Foreign Equity or JV Partnerships – Crown Agarwood Group

US$10M Foreign Equity / JV Partnership Structure

1. Recommended Master Structure

                    FOREIGN STRATEGIC INVESTOR
                           US$10M
                              │
                    Foreign Investment HoldCo
                              │
                    60%–80% Economic Interest*
                              │
                              ▼
             ┌─────────────────────────────────┐
             │ PHILIPPINE AGARWOOD HOLDCO      │
             │        / MASTER JV              │
             └─────────────────────────────────┘
                    ▲                 ▲
                    │                 │
             20%–40%*          Strategic/local
             Philippine        partner contribution
             ownership
                    │
       ┌────────────┼──────────────┐
       ▼            ▼              ▼
 Plantation      Extraction     Downstream &
   SPV             SPV          Luxury Brand SPV
       │            │              │
       ▼            ▼              ▼
 Aquilaria       Oud/Oil       Perfume, incense,
 plantations     processing    cosmetics, etc.
       │
       ▼
  FARM MANAGEMENT /
 CONTRACT FARMING

*The actual percentage must be determined after a legal review of the specific activities, land arrangements, licenses, and the current Foreign Investment Negative List.

The Foreign Investments Act generally permits up to 100% foreign ownership unless the Constitution, existing law, or the Foreign Investment Negative List restricts the activity.

2. The Four-Layer Corporate Architecture

Layer 1 — Foreign Investment HoldCo

The foreign investor establishes or uses an offshore investment vehicle.

Its functions:

Invest US$10M
Hold shares in the Philippine JV
Protect investment rights
Receive dividends
Fund subsequent capital calls
Hold international commercialization rights where appropriate

It should not automatically own Philippine plantation land.

Layer 2 — Philippine Master JV / HoldCo

This becomes the principal Philippine investment platform.

Example:

Aetherial Agarwood Philippines Holdings, Inc.

Illustrative capitalization:

Shareholder	Equity
Foreign Strategic Investor	70%
Philippine Strategic Partner	30%
Total	100%

The 70/30 split is an illustrative commercial structure, not a conclusion that 70% foreign ownership is legally available for every activity.

The SEC expressly provides registration pathways for corporations with foreign equity, including corporations with more than 40% foreign equity.

3. What Each Partner Contributes

Foreign Investor
The foreign investor contributes primarily:

Financial capital
US$10,000,000

Technology

Potentially:

extraction technology
quality-control systems
analytical technology
proprietary processing know-how
manufacturing technology
ERP/traceability systems

International market access

Especially:

GCC
UAE
Saudi Arabia
Qatar
Kuwait
Japan
EU
Singapore
Hong Kong
luxury fragrance distributors

Brand development

Including:

luxury oud brand
international packaging
product development
international marketing
e-commerce infrastructure

Management expertise

investment management
international sales
financial controls
strategic procurement
export development

4. Philippine Partner Contribution

The Philippine partner can contribute eligible assets and capabilities such as:

local operating expertise
plantation development capability
farm-management systems
nursery operations
local supplier network
farmer/landholder relationships
Philippine workforce
government/LGU coordination
local logistics
Philippine market development
regulatory implementation

Critical distinction

Land should not simply be treated as an ordinary equity contribution without legal analysis.

The Philippine Constitution restricts ownership of private land to persons/entities qualified to acquire public-domain land, and the current BOI guide identifies private-land ownership as subject to a 40% foreign-equity ceiling. (Lawphil)

Therefore, the preferred structure is often:

Philippine landowner / qualified Philippine entity
↓
long-term lawful lease / farm-use arrangement
↓
Agarwood Plantation SPV

rather than:

Foreign investor → ownership of plantation land

5. US$10M Capitalization

Investment Component	Amount
Plantation development	US$3.00M
Nursery & planting material	US$0.75M
Induction/R&D platform	US$0.75M
Extraction facility	US$2.00M
Downstream manufacturing	US$1.00M
Luxury oud/fragrance brand	US$0.75M
Working capital	US$1.00M
Regulatory, certification & laboratory	US$0.25M
Contingency	US$0.50M
TOTAL	US$10.00M

I would not release the entire US$10M on Day 1.

Instead, use staged capital calls.

6. Capital Deployment Schedule

Tranche 1 — Establishment

US$1.5M

Used for:

incorporation
land/site due diligence
nursery
initial plantation
feasibility
engineering
permits
laboratory work
management team

Tranche 2 — Plantation Expansion

US$2.5M

Triggered by:

secured plantation sites
validated planting program
operational farm-management system
satisfactory survival rates
regulatory compliance

Tranche 3 — Extraction

US$2.5M

Triggered by:

adequate raw-material pipeline
completed facility design
equipment procurement
regulatory approvals

Tranche 4 — Downstream Manufacturing

US$1.5M

For:

perfume
incense
cosmetics
hydrosol
extracts
specialty products

Tranche 5 — International Commercialization

US$1.0M

For:

GCC launch
international distributors
luxury branding
certifications
trade shows
e-commerce

Reserve

US$1.0M

Held for:

working capital
crop risk
equipment
expansion
strategic opportunities

7. Separate the Plantation From the Manufacturing Business

This is one of the most important structural decisions.

