To build and develop a business, business actors usually collaborate with other parties to make it happen. This cooperation can be done in various ways, one of which is by obtaining an injection of funds / additional capital which is also used to expand, complete business facilities, and company promotion or marketing costs. Before cooperating and investing in a company, investors must also make an agreement first. Because no matter how much KH Friend trusts the partner where KH Friend will invest, business is still business and oral agreements are difficult to be used as evidence so the agreement needs to be made in writing. To find out more about investment agreements and what clauses should be regulated in them, Kontrak Hukum will discuss it below. Let’s see the explanation until the end!
Investment Agreement
For information, investment is an activity of investing capital either directly or indirectly with the aim that the owner of the capital/investor will get a certain amount of profit from the investment and turnover of the capital. Meanwhile, an investment agreement is a cooperation agreement with a profit-sharing system where one party will manage the investment funds provided by the other party. So, an investment agreement is made between an investor and a company/business actor before investing where the investor will provide a certain amount of capital (can be valued in money) to the company/business actor to develop the business/business being run. In agreement law, the principle of freedom of contract is applied so that the parties who will make an investment agreement are free to determine what provisions need to be in the investment agreement. Even though they are free to determine the clauses, the agreement must still fulfill the four valid conditions of the agreement as stipulated in Article 1320 of the Civil Code, including:
- Agreement of those who bind themselves.
- Capacity to enter into an agreement.
- Regarding a certain matter.
- A lawful cause, not against the law or decency.
If the provisions in the agreement have met the legal requirements of the agreement, are not contrary to law, and are carried out in good faith, the agreement will be valid and apply as law to the parties who make it so that each party also has an obligation to carry out the performance as stipulated therein.
Terms of the Investment Agreement
Although the parties are free to determine the provisions or clauses that need to be in the agreement to be made, the investment agreement must at least contain :
- Scope of the investment agreement.
- The value of the investment to be provided.
- Term of the agreement.
- Rights and obligations of investors and businesses.
- How to divide the profits from the investment made.
- Risks and responsibilities in the event of losses from investment turnover made by business actors.
- Investment fund utilization report.
- Statements and warranties.
- Force majeure or force majeure.
- Termination of the agreement.
- The manner of dispute resolution including applicable law.
KH Contact
Well, KH Friend, that’s an explanation of the investment agreement that needs to be known, especially by investors who want to provide capital to companies / business actors. Remember, the future is unpredictable so there may be one party violating the agreement or not fulfilling its obligations. So do not let the reason to trust the person, KH Friend chooses to make an investment agreement only verbally. If you need help to make an investment agreement, want to do a consultation or have questions related to investment agreements and other legal issues, do not hesitate to contact Kontrak Hukum at the following link Tanya KH or through our Instagram social media @kontrakhukum. For information about contrae/agreement services from Kontrak Hukum, you can visit https://kontrakhukum.com/kontrak.
