Editor's note: Once a data centre project enters the substantive investment stage, the shareholders' agreement, land or industrial-park agreement, power and water agreements, EPC contract, equipment purchase contracts, operating agreement, customer SLA and financing documents may all appear at the same time. These documents are often advanced separately by different teams, but an overall project review requires the signing entities, ownership of rights and allocation of responsibilities to be checked again. One entity may hold the land, another may apply for licences, a third may sign customer contracts, while the operator that actually controls the systems and personnel may be yet another entity.
The fact that a local company has already been registered does not mean that these relationships have been properly arranged. What the project company owns, which licences it applies for, which agreements it signs and which customer responsibilities it assumes will determine whether it can construct, finance and operate the project on a continuing basis.
This article follows the first article by discussing how to arrange entity functions, assets, construction, operations and control after a decision has been made to proceed. The third article addresses the documentation of resource agreements, while the fourth article addresses continuing operations and incident response after launch.
01 Holding Platforms and Local Project Companies
A Chinese investor may invest directly in a local entity, enter through an offshore holding platform, establish a new local project company, acquire an operator or form a joint venture with a park or industrial-estate enterprise. The choice should take into account onshore and offshore investment procedures, the flow of funds, tax coordination, equity control, the partner's contribution and future financing at the same time. It should not be fixed merely because registration is convenient in a particular location.
The functions of the local project company need to be stated clearly in the shareholders' agreement, constitution and business plan. It may hold land and equipment, undertake construction and operations, or serve only as the entity that receives the investment and licences. If the project company must sign power, water, EPC, operating and customer contracts, it should have the authority, personnel, assets and compliance capacity that correspond to those contracts.
Indonesian projects often involve PT PMA, KBLI and PSE at the same time. At least four questions must be separated: Who is the foreign-investment entity? Who operates colocation or data processing? Who operates the electronic system? Who provides cloud services to customers? Public materials from OSS and Komdigi can help the project team locate the business-classification and registration entry points, but the words “local company” cannot replace a project-specific analysis.
Contributions, technical services, management services, intellectual property and brand licences between the holding platform and the project company must also correspond to the actual transactions. If the payment routes and pricing for related-party transactions cannot be explained, banks conducting KYC, tax authorities, financing due diligence teams and partners will all require the position to be explained again.
02 Asset Ownership and the Allocation of Construction and Operating Functions
Land, equipment, construction and operations may be undertaken by one project company or held and performed by separate entities. Separating them can help with risk isolation or financing, but every additional separation creates another layer of licensing, contracting and handover requirements.
The land-holding entity needs a term of use, expansion space and financing availability that match the project cycle. The equipment entity needs to handle procurement, importation, installation, warranties and handover. The construction entity needs to take responsibility for design, procurement, construction, testing and acceptance. The operating entity needs authority for daily maintenance, customer service, system access and incident response.
For a joint venture, it is also necessary to establish whether the local partner is contributing land, customers, licences, resource coordination or operating capabilities. A shareholders' agreement should not record only the contribution ratios; it should also address director appointments, reserved-matter voting, budgets and additional investment, related-party transactions, partner default, deadlock and exit.
When the operator and project company are separate, control rights are most likely to be underestimated. The operating agreement should reserve a route for the project company to audit subcontractors, obtain logs and root-cause reports, restrict remote access, replace the operator, and arrange the handover of equipment, accounts, keys, customer information and warranties when the agreement ends.
03 Resource Agreements, Operating Licences and Customer Contracts
Although resource agreements, licence documents and customer contracts may be advanced separately by different teams, they ultimately need to be checked within the same project structure. A power agreement needs to address the construction schedule, equipment load, backup power and expansion. Operating licences need to match the actual services, customer groups and data-processing arrangements. The customer SLA must not go beyond the scope that the project company and operator can actually control.
Public information on Singapore's second-round DC-CFA2 shows that selected projects made commitments concerning green energy, liquid cooling, IT-equipment efficiency and Green Mark. MIDA's 2026 announcement in Malaysia identified power, water, green compliance and local supply chains as matters of focus in DCTF screening. Public Thailand BOI conditions may also place PUE, backup systems, communications connectivity, certification and local economic contributions within investment-promotion conditions. Taken together, these materials show that technical and resource commitments at the application stage can continue to affect the later structure. The legal effect of each commitment must still be traced back to the particular policy document, contract and project condition.
If the project company only holds land and equipment while the operator signs customer contracts, customers need to know who is responsible for service levels, data access, data incidents and exit. If the operator cannot control power, cooling and networks, the SLA should not promise results that the operator cannot independently deliver. Back-to-back obligations, information rights, audit rights and recourse arrangements should be used to establish a responsibility chain between the entities.
