Document background
The Convertible Loan Stock Agreement is a strategic financing instrument used when companies seek funding while maintaining flexibility in their capital structure. This document is particularly relevant in the Philippine market where companies may need growth capital but prefer to defer equity dilution. The agreement provides a framework for investors to extend loans that can later be converted into equity, typically at a discount or based on future valuation events. It must comply with Philippine regulatory requirements, including those set by the Securities and Exchange Commission and the Revised Corporation Code. The document includes detailed provisions on conversion rights, pricing mechanisms, company warranties, and investor protections, making it suitable for both institutional and sophisticated individual investors. This type of agreement is commonly used in startup funding rounds, corporate restructuring, or when companies need bridge financing before a larger funding event.