SPV 1 — Agarwood Plantation Co.

Purpose:

nursery
plantation establishment
tree management
induction
harvesting
farm-level processing

Potential ownership:

Philippine JV / qualified Philippine entity + foreign participation subject to applicable restrictions.

Where public forestland or forest resources are involved, the legal regime is substantially different. DENR’s current guidance for instruments such as FLAg requires at least 60% Filipino ownership of the participating juridical entity. (Forestry DENR)

Therefore, private agricultural plantation land and public forestland should not be treated as the same investment category.

8. SPV 2 — Advanced Extraction Philippines

This company owns/operates:

hydrodistillation
solvent extraction where appropriate
supercritical CO₂ extraction
fractionation
purification
analytical laboratory
oil blending
extract production

This could potentially support a higher foreign ownership percentage because manufacturing/export activity is generally more open to foreign investment, subject to the actual activity and applicable restrictions. The BOI states that export enterprises generally have no foreign-ownership restriction, while restricted activities remain subject to the Negative List and other laws. (Bureau of Internal Revenue)

9. SPV 3 — Luxury Oud & Downstream Products

This is the high-margin company.

Potential portfolio:

Oud

premium oud oil
aged oud
distilled oud
oud absolute
oud extracts

Fragrance

Luxury EDP
extrait
niche perfume
solid perfume
perfume oils

Home fragrance

oud incense
oud candles
bakhoor
room fragrance

Personal care

soaps
lotions
skincare
hair products

Wellness

hydrosol
botanical extracts
other legally compliant botanical products

This company can ultimately become the international-facing commercial engine.

10. Recommended Governance

For a 70/30 illustrative JV:

Board — 7 members

Appointment	Seats
Foreign investor	4
Philippine partner	2
Independent director	1
Total	7

But ordinary voting control should not mean unilateral control over every strategic decision.

11. Reserved Matters

Certain decisions should require a supermajority, for example 75%.

These include:

issuing new shares
changing ownership
selling major assets
selling IP
acquiring another company
borrowing above an agreed threshold
related-party transactions
changing the business model
entering a new regulated business
declaring extraordinary dividends
liquidation
merger
sale of the company

This protects the minority Philippine partner while giving the foreign investor meaningful control.

12. Management Structure

Chief Executive Officer

Selected jointly.

Chief Operating Officer

Preferably Philippine-based.

Responsible for:

farms
extraction
manufacturing
logistics

Chief Financial Officer

Investor-approved.

Responsible for:

financial controls
budgets
capital calls
reporting
audit
investor reporting

Chief Technology Officer

Responsible for:

extraction technology
induction R&D
laboratory
process optimization

Chief Commercial Officer

Responsible for:

GCC
EU
Japan
luxury brand
distributors
international sales

13. Profit Distribution

I recommend not using a simple “70% investor / 30% partner of every peso of revenue” model.

Instead:

Revenue
↓
Operating expenses
↓
Taxes
↓
Debt service
↓
Maintenance reserve
↓
Working-capital reserve
↓
Reinvestment reserve
↓
Distributable profit
↓
Dividends according to shareholding

This prevents the company from extracting cash before it has enough capital to maintain the plantations and processing operation.

14. Investor Preferred Return

For a sophisticated US$10M investor, an additional mechanism can be considered.

Example:

Phase 1

Investor receives ordinary dividends according to equity ownership.

Phase 2

Once distributable cash exceeds defined thresholds:

Preferred distribution to investor until an agreed preferred return is achieved.

Phase 3

Remaining profits:

70/30 ordinary equity split.

This can make the proposal considerably more attractive to institutional investors without necessarily giving the investor unlimited ownership.

The exact preferred-return mechanics should be drafted by Philippine counsel and tax advisers.

15. Investor Protection Mechanisms

The JV agreement should address:

Anti-dilution

The foreign investor receives pre-emptive rights in new issuances.

Tag-along

If the Philippine partner sells to a third party, the foreign investor can participate proportionally.

Drag-along

If a qualified third-party acquisition offer is accepted under agreed conditions, minority shareholders can be required to participate.

Right of first refusal

Existing shareholders receive the first opportunity to acquire shares offered for sale.

Deadlock mechanism

For example:

Management negotiation → Board mediation → independent mediator → arbitration/buy-sell mechanism.

