Document background
The Convertible Loan Agreement is a sophisticated financing instrument commonly used in the Austrian market for early-stage and growth company financing. It provides a mechanism for investors to extend funds to companies while maintaining the option to convert their investment into equity at a later stage, typically during a future funding round or upon specific trigger events. The document is particularly valuable when a company's valuation is unclear or when parties wish to defer valuation discussions. This agreement type must comply with Austrian corporate law requirements, particularly regarding share capital increases and corporate approvals. It includes detailed provisions on conversion mechanics, price calculations, and shareholder rights post-conversion, while also addressing Austrian-specific requirements regarding interest rate regulations and corporate governance. The agreement is structured to protect both the lender's investment and the company's operational flexibility, making it a preferred instrument for bridge financing or pre-series A investments in the Austrian market.
