter is a formal document investors use to officially commit to buying shares or securities in an Indonesian company. It outlines key details like the number of shares being purchased, the agreed price per share, and payment terms. This binding agreement helps protect both the investor and the company during capital raising activities.

Under Indonesian investment regulations, these letters play a crucial role in documenting shareholder commitments and ensuring compliance with capital market rules. Companies commonly use them during Initial Public Offerings (IPOs), rights issues, or private placements. The letter must include specific declarations required by OJK (Financial Services Authority) guidelines, such as the source of funds and investment intentions.

Use a Subscription letter when raising capital through share offerings in Indonesia, particularly during IPOs, private placements, or rights issues. This document becomes essential once you've identified potential investors and need to formalize their commitment to purchase shares in your company.

The timing is critical - prepare the Subscription letter before accepting any investment funds, but after initial negotiations are complete. Indonesian regulations require this documentation for both domestic and foreign investors, with specific OJK compliance requirements. Having it ready helps prevent last-minute delays in closing investment rounds and provides clear evidence of investor commitments for regulatory filings.

• Basic Share Subscription: Used for straightforward investments in private Indonesian companies, focusing on share quantity, price, and payment terms
• IPO Subscription: Contains additional disclosures and warranties required by OJK for public offerings, including lock-up periods and risk acknowledgments
• Rights Issue Subscription: Specifically formatted for existing shareholders exercising their preemptive rights, including detailed terms of the rights offering
• Foreign Investment Version: Includes special provisions required for foreign investors under Indonesian investment law, such as ownership limitations and repatriation terms

• Investors: Sign the Subscription letter to formally commit to purchasing shares, confirming their investment amount and acceptance of terms
• Company Directors: Review and approve subscription terms, ensure compliance with corporate strategy and Indonesian investment regulations
• Corporate Legal Teams: Draft and customize the letter according to OJK requirements and specific deal terms
• Investment Banks: Coordinate the subscription process during IPOs or large private placements, ensuring proper documentation
• Company Secretary: Maintains official records of subscription letters and handles shareholder registry updates

• Company Details: Gather complete corporate information, including registration number, authorized capital, and current shareholding structure
• Investment Terms: Document the exact number of shares, price per share, and total investment amount
• Investor Information: Collect investor's legal name, registration details, and proof of funds source as required by OJK
• Payment Mechanics: Specify payment timeline, bank account details, and completion requirements
• Compliance Check: Verify alignment with Indonesian foreign investment restrictions and shareholding limits
• Documentation: Prepare supporting documents like corporate approvals and identity verification

• Parties' Details: Full legal names, addresses, and registration numbers of both investor and company
• Share Information: Precise number, class, and nominal value of shares being subscribed
• Payment Terms: Amount, method, and timeline for share payment, including bank account details
• Warranties: Investor's confirmation of financial capacity and compliance with Indonesian investment laws
• Fund Source Declaration: Statement confirming legitimate source of investment funds per OJK requirements
• Governing Law: Clear statement of Indonesian law application and dispute resolution mechanism
• Execution Block: Signature spaces with company seal requirements and witness provisions

A Subscription letter differs significantly from an Engagement Letter in both purpose and legal effect within Indonesian business practice. While both documents formalize commitments, they serve distinct functions in different contexts.

• Primary Purpose: Subscription letters specifically commit to purchasing shares or securities, while Engagement letters outline professional service relationships and terms
• Legal Framework: Subscription letters must comply with OJK capital market regulations and investment laws, whereas Engagement letters follow general contract law principles
• Financial Commitment: Subscription letters include specific share quantities and payment terms, while Engagement letters typically focus on service scope and fee structures
• Required Elements: Subscription letters must contain share details and fund source declarations, while Engagement letters emphasize service deliverables and professional obligations
• Timing: Subscription letters are used during capital raising events, while Engagement letters initiate ongoing professional relationships