Convertible Agreement Regarding Equity Template for Philippines

The Convertible Agreement Regarding Equity (CARE) has become increasingly popular in the Philippine startup ecosystem as a simplified alternative to traditional equity investment structures. This document is typically used when a company needs early-stage funding but determining a precise valuation is challenging or premature. It complies with Philippine corporate law, securities regulations, and foreign investment restrictions while providing a standardized framework for investment. The agreement includes essential provisions for conversion triggers, valuation mechanisms, and investor rights, all structured to meet Philippine Securities and Exchange Commission requirements. It's particularly useful for startups seeking bridge funding between formal funding rounds or when trying to close multiple small investors efficiently.

1. Parties: Identification of the Company and the Investor, including complete legal names, addresses, and registration details as required by Philippine law

2. Background: Context of the agreement, nature of the Company's business, and purpose of the investment

3. Definitions: Key terms used throughout the agreement, including 'Equity Shares', 'Qualified Financing', 'Valuation Cap', 'Discount Rate', and other relevant terms

4. Investment Amount: Specification of the investment amount and payment terms, including currency and payment method

5. Events Triggering Conversion: Detailed conditions that trigger conversion of the investment into equity, including Qualified Financing, Exit Event, or Dissolution Event

6. Conversion Mechanics: Formula and process for converting the investment into equity shares, including valuation calculations and share class specifications

7. Company Representations: Company's warranties regarding its legal status, authority, and compliance with Philippine laws

8. Investor Representations: Investor's warranties regarding investment capacity and compliance with securities laws

9. Information Rights: Investor's rights to receive financial and other company information

10. Assignment and Transfer: Terms governing the transfer of rights under the agreement

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

12. Execution: Signature blocks and execution requirements compliant with Philippine law