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Stock Redemption Agreement

Stock Redemption Agreement Template for Philippines

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Key Requirements PROMPT example:

Stock Redemption Agreement

"I need a Stock Redemption Agreement for my tech company to repurchase 10,000 common shares from a departing founder at PHP 500 per share, with payment to be made in four quarterly installments starting March 2025."

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Document background
The Stock Redemption Agreement is utilized when a Philippine corporation wishes to repurchase its own shares from existing shareholders, a transaction that must comply with the Revised Corporation Code of the Philippines and relevant securities regulations. This document becomes necessary in various scenarios, such as implementing share buyback programs, facilitating shareholder exits, or managing corporate capital structure. The agreement typically includes detailed provisions on valuation, payment terms, regulatory compliance, and necessary corporate approvals. It's particularly important in ensuring that the stock redemption adheres to Philippine legal requirements regarding corporate capital maintenance, creditor protection, and shareholder rights. The document must reflect specific Philippine law considerations, including tax implications and Securities and Exchange Commission regulations.
Suggested Sections

1. Parties: Identification of the corporation and the selling stockholder(s)

2. Background: Context of the redemption, including corporate authority and purpose

3. Definitions: Key terms used throughout the agreement

4. Agreement to Redeem: Core agreement for the corporation to redeem and the stockholder to sell the shares

5. Redemption Price and Payment Terms: Specified price per share and method of payment

6. Representations and Warranties of Seller: Seller's confirmations regarding share ownership, authority to sell, and absence of encumbrances

7. Representations and Warranties of Corporation: Corporation's confirmations regarding authority, financial capacity, and compliance with laws

8. Closing Conditions: Prerequisites for completing the redemption transaction

9. Closing Mechanics: Procedures for executing the transfer and payment

10. Tax Matters: Allocation of tax responsibilities and requirements

11. Confidentiality: Provisions regarding non-disclosure of agreement terms

12. Governing Law: Application of Philippine law and jurisdiction

13. General Provisions: Standard clauses including notices, amendments, and severability

Optional Sections

1. Installment Payment Terms: Details of payment schedule when redemption price is paid in installments

2. Security Provisions: Collateral or security arrangements for installment payments

3. Board and Shareholder Approval: Specific approval requirements if not already obtained

4. Right of First Refusal: Corporation's priority rights for additional share purchases

5. Non-Competition: Restrictions on seller's competitive activities post-redemption

6. Regulatory Compliance: Special provisions for regulated industries or listed companies

7. Earn-out Provisions: Additional payment terms based on future performance metrics

Suggested Schedules

1. Schedule A - Description of Shares: Detailed information about shares being redeemed, including certificate numbers and share classes

2. Schedule B - Corporate Resolutions: Copies of board and/or shareholder resolutions authorizing the redemption

3. Schedule C - Payment Schedule: Detailed payment terms and dates if applicable

4. Schedule D - Disclosure Schedule: Exceptions or qualifications to representations and warranties

5. Appendix 1 - Share Certificates: Copies of relevant share certificates

6. Appendix 2 - Secretary's Certificate: Certification of corporate authority and compliance

7. Appendix 3 - Closing Documents Checklist: List of required documents for closing

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

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Articles of Incorporation
Board
Board Resolution
Business Day
By-laws
Closing
Closing Date
Company
Confidential Information
Corporate Records
Disclosure Schedule
Encumbrance
Execution Date
Fair Market Value
Governmental Authority
Law
Material Adverse Effect
Par Value
Payment
Purchase Price
Redemption
Redemption Price
Redemption Shares
Regulatory Approvals
Revised Corporation Code
SEC
Securities Regulation Code
Seller
Share Certificates
Shareholders
Shares
Stock and Transfer Book
Stockholders' Resolution
Subscription Price
Tax
Transaction Documents
Transfer
Clauses
Definitions
Interpretation
Share Redemption
Purchase Price
Payment Terms
Conditions Precedent
Closing Conditions
Representations and Warranties
Seller Covenants
Company Covenants
Corporate Authority
Share Transfer
Tax Matters
Confidentiality
Non-Competition
Regulatory Compliance
Securities Laws Compliance
Corporate Approvals
Documentation
Notice
Assignment
Amendment
Waiver
Severability
Entire Agreement
Force Majeure
Governing Law
Dispute Resolution
Indemnification
Termination
Further Assurance
Costs and Expenses
Counterparts
Relevant Industries

Financial Services

Professional Services

Manufacturing

Technology

Real Estate

Retail

Healthcare

Energy

Transportation

Telecommunications

Family-Owned Businesses

Private Equity

Venture Capital

Relevant Teams

Legal

Finance

Corporate Secretariat

Treasury

Tax

Compliance

Board of Directors

Corporate Governance

Shareholder Relations

Internal Audit

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Corporate Secretary

General Counsel

Legal Director

Finance Director

Treasury Manager

Corporate Lawyer

Compliance Officer

Board Director

Company Director

Tax Manager

Financial Controller

Investment Manager

Shareholder Relations Manager

Industries
Revised Corporation Code of the Philippines (Republic Act No. 11232): Primary law governing corporations in the Philippines, including provisions on stock redemption, corporate capital, and shareholders' rights. Particularly relevant are Sections 8, 62, and 63 which deal with the corporation's power to purchase its own shares.
Securities Regulation Code (Republic Act No. 8799): Regulates the sale and trading of securities in the Philippines, including requirements for disclosure and registration of securities transactions.
National Internal Revenue Code: Contains provisions on tax implications of stock redemption, including capital gains tax and documentary stamp tax considerations.
Civil Code of the Philippines (Republic Act No. 386): Provides the basic principles of contract law applicable to the agreement, including provisions on consent, object, cause, and form of contracts.
Securities and Exchange Commission Memorandum Circular No. 10, Series of 2019: Guidelines on corporate stock redemption and the required disclosures and procedures for such transactions.
Bureau of Internal Revenue Regulations: Implementing rules and regulations regarding the tax treatment of stock redemption transactions, including reporting requirements and tax compliance procedures.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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