Information rights

Monthly:

production
sales
cash
inventory
plantation status

Quarterly:

financial statements
KPI report
capital expenditure

Annually:

audited financial statements
independent valuation
plantation valuation

16. Plantation-Specific Investor Protection

This is especially important for agarwood.

The investor should receive:

Tree registry

Every plantation block receives:

GPS location
planting date
species
provenance
tree count
health status
induction history
harvest status

Digital traceability

Seed/Nursery
      ↓
Planting
      ↓
Tree ID
      ↓
Farm Block
      ↓
Induction
      ↓
Resin Development
      ↓
Harvest
      ↓
Extraction Batch
      ↓
Oil/Extract Lot
      ↓
Finished Product
      ↓
Customer

This creates a powerful “Tree-to-Oud™” traceability platform.

17. Technology & IP Structure

Do not automatically transfer all foreign technology into the Philippine JV.

Instead:

Foreign IP Owner

↓

Technology License Agreement

↓

Philippine JV

The license can cover:

patents
proprietary processes
formulations
software
manufacturing know-how
analytical methods
trademarks

The Philippine company pays an agreed:

royalty / technology fee / technical-service fee

subject to Philippine tax, transfer-pricing, and related-party requirements.

This allows the foreign investor to retain the underlying technology while giving the Philippine JV sufficient rights to operate.

18. Brand Structure

I recommend separating the luxury brand from the plantation.

For example:

Foreign Brand/IP Company
↓
licenses brand
↓
Philippine Manufacturing Company
↓
produces
↓
International Distribution Company
↓
sells globally.

This prevents a problem in which a dispute over the plantation company unintentionally freezes the international luxury brand.

19. Foreign Investor Exit

A US$10M investment should have a clearly defined exit.

Possible exits:

Exit A — Strategic acquisition
Sell the investor’s stake to:

fragrance company
cosmetics company
Middle Eastern oud company
private-equity fund
family office
strategic investor

Exit B — JV buyout
Philippine partner buys foreign investor’s stake using an agreed valuation formula.

Exit C — Third-party sale
Sell the entire company.

Exit D — Partial secondary
Investor sells 20–30% while retaining a strategic stake.

Exit E — IPO
Long-term possibility if the platform becomes sufficiently large.

20. Illustrative Investor Economics

Suppose the project eventually produces:

US$5M annual EBITDA

and the agreed valuation multiple is:

10× EBITDA

Then:

Enterprise value = US$50M

If the investor owns 70%:

Investor’s equity value ≈ US$35M

before considering net debt, preferred rights, taxes, transaction costs and other adjustments.

This is the kind of capital-growth story that makes the project more attractive than simply selling raw agarwood.

21. The Investment Thesis

The investor is therefore not investing merely in trees.

They are investing in:

A vertically integrated Philippine agarwood value chain.

GENETICS
   ↓
NURSERY
   ↓
PLANTATION
   ↓
INDUCTION
   ↓
RESIN DEVELOPMENT
   ↓
HARVEST
   ↓
EXTRACTION
   ↓
FRACTIONATION
   ↓
FULL-SPECTRUM OIL
   ↓
LUXURY OUD
   ↓
PERFUME
   ↓
COSMETICS
   ↓
HOME FRAGRANCE
   ↓
GLOBAL BRAND

That vertical integration is potentially where the greatest value creation occurs.

22. Recommended Ownership Architecture

My preferred commercial model would be:

Entity	Foreign Investor	Philippine Partner	Purpose
Master JV HoldCo	70%*	30%*	Strategic platform
Plantation SPV	Subject to legal structure	Majority/qualified ownership where required	Trees/farms
Extraction SPV	Up to 70–100%*	0–30%*	Extraction
Manufacturing SPV	Up to 70–100%*	0–30%*	Finished products
International Brand/IP Co.	Potentially 100%	Contractual participation	Global brand
International Distribution Co.	Potentially 100%	Commercial agreement	Export/global sales

*Subject to activity-specific Philippine law.

This separation is important because the current BOI guidance distinguishes generally open foreign investment from activities restricted by the Constitution, special laws, and the Foreign Investment Negative List. (Bureau of Internal Revenue)

23. Compliance Architecture

The project should conduct a legal workstream before signing the definitive JV agreement covering:

Foreign Investment Act / current Negative List
SEC registration
Philippine nationality requirements
Land ownership/lease
Agrarian-reform issues where applicable
DENR forestry requirements
Environmental compliance
Tree/forest-product documentation
CITES requirements where applicable
Export requirements
Customs
BIR/tax
Transfer pricing
Technology licensing
Intellectual property
Employment
LGU permits
Investment incentives

SEC currently provides registration mechanisms for domestic corporations with foreign equity and for foreign corporations doing business in the Philippines. (SEC Appointment System)

For forestry-related operations, DENR requirements can include corporate documents, capitalization/financial capability, maps, LGU endorsements and specific permits depending on the activity. (Forestry DENR)

