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Convertible Notes Agreement Template for Singapore

A Convertible Notes Agreement under Singapore law is a legally binding document that establishes the terms under which investors provide debt financing to a company, with the option to convert this debt into equity shares under specified conditions. The agreement is governed by Singapore's Companies Act and Securities and Futures Act, incorporating specific provisions for interest rates, conversion mechanisms, and investor protections in accordance with Singapore's regulatory framework.

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What is a Convertible Notes Agreement?

The Convertible Notes Agreement is commonly used by Singapore-based companies, particularly startups and growth-stage businesses, seeking to raise capital without immediate equity dilution. This document type combines debt financing features with potential equity participation, offering investors the security of debt with upside potential through conversion rights. The agreement must comply with Singapore's regulatory requirements, including the Companies Act and Securities and Futures Act, and typically includes detailed terms on interest rates, maturity dates, conversion triggers, and valuation mechanisms. It serves as a bridge financing tool, often used between equity funding rounds or when traditional equity valuation is challenging.

What sections should be included in a Convertible Notes Agreement?

1. Parties: Identifies the issuer and noteholder(s)

2. Background: Explains context and purpose of the convertible note issuance

3. Definitions: Key terms used throughout the agreement including conversion terms, maturity date, and interest rate

4. Subscription and Issue: Terms of note subscription and issuance, including principal amount and payment terms

5. Interest: Interest rate, calculation method, and payment terms in compliance with Singapore regulations

6. Conversion Rights: Terms and conditions for converting notes to equity, including conversion price and mechanisms

7. Maturity and Repayment: Maturity date and repayment terms, including early repayment provisions

8. Events of Default: Circumstances constituting default and consequences thereof

9. Representations and Warranties: Statements of fact by parties, including compliance with Singapore law

What sections are optional to include in a Convertible Notes Agreement?

1. Security: Terms of any security arrangements if the notes are secured against company assets

2. Tag-Along Rights: Rights of noteholders in case of company sale or transfer of shares

3. Information Rights: Rights to company information, financial statements and reporting obligations

4. Board Observer Rights: Rights of noteholders to appoint board observers or attend board meetings

5. Foreign Investment Provisions: Specific provisions for foreign investors including compliance with Singapore foreign investment laws

What schedules should be included in a Convertible Notes Agreement?

1. Note Certificate Form: Template of the physical note certificate to be issued

2. Conversion Notice Form: Template form for noteholders to exercise their conversion rights

3. Capitalization Table: Current and post-conversion capital structure of the company

4. Company Information: Key corporate details, structure, and relevant company registration information

5. Calculation of Interest: Detailed methodology for interest calculation and payment schedule

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok成人版 | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

Singapore

Cost

Free to use

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