Safes, Convertible Notes & Subscription Agreements in the Philippines (2026): SEC MC No.6 Compliance Guide

Subscription agreements in the Philippines have entered a new regulatory phase. SEC Memorandum Circular No. 6, Series of 2026 (MC No.6) introduces streamlined documentary requirements for subscription contracts and capital-increase filings, directly affecting how founders structure startup fundraising in the Philippines. For early-stage companies relying on SAFEs, convertible notes and traditional equity subscriptions, the circular reshapes filing obligations, notarisation standards and the SEC’s acceptance criteria for supporting documents. This guide walks through every material change, provides a practical decision tree for registration versus exemption, and offers model clauses that practitioners can adapt immediately.

Executive Summary: Key Takeaways for Founders and Investors

Before diving into the detail, here are the headline points every founder, CFO and investor counsel should absorb:

• MC No.6 broadens documentary acceptance. The SEC now explicitly recognises subscription contracts, including instruments that evidence future equity commitments, as acceptable supporting documents for capital-increase applications.
• SAFEs and convertible notes are not automatically exempt. Whether a SAFE or convertible note constitutes a “security” under the Securities Regulation Code (R.A. No. 8799) depends on its structure, transferability and the manner of offering.
• Private placement exemptions remain critical. Most startup rounds can avoid full registration by qualifying under the private placement exemption in the Securities Regulation Code, but a notification filing with the SEC is still required.
• Notarisation and board-resolution requirements have been clarified. MC No.6 sets specific format and authentication standards that earlier circulars left ambiguous.
• Tax classification drives real economic outcomes. The BIR’s treatment of a convertible instrument as debt or equity affects withholding tax on interest, documentary stamp tax and capital-gains exposure, get the classification wrong and the cost compounds on conversion.
• Pre-incorporation subscriptions remain irrevocable. Under the Revised Corporation Code (R.A. No. 11232), a subscriber who signs before incorporation cannot withdraw within six months after incorporation unless all other subscribers consent.
• Act now. Review existing SAFEs, convertible notes and subscription agreements against the MC No.6 checklist below. Non-compliant documents risk SEC rejection at the point of capital-increase filing.

What Changed in 2026: SEC MC No.6 and Related Subscription Agreements Philippines Updates

MC No.6, Short Breakdown

SEC Memorandum Circular No. 6, Series of 2026 was issued to modernise the documentary requirements that companies must satisfy when filing applications to increase authorised capital stock or record additional paid-in capital. Under prior practice, the SEC’s Company Registration and Monitoring Department applied an informal and sometimes inconsistent list of acceptable supporting documents. MC No.6 formalises that list, explicitly names subscription contracts as primary evidence of capital commitments, and clarifies the format in which those contracts must be submitted.

The practical result is twofold. First, companies that previously attached only board resolutions and treasurer’s affidavits must now also submit duly executed subscription agreements in the SEC-prescribed format. Second, the circular’s broadened language covers instruments that evidence a commitment to subscribe, a formulation that industry observers expect will sweep in SAFEs and certain convertible notes once the conversion event occurs and shares are issued.

Other 2026 SEC Issuances Affecting Subscriptions

MC No.6 does not operate in isolation. The SEC’s 2026 issuance calendar includes related guidance on electronic filing formats, updated fee schedules for capital-increase applications, and clarified timelines for processing. Companies should monitor the SEC Issuances page for supplementary circulars that may adjust deadlines or introduce transitional provisions.

Legal Character: Subscription Contracts, SAFEs and Convertible Notes Under Philippine Law

Understanding the legal character of each instrument is the foundation for every compliance decision that follows. Philippine corporate and securities law draws sharp lines between a contract to subscribe to shares, a promise to deliver equity in the future, and a debt obligation that may convert into equity.

A subscription agreement is a contract by which a person agrees to take and pay for a specified number of shares in a corporation. Under the Revised Corporation Code (R.A. No. 11232), a subscription may be entered into before incorporation (a pre-incorporation subscription) or after. Pre-incorporation subscriptions are irrevocable for six months from incorporation unless all other subscribers consent to the withdrawal.

A subscription agreement is not a shareholders’ agreement. A shareholders’ agreement governs the relationship among existing stockholders, voting arrangements, drag-along and tag-along rights, dividend policies. A subscription agreement deals solely with the obligation to take and pay for shares. Both documents may exist simultaneously, but they serve different legal purposes and are filed with or disclosed to different parties.

When Is a SAFE a “Security”?

