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Preferred Stock Subscription Agreement for Philippines

Preferred Stock Subscription Agreement Template for Philippines

A comprehensive legal agreement governed by Philippine law that establishes the terms and conditions under which an investor subscribes to preferred shares issued by a corporation. The document details the specific rights, privileges, and preferences attached to the preferred shares, including dividend rights, liquidation preferences, voting rights, and potential conversion features. It ensures compliance with the Revised Corporation Code of the Philippines and Securities Regulation Code while protecting both the issuing company's and investor's interests through carefully structured terms and conditions.

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Preferred Stock Subscription Agreement

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What is a Preferred Stock Subscription Agreement?

The Preferred Stock Subscription Agreement is a crucial document used in Philippine corporate transactions when a company seeks to raise capital by issuing preferred shares to investors. This agreement is particularly relevant for growing companies looking to attract strategic or institutional investors while maintaining existing control structures. The document must comply with Philippine corporate and securities laws, including the Revised Corporation Code and SEC regulations, which govern corporate capital structure and securities issuance. It typically includes detailed provisions on share rights, dividend preferences, liquidation priorities, and potential conversion features, making it essential for both capital-raising activities and corporate restructuring initiatives. The agreement serves as the foundational document establishing the relationship between the issuing company and preferred shareholders, while ensuring all regulatory requirements under Philippine law are met.

What sections should be included in a Preferred Stock Subscription Agreement?

1. Parties: Identification of the Company issuing the preferred shares and the Subscriber(s)

2. Background: Recitals explaining the Company's authorization to issue preferred shares and the Subscriber's intent to purchase

3. Definitions: Definitions of key terms used throughout the agreement

4. Subscription: Details of the preferred shares being subscribed to, including number of shares and subscription price

5. Payment Terms: Terms and method of payment for the preferred shares, including payment schedule if applicable

6. Preferred Share Rights: Specific rights attached to the preferred shares including dividend rights, liquidation preferences, and conversion rights

7. Closing Conditions: Conditions that must be satisfied before the subscription can be completed

8. Representations and Warranties: Statements of fact and assurances from both the Company and the Subscriber

9. Covenants: Ongoing obligations of the parties

10. Transfer Restrictions: Limitations on the transfer of preferred shares

11. Termination: Circumstances under which the agreement may be terminated

12. Notices: Process for sending formal communications between parties

13. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

14. Miscellaneous: Standard boilerplate provisions including entire agreement, amendments, and severability

What sections are optional to include in a Preferred Stock Subscription Agreement?

1. Foreign Ownership Compliance: Required when the subscriber is a foreign entity, detailing compliance with Philippine foreign ownership restrictions

2. Anti-Dilution Protection: Optional protection mechanisms against dilution of shareholding

3. Tag-Along Rights: Rights of preferred shareholders to join in sale of shares by other shareholders

4. Drag-Along Rights: Rights to require preferred shareholders to join in sale of shares

5. Board Representation: Rights of preferred shareholders to nominate board members

6. Information Rights: Special rights to receive company information beyond statutory requirements

7. Registration Rights: Rights related to future public offerings or registration of shares

8. Redemption Rights: Terms and conditions for share redemption, if applicable

What schedules should be included in a Preferred Stock Subscription Agreement?

1. Schedule 1 - Share Certificate Specimen: Form of share certificate for the preferred shares

2. Schedule 2 - Company Information: Details of the Company's capital structure, outstanding shares, and corporate information

3. Schedule 3 - Subscription Details: Detailed breakdown of subscription amount, share price calculation, and payment terms

4. Schedule 4 - Preferred Share Terms: Detailed terms and conditions of the preferred shares including dividend rates and preferences

5. Schedule 5 - Closing Deliverables: List of documents and items to be delivered at closing

6. Schedule 6 - Corporate Resolutions: Copies of relevant board and shareholder resolutions

7. Schedule 7 - Disclosure Schedule: Exceptions to representations and warranties

8. Appendix A - Form of Deed of Adherence: Template for additional subscribers to join the agreement if applicable

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Philippines

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions













































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Relevant Industries

Technology

Financial Services

Real Estate

Manufacturing

Energy

Infrastructure

Healthcare

Telecommunications

Retail

Agriculture

Mining

Entertainment

Education

Transportation

Construction

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Compliance

Board Secretariat

Investment Relations

Risk Management

Corporate Governance

Executive Leadership

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Investment Manager

Private Equity Manager

Venture Capital Manager

Corporate Lawyer

Investment Banker

Finance Director

Corporate Development Manager

Board Director

Compliance Officer

Treasury Manager

Company President

Managing Director

Industries







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