Redemption Agreement Template for United States

A Redemption Agreement lays out the terms and conditions for buying back shares from stockholders in a Philippine corporation. It's essentially a contract that protects both the company and its shareholders when shares need to be repurchased, typically during business transitions, succession planning, or when key employees leave.

Under Philippine Corporation Law, these agreements help maintain corporate control by setting clear rules for share valuation, payment terms, and timing of redemptions. Many Filipino businesses use them alongside their Articles of Incorporation to prevent unwanted third-party ownership and ensure smooth ownership transitions while following Securities and Exchange Commission guidelines.

A Redemption Agreement becomes essential when your Philippine corporation needs to maintain control over its ownership structure. Common triggers include a shareholder's retirement, death, or departure from the company, or when preventing shares from being sold to outsiders becomes crucial for business continuity.

This agreement particularly helps family-owned businesses and closely-held corporations manage succession planning and protect minority shareholders' interests. It's valuable during corporate restructuring, when settling disputes between shareholders, or when implementing employee stock ownership programs that need clear exit mechanisms - all while complying with Philippine Corporation Code requirements.

• Fixed-Price Redemptions: Sets a predetermined share value, making exits simpler but potentially less fair in rapidly growing companies
• Fair Market Value: Uses professional valuations to determine share prices at redemption time, common in larger Filipino corporations
• Installment-Based: Allows companies to spread redemption payments over time, easing cash flow impacts
• Mandatory vs. Optional: Defines if the company must redeem shares upon triggering events or maintains discretion
• Event-Specific: Tailored to specific triggers like retirement, death, or termination, with varying terms for each scenario

• Corporate Officers: Initiate and oversee the redemption process, ensuring compliance with Philippine corporate laws and SEC regulations
• Shareholders: Both majority and minority stockholders whose shares may be subject to redemption under specified conditions
• Corporate Lawyers: Draft and review Redemption Agreements to protect company interests while ensuring fairness to all parties
• Board of Directors: Approve redemption terms and authorize share buybacks according to company bylaws
• Independent Valuators: Determine fair market value of shares when required by agreement terms

• Company Details: Gather Articles of Incorporation, bylaws, and current shareholder records
• Share Information: Document total shares, classes, current valuations, and any existing transfer restrictions
• Trigger Events: Define specific circumstances that activate share redemption rights
• Payment Terms: Outline price calculation methods, payment schedules, and funding sources
• Board Approval: Secure necessary corporate resolutions authorizing the redemption program
• Legal Review: Our platform generates compliant agreements tailored to Philippine law, ensuring all mandatory elements are included

• Identification: Full legal names and details of the corporation and shareholders involved
• Share Details: Number, class, and certificate numbers of shares subject to redemption
• Trigger Events: Clear conditions that activate redemption rights under Philippine law
• Valuation Method: Detailed formula or process for determining share price
• Payment Terms: Timeline, method, and conditions for completing the redemption
• Governing Law: Explicit reference to Philippine Corporation Code and relevant SEC regulations
• Execution Block: Proper signature spaces with witness requirements and notarization details

A Redemption Agreement differs significantly from a Business Acquisition Agreement in several key aspects, though both deal with ownership transfers in Philippine corporations. While redemption involves a company buying back its own shares, business acquisition covers the complete or partial purchase of an entire business entity.

• Scope of Transfer: Redemption Agreements focus solely on share repurchases by the issuing company, while Business Acquisition Agreements cover assets, liabilities, and operational control
• Regulatory Requirements: Redemptions must comply with Philippine Corporation Code's capital maintenance rules; acquisitions face broader SEC and competition law scrutiny
• Payment Structure: Redemptions often follow preset formulas with specific triggering events; acquisitions typically involve negotiated prices and due diligence
• Post-Transaction Impact: Redemptions reduce outstanding shares and redistribute ownership internally; acquisitions can result in complete business restructuring or merger