A Simple Agreement for Future Equity (SAFE) does not, by itself, issue shares. It grants the holder the right to receive equity upon a triggering event, typically a priced equity round, a liquidity event or dissolution. Under Section 3 of the Securities Regulation Code (R.A. No. 8799), the definition of “securities” is broad: it includes investment contracts, certificates of interest and instruments commonly known as securities. Industry observers note that where a SAFE is offered to multiple investors, involves the pooling of funds, and promises returns derived from the efforts of the issuer, it is likely to satisfy the Howey-equivalent test applied by Philippine regulators and thus constitute a security.

The compliance implication is direct: if a SAFE is a security, its issuance must either be registered with the SEC or fall under a valid exemption. SAFEs in the Philippines that are structured as one-on-one, non-transferable commitments between a single angel investor and a startup may sit outside the registration requirement, but any broader offering, even to a small group, should be evaluated against the private placement exemption criteria.

Convertible Note Anatomy and Triggers

A convertible note is a debt instrument that converts into equity upon specified triggers (usually a qualified financing round). Until conversion, the holder is a creditor, not a shareholder. The note typically carries an interest rate, a maturity date and a conversion discount or valuation cap. Under Philippine law, convertible notes in the Philippines occupy a hybrid space: they are debt for accounting purposes until the conversion trigger fires, but the embedded conversion option may itself be classified as a derivative security. The Securities Regulation Code’s broad definition means that offering convertible notes to multiple investors will, in most cases, require either registration or an exemption.

Registration vs Exemption: Do SAFEs or Convertible Notes Need SEC Registration?

This is the question founders and counsel ask most often. The answer depends on the instrument’s structure, the number and type of investors, and the manner of offering. The decision tree below distils the analysis into four sequential questions.

Decision Tree

1. Is the instrument a “security” under R.A. No. 8799? If it is a subscription agreement for shares, a SAFE with investment-contract characteristics, or a convertible note offered to multiple parties, the answer is almost certainly yes.
2. Is the offer a “public offering”? An offer to 20 or more persons during any 12-month period is generally treated as a public offering. An offer to fewer than 20 persons, where each is sophisticated or accredited, may qualify as a private placement.
3. Does a securities registration exemption apply? The most commonly used exemption for startup rounds is the private placement exemption under Section 10 of the Securities Regulation Code, which covers offers made to qualified buyers or to no more than 19 persons in any 12-month period. Other exemptions exist for offers to existing shareholders and for securities issued in exchange for property.
4. Have you filed the required exemption notification? Even where an exemption applies, the issuer must file a notice of exempt transaction with the SEC within the prescribed period. Failure to notify does not automatically void the transaction, but it exposes the issuer to administrative sanctions.

Instrument Comparison Table

Private Placement Philippines: Practical Checklist

For most pre-seed and seed rounds involving SAFEs or convertible notes, the private placement Philippines route is the path of least resistance. To qualify, the issuer should confirm the following:

• Investor count. The offer is directed to no more than 19 persons within any 12-month period.
• Investor sophistication. Each offeree has access to relevant information and is capable of evaluating the merits and risks of the investment, or is an accredited investor under SEC rules.
• No general solicitation. The offer is not made through public advertisements, social media posts or any form of general solicitation.
• Transfer restrictions. The instruments contain contractual restrictions on resale or transfer for a prescribed period.
• Notification filing. A notice of exempt transaction is filed with the SEC promptly after closing.

Drafting Checklist and Model Clauses for Subscription Agreements Philippines

Getting the documentation right at the drafting stage is the single most effective way to avoid SEC rejection at filing and to protect both founder and investor interests. This section provides an actionable checklist and three model clauses that practitioners can adapt. All model clauses are illustrative only, seek legal review before use.

Drafting Checklist (MC No.6 Compliant)

• Identification of parties. Full legal names, nationalities, addresses and taxpayer identification numbers of the subscriber and the issuer.
• Share description. Class, par value, number of shares subscribed, total subscription price and payment schedule.
• Representations and warranties. Subscriber’s representation as to investor status (accredited or qualified buyer), source of funds (anti-money-laundering compliance) and absence of disqualifications.
• Conversion mechanics (SAFEs and convertible notes). Clear trigger events, valuation cap or discount methodology, mechanics for determining conversion shares and timeline for share issuance.
• Anti-dilution provisions. Broad-based weighted-average or full-ratchet formula, clearly defined adjustment events, and carve-outs for option pools and exempted issuances.
• Transfer restrictions. Contractual lock-up periods, right of first refusal in favour of the company, and compliance legend on any certificates or book-entry records.
• Notarisation. MC No.6 requires subscription contracts submitted to the SEC to be notarised. Ensure the notary public is commissioned in the jurisdiction where the subscriber signs, and that foreign subscribers comply with consularisation or apostille requirements.
• Conditions precedent. Board and shareholder approvals, SEC filings, regulatory clearances (e.g., BOI or BSP approvals for foreign investors in restricted sectors).
• Tax reporting language. Clauses allocating responsibility for documentary stamp tax, withholding-tax obligations on interest (convertible notes) and capital-gains-tax reporting on future transfers.
• Governing law and dispute resolution. Philippine law; arbitration or court jurisdiction.