24. The Investment Agreement Package

For a professional US$10M investor presentation, I would create eight principal documents:

1. Term Sheet

Defines:

US$10M investment
valuation
equity
funding schedule
governance

2. Shareholders’ Agreement

Defines:

voting
reserved matters
dividends
transfer
deadlock
exit

3. Subscription Agreement

Defines:

foreign investor’s purchase of shares
payment
conditions precedent

4. JV Agreement

Defines:

partner responsibilities
contributions
operations
management

5. Technology License Agreement

Defines:

IP
technology
royalties
exclusivity
territory

6. Plantation/Farm Management Agreement

Defines:

planting
maintenance
induction
harvesting
traceability
farmer participation

7. Offtake Agreement

Potentially establishes minimum purchase commitments for:

agarwood
chips
oil
extracts

8. Management Services Agreement

Defines the services provided by the platform’s management company.

25. Recommended Deal Structure

For your US$10M Agarwood Investment Platform, my preferred structure is therefore:

Foreign Strategic Investor → Philippine Master JV → Separate Plantation, Extraction and Manufacturing SPVs → International Luxury Oud/Brand Platform

with:

US$10M staged investment

70/30 illustrative Master JV equity

minority-protection provisions
technology licensing
tree-to-product traceability
international offtake
defined investor exit
separate treatment of land/forest rights

This is substantially more investable than a simple “foreign investor buys 70% of an agarwood plantation” proposal.

Critical legal qualification

One particularly important issue is not to assume that a plantation company can freely acquire or hold every type of land or forest resource simply because the investment company has foreign capital. The Constitution and current BOI guidance impose specific restrictions on private land and natural resources, while DENR instruments can have their own Filipino-ownership requirements. (Lawphil)

For that reason, I would make land tenure and plantation rights a separate legal workstream before finalizing the 70/30 capitalization.

Next logical document: a US$10M Foreign Investor JV Term Sheet & Shareholders’ Agreement framework, with the actual 70/30 cap table, US$10M capital calls, preferred return, board seats, reserved matters, dividend waterfall, anti-dilution, deadlock, and exit/buyout formulas.

Foreign Equity vs. JV Partnership

Structure	Foreign Investor Role	Philippine Partner Role	Best Use
Foreign Equity Investment	Provides capital and receives shares	Provides local company/platform and operations	Extraction, processing, brand, export
Equity JV	Capital + strategic expertise	Land access, operations, local network	Agarwood plantation + processing
Contract JV	Funds a defined project	Operates project	Plantation development
Musharakah JV	Capital contribution	Capital/assets/operations contribution	Shariah-compatible joint venture
Project SPV	Invests into dedicated project company	Contributes assets/rights/management	US$10M institutional investment
Co-managed JV	Capital, technology, international market	Philippine execution and farm management	Turnkey agarwood platform

Recommended structure for the Agarwood Platform

A strong model would be a Philippine project SPV + foreign equity/JV partnership:

Foreign Investor
↓
US$10M Capital
↓
Philippine Agarwood Project SPV
↙︎ ↓ ↘︎
Plantations — Extraction Facility — Luxury Oud/Downstream Products
↓
International Sales & Export

The foreign investor could receive:

Equity ownership in the SPV
Preferred economic rights, where legally appropriate
Profit/dividend participation
Board representation
Defined exit rights
Participation in international commercialization
Potential rights linked to additional project phases

Possible US$10M allocation

Component	Indicative Allocation
Agarwood plantations / farm development	US$3.0M
Nursery & planting material	US$0.75M
Biological/induction technology	US$0.75M
Extraction facility	US$2.0M
Downstream product manufacturing	US$1.0M
Luxury oud/fragrance brand	US$0.75M
Working capital	US$1.0M
R&D, certification & regulatory	US$0.25M
Contingency	US$0.50M
Total	US$10.0M

Three investor partnership tiers

Tier 1 — Strategic Equity Investor
Foreign investor provides most/all of the financial capital and receives equity in the Philippine operating company.

Tier 2 — Joint-Venture Investor
Foreign investor contributes cash/technology/market access while the Philippine partner contributes eligible assets, local operations, management, plantation access, or other permitted contributions.

Tier 3 — Project-Level Investor
Investor participates only in a defined plantation, extraction facility, or downstream project through a separate SPV. This can make the investment easier to ring-fence.

Important Philippine legal point

The optimal ownership percentage cannot be selected purely on commercial grounds. Philippine foreign-investment rules, the nature of the business, land ownership/lease arrangements, constitutional restrictions, applicable nationality requirements, forestry/environmental regulations, and the Foreign Investments Act need to be reviewed before setting the cap table.

For the agarwood project, I would therefore separate:

Land/plantation rights → operating company → extraction/manufacturing → IP/technology → international brand/export company

rather than automatically placing everything into one corporation.