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A Underwriting Agreement is a crucial contract between a company issuing securities and investment banks that manage the public offering process in Indonesia's capital markets. It spells out how the banks will buy and resell shares or bonds to investors, setting key terms like pricing, timing, and distribution methods.

Under OJK regulations, these agreements help protect both issuers and investors by clearly defining responsibilities and risk allocation. The underwriters typically guarantee the sale of securities by either buying them outright (firm commitment) or making their best effort to sell them, following procedures set out in Indonesia's Capital Market Law No. 8/1995. This makes it easier for companies to raise funds while giving investors confidence in the offering process.

Companies planning to go public on the Indonesia Stock Exchange need a Underwriting Agreement when they're ready to sell shares or bonds to the public. This becomes essential during the initial stages of an IPO, when coordinating with investment banks to handle the securities distribution.

The timing often aligns with other key IPO preparations, like drafting the prospectus and securing OJK approval. Indonesian companies typically enter into these agreements 3-6 months before their planned listing date. The agreement becomes particularly important when dealing with multiple underwriters, as it establishes clear roles, responsibilities, and commission structures while ensuring compliance with capital market regulations.

• Firm Commitment Agreement: Investment banks guarantee to buy and resell all securities, providing the most certainty for Indonesian issuers but charging higher fees
• Best Efforts Agreement: Underwriters commit to sell as many securities as possible without guaranteeing full placement, common for riskier offerings
• Standby Agreement: Underwriters agree to purchase any unsold shares after the public offering, offering a middle-ground approach popular in Indonesian IPOs
• Syndicated Agreement: Multiple underwriters share the risk and distribution responsibilities, typically used for larger offerings on IDX

• Issuing Companies: Indonesian corporations seeking to raise capital through public offerings, responsible for providing accurate information and signing the agreement
• Investment Banks: Lead underwriters who structure the deal, set pricing, and coordinate distribution of securities under OJK supervision
• Legal Counsel: Both issuer's and underwriter's attorneys who draft and review the agreement to ensure compliance with IDX regulations
• OJK Officials: Regulators who review and approve the agreement as part of the securities registration process
• Company Directors: Board members who authorize and execute the agreement on behalf of the issuing company

• Company Details: Gather corporate documents, financial statements, and OJK registration information for the securities offering
• Offering Structure: Define the type and amount of securities, pricing mechanism, and underwriting method (firm commitment or best efforts)
• Due Diligence: Complete financial and legal verification of company information for the prospectus
• Timeline Planning: Set key dates for registration, roadshows, pricing, and closing
• Risk Assessment: Identify potential market risks and allocation of responsibilities between parties
• Regulatory Compliance: Ensure alignment with OJK regulations and IDX listing requirements

• Parties Identification: Full legal names and details of the issuing company and all underwriters
• Securities Description: Detailed specifications of shares or bonds being offered, including type, quantity, and price range
• Underwriting Terms: Clear statement of commitment type (firm/best efforts) and commission structure
• Distribution Plan: Marketing strategy, allocation methods, and timing of the offering
• Representations & Warranties: Issuer's statements about company condition and legal compliance
• Indemnification: Protection clauses for underwriters against misstatements in offering documents
• Termination Rights: Conditions allowing parties to exit the agreement, including force majeure events

A Underwriting Agreement differs significantly from a Bond Purchase Agreement in Indonesian capital markets. While both deal with securities transactions, they serve distinct purposes and have different scopes. The key differences include:

• Purpose and Scope: Underwriting Agreements cover the entire IPO or securities offering process, including marketing and distribution, while Bond Purchase Agreements focus solely on the direct purchase of bonds between two parties
• Parties Involved: Underwriting Agreements involve multiple parties (issuer, underwriters, regulators) while Bond Purchase Agreement typically involves just the bond issuer and purchaser
• Regulatory Oversight: Underwriting Agreements require OJK approval and must comply with comprehensive securities regulations, while Bond Purchase Agreements face less regulatory scrutiny
• Risk Distribution: Underwriting Agreements include mechanisms for spreading market risk across multiple underwriters, whereas Bond Purchase Agreements typically concentrate risk between the direct parties