Model Clause Bank

The following clauses are illustrative only, seek legal review before incorporating them into live transaction documents.

Model Clause 1, SAFE Conversion Trigger

“Upon the closing of a Qualified Financing (defined as an equity financing round yielding aggregate gross proceeds to the Company of at least [amount] Philippine Pesos), the SAFE Amount shall automatically convert into shares of the class and series issued in such Qualified Financing at a price per share equal to the lesser of (a) the price per share paid by the investors in the Qualified Financing multiplied by [discount percentage] and (b) the price per share implied by the Valuation Cap divided by the Company’s fully diluted capitalisation immediately prior to such closing. The Company shall issue the Conversion Shares within fifteen (15) business days of the Qualified Financing closing.”

Model Clause 2, Convertible Note Maturity and Conversion

“Unless earlier converted, the outstanding principal amount of this Note, together with all accrued and unpaid interest, shall be due and payable on [maturity date]. If a Qualified Financing has not occurred by the Maturity Date, the Holder may, at its sole election, either (a) demand repayment in full or (b) convert the outstanding principal and accrued interest into common shares of the Company at a conversion price equal to the price per share implied by the Valuation Cap divided by the Company’s fully diluted capitalisation as of the Maturity Date.”

Model Clause 3, Subscription Agreement Anti-Dilution (Broad-Based Weighted Average)

“If the Company issues additional shares at a price per share lower than the Subscription Price (a ‘Dilutive Issuance’), the Subscription Price shall be adjusted to equal the quotient obtained by dividing (x) the sum of (i) the product of the Subscription Price immediately prior to such Dilutive Issuance multiplied by the number of shares outstanding immediately prior thereto, plus (ii) the aggregate consideration received by the Company for such additional shares, by (y) the total number of shares outstanding immediately after such Dilutive Issuance. This adjustment shall not apply to Exempted Issuances, which shall include shares issued pursuant to employee stock option plans approved by the Board.”

SEC Filing and Submission Step-by-Step (MC No.6 Compliant)

Once the subscription agreement, SAFE or convertible note is drafted and executed, the issuer must navigate the SEC filing process. MC No.6 clarifies the required documentary package, and the steps below reflect the current procedural framework.

Checklist Before Submission

• Board resolution. Certified true copy of the board resolution authorising the issuance, subscription or capital increase.
• Stockholders’ resolution (if increasing authorised capital). Resolution approved by at least two-thirds of the outstanding capital stock, as required by the Revised Corporation Code.
• Amended Articles of Incorporation. Reflecting the new authorised capital stock, signed by a majority of the board and countersigned by the corporate secretary.
• Treasurer’s affidavit. Certifying that at least 25% of the increased capital has been subscribed and at least 25% of the subscription has been paid.
• Notarised subscription agreements. Per MC No.6, the actual subscription contracts, not merely a summary, must be submitted.
• Proof of inward remittance (foreign investors). Bank certificate or credit advice showing the remittance of subscription payments through the Philippine banking system.
• Tax clearance or certificate of no outstanding tax liability. If required by BIR regulations for the transaction type.
• SEC filing fees. Computed based on the increase in authorised capital stock, as prescribed by the SEC fee schedule.

Filing Steps

1. Compile the complete documentary package per the checklist above.
2. Prepare a cover letter addressed to the SEC Company Registration and Monitoring Department, referencing MC No.6 and listing all attachments.
3. Submit the application, either electronically through the SEC’s online filing portal or in hard copy at the SEC main office or satellite offices.
4. Pay the prescribed filing fees and retain the official receipt.
5. Monitor the application status. The SEC typically issues a notice of deficiency within 15 to 30 business days if documents are incomplete. Respond promptly to avoid re-filing.
6. Receive the Certificate of Filing of Amended Articles of Incorporation once the SEC approves the application.

How to Correct or Withdraw Filings

If the SEC issues a notice of deficiency, the issuer must submit corrected documents within the period specified in the notice, usually 30 calendar days. Failure to respond may result in the application being archived. To withdraw a pending application, submit a letter of withdrawal signed by an authorised officer, attaching a board resolution authorising the withdrawal.

Tax and Accounting Treatment: BIR Guidance and Practical Flags

The tax treatment of convertible notes in the Philippines and of SAFEs is driven by how the BIR classifies the instrument, debt or equity, at each stage of its life cycle.

