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An Investment agreement term sheet lays out the key points of a potential investment deal in the Philippines, serving as a roadmap for the final agreement. It captures essential details like investment amount, equity stake, voting rights, and exit strategies in a clear, non-binding format that both parties can review before moving forward.

Under Philippine securities laws, particularly the Securities Regulation Code, term sheets help protect investors by documenting important deal terms upfront. While not legally binding (except for confidentiality clauses), these documents save time and money by getting major deal points agreed upon early, reducing the risk of misunderstandings during final negotiations.

Use an Investment agreement term sheet when entering serious negotiations with potential investors in your Philippine business venture. This document becomes essential once initial discussions move beyond casual interest and both parties need to outline specific terms. It's particularly valuable when dealing with venture capitalists, angel investors, or strategic partners who require clear documentation of proposed terms.

The term sheet proves most useful before spending significant time and money on due diligence and final agreements. It helps prevent miscommunication about key terms like valuation, board seats, and investor rights. For international investments in Philippine companies, it's crucial to draft this early to address foreign ownership restrictions and regulatory requirements under the Foreign Investments Act.

• Term sheets for direct equity investments detail ownership percentages, board rights, and voting arrangements
• Convertible note term sheets focus on conversion terms, interest rates, and valuation caps common in Philippine startup funding
• Strategic partnership term sheets emphasize operational control, technology transfer, and compliance with Philippine foreign ownership restrictions
• Joint venture term sheets outline capital contributions, profit-sharing ratios, and management structures
• Mezzanine financing term sheets specify debt-equity hybrid terms, including security arrangements and dividend rights under Philippine corporate laws

• Startup Founders: Initiate and negotiate term sheets when seeking capital, often working closely with their legal counsel to protect company interests
• Venture Capital Firms: Draft and propose initial term sheets, outlining their investment terms and conditions
• Corporate Lawyers: Review and refine term sheet language to ensure compliance with Philippine securities laws and protect client interests
• Angel Investors: Negotiate key terms directly with founders, particularly in early-stage investments
• Investment Bankers: Facilitate negotiations and help structure deals, especially in larger financing rounds
• Corporate Secretaries: Handle documentation and ensure proper board approvals for term sheet provisions

• Company Details: Gather current capitalization, ownership structure, and financial statements
• Investment Terms: Define investment amount, valuation, and type of securities being offered
• Ownership Rights: Outline proposed voting rights, board seats, and anti-dilution provisions
• Due Diligence: Compile key business documents, permits, and intellectual property records
• Regulatory Review: Check Philippine foreign investment restrictions and SEC requirements
• Exit Strategy: Specify liquidation preferences, tag-along rights, and exit mechanisms
• Confidentiality: Include non-disclosure provisions to protect sensitive information during negotiations

• Basic Information: Company name, registered address, parties involved, and date of agreement
• Investment Terms: Amount, valuation, type of securities, and payment schedule
• Ownership Structure: Pre and post-money capitalization, share classes, and voting rights
• Board Composition: Number of seats, appointment rights, and voting thresholds
• Protective Provisions: Veto rights, anti-dilution protection, and drag-along rights
• Confidentiality Clause: Non-disclosure terms and duration
• Governing Law: Philippine law application and dispute resolution mechanisms
• Non-Binding Statement: Clear indication of which provisions are binding and non-binding

An Investment agreement term sheet differs significantly from a full Investment Agreement in several key ways. While both documents deal with investment transactions in the Philippines, they serve distinct purposes in the investment process.

• Legal Binding: Term sheets are mostly non-binding documents outlining key terms, while an Investment Agreement is a legally binding contract that finalizes all details
• Level of Detail: Term sheets contain brief summaries of major points, while Investment Agreements include comprehensive legal provisions, warranties, and obligations
• Timing: Term sheets come first during initial negotiations, while Investment Agreements are drafted after parties reach preliminary agreement
• Cost and Complexity: Term sheets are simpler and less expensive to prepare, making them ideal for early discussions without committing significant legal resources
• Flexibility: Term sheets allow easier modification of terms, while Investment Agreements require formal amendments once executed