Preferred Stock Agreement Template for Philippines

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Key Requirements PROMPT example:

Preferred Stock Agreement

"I need a Preferred Stock Agreement for my Philippine technology startup to issue Series A preferred shares with a 6% cumulative dividend rate to foreign investors, including conversion rights and anti-dilution protection, planned for closing in March 2025."

Document background

The Preferred Stock Agreement is a vital instrument in Philippine corporate finance, used when a company seeks to raise capital while offering investors preferential rights over common stockholders. This document is essential for both private and public corporations operating under Philippine jurisdiction who wish to issue preferred shares as part of their capital structure or fundraising strategy. The agreement must comply with the Revised Corporation Code of the Philippines and Securities Regulation Code, particularly regarding shareholder rights, corporate governance, and securities regulations. It is commonly used in situations requiring significant capital investment, corporate restructuring, or strategic partnerships, where investors seek priority in dividends and liquidation proceeds. The document typically includes detailed provisions on dividend rights, voting powers, conversion privileges, redemption terms, and protective provisions, making it a crucial tool for both issuers and investors in structuring their investment relationship.

Suggested Sections

1. Parties: Identification of the corporation issuing preferred shares and the preferred stockholder(s)

2. Background: Context of the preferred stock issuance, including corporate authorizations and purpose

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

4. Subscription and Purchase: Details of the preferred shares being issued, including number, price, and payment terms

5. Preferred Share Rights: Core rights attached to preferred shares including dividend rights, liquidation preferences, and voting rights

6. Dividend Provisions: Detailed terms of dividend payments, including rate, calculation method, and payment schedule

7. Transfer Restrictions: Limitations and conditions on the transfer of preferred shares

8. Corporate Governance: Provisions regarding board representation and voting rights

9. Information Rights: Rights of preferred shareholders to receive financial and other corporate information

10. Pre-emptive Rights: Rights of first refusal on future share issuances

11. Exit Rights: Provisions regarding liquidation, dissolution, or sale of the company

12. Representations and Warranties: Standard representations and warranties from both the company and investors

13. Covenants: Ongoing obligations of the company and preferred shareholders

14. Events of Default: Circumstances constituting default and corresponding remedies

15. General Provisions: Standard clauses including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Conversion Rights: Terms for converting preferred shares to common shares, if convertible preferred stock is being issued

2. Redemption Rights: Terms for share redemption, if redeemable preferred stock is being issued

3. Anti-dilution Protection: Provisions protecting preferred shareholders from dilution in specific circumstances

4. Foreign Ownership Compliance: Special provisions ensuring compliance with Philippine foreign ownership restrictions, if foreign investors are involved

5. Tag-along Rights: Rights of preferred shareholders to join in sale of shares by majority shareholders

6. Drag-along Rights: Rights of majority shareholders to force preferred shareholders to join in sale of company

7. Registration Rights: Rights related to future public offering registration, if contemplated

8. Special Voting Arrangements: Any special voting arrangements or veto rights for specific corporate actions

Suggested Schedules

1. Schedule A - Share Certificate Specimen: Form of preferred share certificate including legend

2. Schedule B - Capitalization Table: Current and post-issuance capitalization of the company

3. Schedule C - Corporate Authorizations: Copies of board and shareholder resolutions authorizing the preferred share issuance

4. Schedule D - Dividend Calculation Methods: Detailed methodology for calculating preferred share dividends

5. Schedule E - Disclosure Schedule: Exceptions to representations and warranties

6. Appendix 1 - Articles of Incorporation: Copy of the company's Articles of Incorporation showing authorized capital stock

7. Appendix 2 - SEC Approvals: Relevant Securities and Exchange Commission approvals for the issuance

8. Appendix 3 - Financial Statements: Recent financial statements of the company

Authors

Alex Denne

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Financial Services

Technology and Startups

Real Estate

Manufacturing

Energy

Infrastructure

Healthcare

Telecommunications

Retail and Consumer Goods

Mining and Natural Resources

Relevant Teams

Legal

Finance

Corporate Secretariat

Compliance

Treasury

Investment Relations

Board Secretariat

Risk Management

Corporate Development

Mergers & Acquisitions

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

Legal Counsel

Investment Banker

Corporate Finance Manager

Compliance Officer

Board Director

Investment Manager

Private Equity Manager

Venture Capitalist

Corporate Treasurer

Risk Manager

Financial Controller

Company Director

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Authors

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