• Convertible notes (pre-conversion). Treated as debt. Interest payments are subject to withholding tax, 20% final withholding tax for domestic holders, and the applicable treaty rate (commonly 10%–15%) for foreign holders. Documentary stamp tax applies on the original issuance of the note.
• Convertible notes (post-conversion). Upon conversion, the note is extinguished and shares are issued. Documentary stamp tax applies on the original issuance of the shares. The conversion itself is generally not a taxable event for income-tax purposes, but any gain on subsequent sale of the shares is subject to capital-gains tax or stock-transaction tax, depending on whether the shares are listed.
• SAFEs. The BIR has not issued specific guidance on SAFEs. Industry observers expect the BIR to treat the SAFE amount as an equity contribution upon conversion, meaning no withholding tax on the initial investment. However, if the SAFE includes any interest or yield component, the BIR may reclassify it as debt, with corresponding withholding obligations.
• Subscription agreements (cash). Documentary stamp tax is imposed on the original issuance of shares at the rate prescribed under the National Internal Revenue Code. No VAT applies to the issuance of shares of stock.
• Financial reporting. Under Philippine Financial Reporting Standards (PFRS, aligned with IFRS), convertible notes must be bifurcated into a debt component and an equity component if the conversion feature meets the definition of an equity instrument. SAFEs are typically classified as financial liabilities until conversion unless they meet strict equity-classification criteria.

Practical Risks, Investor Protections and Negotiation Tips

Beyond compliance, the commercial terms embedded in subscription agreements in the Philippines determine whether a round is founder-friendly, investor-friendly or balanced. Key negotiation points include:

• Information rights. Investors in SAFEs and convertible notes typically negotiate quarterly financial statements, annual audited accounts and prompt notice of material adverse events. Define “material” precisely to avoid disputes.
• Board observation. Lead investors may request a board observer seat as a condition of investment. Clarify whether the observer has access to privileged legal communications and whether the right survives conversion.
• Anti-dilution ratchets. Full-ratchet protection heavily penalises founders in a down round. Broad-based weighted-average adjustments are the market standard and offer a more equitable outcome.
• Pre-emption rights. Give existing investors the right to participate pro rata in future rounds to maintain their ownership percentage. Ensure carve-outs for employee stock option plans and strategic issuances.
• Exit triggers and liquidation preference. Define what constitutes a “liquidity event” (sale of the company, IPO, winding-up) and confirm the order of payment, participating versus non-participating preferred.
• Red-flag clauses to avoid. Uncapped full-ratchet anti-dilution, drag-along rights exercisable by a single minority investor, and overly broad most-favoured-nation provisions that allow one investor to retroactively amend all prior SAFEs.

Quick Checklist and Filing Timeline

Use this printable checklist to track your compliance steps from term sheet to SEC certificate.

• ☐ Select fundraising instrument (SAFE, convertible note or subscription agreement).
• ☐ Confirm whether a securities registration exemption applies, complete private-placement analysis.
• ☐ Draft and execute subscription or investment agreements per the MC No.6 drafting checklist above.
• ☐ Notarise all subscription contracts (apostille or consularise for foreign signatories).
• ☐ Obtain board and stockholder resolutions for any capital increase.
• ☐ Prepare treasurer’s affidavit and proof of payment.
• ☐ Compile SEC filing package (cover letter, amended Articles of Incorporation, all attachments).
• ☐ Pay SEC filing fees.
• ☐ Submit application to the SEC Company Registration and Monitoring Department.
• ☐ File notice of exempt transaction (if relying on private placement exemption).
• ☐ Monitor for SEC deficiency notices, respond within prescribed period.
• ☐ Receive Certificate of Filing of Amended Articles of Incorporation.
• ☐ File tax returns and pay documentary stamp tax through the BIR within the statutory deadline.

Conclusion

SEC MC No.6 has raised the bar for subscription agreements in the Philippines, and by extension, for every SAFE and convertible note that feeds into a capital-increase application. Founders and investors who treat document preparation as an afterthought risk SEC rejection, tax exposure and unenforceable conversion mechanics. The compliance path is clear: understand the legal character of each instrument, run the registration-versus-exemption analysis, draft to the MC No.6 standard, file correctly the first time and get the tax classification right from day one. Early-stage fundraising in the Philippines rewards companies that build compliant structures from the start.

Sources

1. Securities and Exchange Commission (Philippines), SEC Issuances
2. SEC Memorandum Circular No. 6, Series of 2026
3. Official Gazette of the Republic of the Philippines, Revised Corporation Code (R.A. No. 11232)
4. Official Gazette of the Republic of the Philippines, Securities Regulation Code (R.A. No. 8799)
5. Bureau of Internal Revenue (BIR), Official Website
6. Court of Tax Appeals, Decisions
7. Supreme Court of the Philippines, Decisions