INDONESIA Law and Practice Contributed by: Alvin Suryohadiprojo and Dimas Nandaraditya, KARNA
• the licensed venture capital company bind - ing the investors, pooling and managing the investors’ fund; and • the appointed custodian bank performing col - lective custody related to the fund. The relevant interest within the venture capital fund is divided into a number of investment units. In managing the fund, the licensed venture capi - tal company has the duties of, inter alia: • taking any decisions in goodwill for and on behalf of the investment unit holders; • managing and maintaining all book-keeping and any other important records of the fund; • providing necessary information regarding the fund’s investment risk; • preparing the fair market value of the fund’s investees and submitting to the custodian bank every month; • preparing the calculation formula for the fair market value of the fund’s investees in a con - sistent manner and preparing the net asset value of the fund; and • implementing the AML/CFT and prevention of proliferation of weapons of mass destruction programmes. The book-keeping and any other important records of the fund must be separated from the book-keeping and any other important records of the licensed venture capital company (at com - pany level). In supporting the fund, the appointed custodian bank has the duties of, inter alia: • performing collective custody of the fund’s assets; • calculating the net asset value of the fund every month;
• making payment of the fund’s expenses; • managing and maintaining data regarding the investment unit holders; and • representing the investment unit holders collectively for the placement of the fund’s investments. Comparing with typical venture capital fund structures in other jurisdictions, a licensed ven - ture capital company acts a general partner (GP) and investment unit holders act as limited partners (LPs) in a limited partnership structure. Further, a mutual investment contract serves as a limited partnership agreement. 2.2 Fund Economics Venture capitalists generally earn management fees from a venture capital fund and have the opportunity to negotiate the carried interest and hurdle rate. As discussed in 2.1 Fund Struc- ture , in Indonesia, a licensed venture capital company acts as the fund principal. As the fund principal, the licensed venture capital company is not required to participate in the economics of the venture capital fund that it establishes but may earn fees from the management of the fund. Licensed venture capital companies who manage venture funds are also subject to more strict requirements, including having at least one manager with an investment manager represent - ative licence, standard operational procedures on venture fund management and teams dedi - cated to risk management, internal audit IT, and AML (to name a few). They will need to consider these costs in negotiating the fee with investors. Further, if they also participate in an investment, they will also benefit from any capital gains when the fund is liquidated. Separately, the relevant OJK regulation obliges the licensed venture capital company to have minimum equity (assets minus liabilities) of
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