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A Subscription letter is a formal document investors use to commit to buying shares in a Philippine corporation. It outlines key details like the number of shares, price per share, and payment terms - serving as a binding agreement between the subscriber and the company.

Under Philippine corporate law, this letter helps document compliance with capital requirements and creates legal evidence of share ownership. Companies commonly use subscription letters during fundraising rounds, IPOs, or when increasing their authorized capital stock through the Securities and Exchange Commission.

You need a Subscription letter when raising capital for your Philippine corporation through share issuance. This document becomes essential during initial public offerings (IPOs), private placements, or any situation where you're selling company shares to new investors.

The timing is particularly critical when increasing authorized capital stock, launching a new funding round, or bringing strategic investors on board. Philippine corporations must file these letters with the Securities and Exchange Commission to properly document share subscriptions and protect both the company's and investors' interests in the transaction.

• The common types of Subscription letters in the Philippines include: Basic subscription letters for straightforward share purchases; Convertible note subscription letters that allow debt-to-equity conversion; Rights offering subscription letters for existing shareholders; Private placement subscription letters with detailed investor qualifications; and Founder subscription letters used during company formation with specific capital contribution terms.

• Corporate Officers: The company's authorized representatives prepare and sign Subscription letters on behalf of the issuing corporation, ensuring compliance with SEC requirements.
• Investors: Both individual and institutional investors sign these letters to formalize their commitment to purchase shares at agreed terms.
• Corporate Secretary: Records and maintains Subscription letters as part of official company records and stock certificates.
• Legal Counsel: Reviews and drafts the letters to ensure legal compliance and protect both company and investor interests.

• Company Details: Gather corporate name, registration number, address, and authorized representatives' information.
• Share Information: Specify number of shares, par value, class of shares, and total subscription amount.
• Payment Terms: Document payment schedule, methods, and any special conditions for installment payments.
• Subscriber Details: Collect complete subscriber information, including tax identification numbers and proof of identity.
• Board Approval: Ensure board resolution authorizing the share issuance is in place before finalizing the letter.

• Subscriber Information: Full legal name, address, nationality, and tax identification details of the share subscriber.
• Share Details: Specific number, class, and par value of shares being subscribed to.
• Payment Terms: Clear statement of total subscription amount and payment schedule.
• Representations: Subscriber's confirmation of financial capacity and compliance with Philippine investment laws.
• Governing Law: Statement that Philippine laws govern the subscription agreement.
• Execution Block: Dated signatures of both subscriber and authorized company representative.

A Subscription letter is often confused with an Acceptance Letter, but they serve distinct purposes in Philippine corporate transactions. While both documents formalize agreements, their scope and legal implications differ significantly.

• Purpose and Timing: Subscription letters commit to future share purchases and outline payment terms, while Acceptance letters confirm agreement to already-proposed terms or offers.
• Legal Requirements: Subscription letters must meet specific SEC requirements for share issuance and capital raising, whereas Acceptance letters have more flexible formatting requirements.
• Content Focus: Subscription letters detail share quantities, prices, and payment schedules, while Acceptance letters typically acknowledge and confirm general business arrangements or proposals.
• Regulatory Impact: Subscription letters directly affect corporate capitalization and require SEC filing, but Acceptance letters generally don't trigger regulatory obligations.