04 The Rights Basis for Project Financing
Data centre financing looks not only at the equity structure, but also at whether the project company holds assets and contractual rights capable of supporting repayment. Lenders will usually examine land or lease rights, equipment, project licences, power and water agreements, customer contracts, insurance, construction progress and cash flow.
Public project materials illustrate this interrelationship. Dentons HPRP disclosed that a multi-storey data centre project in Jakarta involved a joint venture, a project development agreement, securitisation arrangements and project-land due diligence. Financing projects disclosed by UOB and DBS for Batam and by Clifford Chance for a Yondr project in Malaysia likewise show that project development, assets, resources and financing arrangements need to be reviewed together. Public announcements are not complete financing documents; they are cited here only to illustrate the review perspective.
Whether the project company can use land-use rights, lease rights, equipment or receivables as security, whether a power agreement can be assigned, whether a change of equity control requires consent, and whether project licences remain effective after a change of control all need to be checked against local law and the contracts. If a resource agreement is signed by a park or an affiliate, and the project company has only an indirect right of use, financial close may require a supplemental direct agreement, security acknowledgement or tripartite arrangement.
Once financing is being arranged, the assets, licences, resources and sources of income actually held by the project company will usually be checked again. If the relevant rights are primarily held by other entities, the financing arrangements may also need to be supplemented accordingly.
05 Operator Replacement and Project Exit
An operator may suffer a decline in performance capacity, undergo a change of control or remain unable to meet service indicators for an extended period. Replacement and exit should not be discussed for the first time after an incident has occurred.
The operating agreement needs to address service indicators, audits, subcontractors, incident reports, cure periods, material breach, suspension of service and termination. After termination, it must also arrange equipment maintenance, customer transition, data return and deletion, transfer of accounts and keys, outstanding warranties and settlement of fees.
The shareholders' agreement needs to address transfers of shares, pre-emption, tag-along and drag-along rights, deadlock, additional investment, partner default and a sale of the project. Writing “the parties shall resolve the matter through consultation” does not replace trigger conditions, valuation methods, handover deadlines and remedies if a party fails to cooperate.
| Entity | Main function | Rights to control or obtain | Corresponding documents |
|---|---|---|---|
| Chinese investor | Capital contribution, major decisions and overall supervision | Equity, reserved matters and funding arrangements | Overseas investment documents; shareholders' agreement |
| Offshore holding platform | Regional holding or financing coordination | Offshore equity, financing and related-party transaction arrangements | Shareholders' agreement; financing documents |
| Local project company | Holding assets and receiving licences and project contracts | Land, equipment, resources and customer-contract rights | Constitution; land agreement; resource agreements |
| Construction entity | Design, procurement, construction, testing and warranties | EPC performance, acceptance and recourse rights | EPC, equipment purchase and warranty documents |
| Operating entity | Daily maintenance, customer service and incident response | Operating authority, system access and subcontractor management | Operating agreement; SLA; data-processing agreement |
The final test for a project structure is what each entity actually does, what rights it controls and what responsibilities it assumes. Only when entity functions, control rights and documentary responsibilities correspond to one another does the project company truly have a basis for implementation and financing.
Conclusion:
An executable project structure needs to align capital contributions, assets, licences, resources, construction, operations and customer responsibilities. Before incorporating the project company, the project team can first map the relationships between the entities and documents. Before signing the shareholders' agreement, operating agreement and financing documents, it should then check whether the project company actually holds the rights needed for construction, operations and financing.
If the operator later needs to be replaced, financing introduced or the local market exited, the ability to do so smoothly will depend on whether control rights and handover routes were written into the documents from the beginning, rather than left to a new round of negotiations at the time.
Key References
- Dentons HPRP: KIRA Management in metro multi-storey data center project in Jakarta
- UOB: DBS and UOB arrange loan for data centre development project by DayOne and the Indonesia Investment Authority
- Clifford Chance: Yondr Group Malaysia data centre project financing
- Indonesia OSS: KBLI 2025 (data processing, hosting and related business classifications; former 63111/63112 classifications converted to 63101/63102 respectively; the actual business of the project must be checked)
- Komdigi: Private Sector ESO Registration
- MIDA: Malaysia Secures RM218.5 Billion in Approved Investments In 1H 2026 (28 August 2026; investment announcement)
- Thailand BOI: Investment Promotion Guide 2026 (July 2026; investment-promotion guide)
Disclaimer: This article does not constitute legal advice, investment advice or a commitment to provide professional services in relation to any specific project or transaction. Data centre projects involve multiple areas, including investment access, land, power, water, communications, data protection, energy efficiency, engineering and construction, operations and financing. Specific matters should be separately assessed by the relevant professional advisers or lawyers in light of the project location, business model, transaction documents and the latest official rules.
This article is general information and not legal advice. Specific matters require assessment by appropriately qualified professionals.