Convertible Agreement Generator for Australia

A Convertible Agreement lets startup investors provide funding now while deciding the exact investment terms later. It works like an IOU that converts into company shares when specific events happen, such as a major funding round or company sale. Australian startups often use these agreements to secure early-stage capital without having to set a firm company valuation right away.

These agreements typically include key terms like the conversion discount (usually 10-30% off future share prices), a valuation cap to protect investor interests, and trigger events that prompt conversion. Under Australian securities law, they're classified as financial products and must comply with Corporations Act requirements, making them different from standard loans or straight equity investments.

Convertible Agreements work best when your startup needs quick capital but setting a precise company valuation proves challenging. They're particularly valuable during seed rounds, bridge financing, or when you're close to a larger funding event. Australian entrepreneurs often turn to these agreements when traditional equity rounds would be too expensive or time-consuming.

The timing makes sense when investors want to support your growth but prefer to wait for a proper valuation, typically during your next major funding round. These agreements also help when you need to close deals quickly, as they require less complex documentation than full equity investments under Australian securities regulations.

• Convertible Notes Agreement: Basic form offering debt that converts to equity, commonly used by Australian startups for seed funding.
• Convertible Bond Agreement: More formal structure with fixed interest rates and conversion terms, suited for larger investments.
• Convertible Note Subscription Agreement: Detailed version covering investor rights and subscription terms.
• Debt To Equity Conversion Agreement: Specifically for converting existing debt into shares.
• Loan Conversion To Equity Agreement: Simpler format focused on converting standard loans to equity stakes.

• Early-stage Startups: Usually the companies seeking funding, responsible for offering the convertible securities and meeting disclosure requirements under ASIC guidelines.
• Angel Investors: Individual investors providing seed capital, often preferring these agreements for their flexibility and upside potential.
• Corporate Lawyers: Draft and review agreements to ensure compliance with Australian securities law and protect client interests.
• Venture Capital Firms: Use these instruments for bridge financing or initial investments before larger funding rounds.
• Company Directors: Must approve and execute agreements, ensuring proper corporate governance and shareholder protection.

• Company Details: Gather ACN/ABN, registered address, and current shareholding structure.
• Investment Terms: Define investment amount, valuation cap, discount rate, and interest rate (if applicable).
• Conversion Triggers: Specify qualifying funding rounds, exit events, or maturity dates that activate conversion.
• Investor Information: Collect full legal names, addresses, and investment entity details for ASIC compliance.
• Security Rights: Detail voting rights, information rights, and anti-dilution provisions.
• Document Generation: Use our platform to create a legally compliant agreement that includes all required elements under Australian law.

• Parties and Definitions: Legal names, ACN/ABN details, and clear definitions of key terms used throughout.
• Investment Terms: Principal amount, interest rate, maturity date, and valuation cap specifics.
• Conversion Mechanics: Detailed triggers, calculation methods, and share class descriptions.
• Security Provisions: Rights ranking, security status, and PPSA requirements if applicable.
• Default Events: Clear consequences and remedies for breach scenarios.
• Governing Law: Explicit statement of Australian jurisdiction and applicable state law.
• Execution Block: Proper signing requirements under Corporations Act 2001.

While Convertible Agreements transform debt into equity based on future events, a Call Option Agreement gives the right to purchase shares at a predetermined price within a specific timeframe. Though both involve potential share acquisition, they serve different strategic purposes in Australian business.

• Investment Structure: Convertible Agreements provide immediate funding with automatic conversion triggers, while Call Options require active exercise and additional payment when executing the option.
• Risk Profile: Convertible Agreements offer more protection to investors through debt-like features, whereas Call Options are purely speculative rights.
• Timing Mechanics: Conversion happens automatically upon triggering events in Convertible Agreements, but Call Options require deliberate action by the holder before expiry.
• Tax Treatment: Under Australian tax law, Convertible Agreements are typically treated as debt until conversion, while Call Options may trigger CGT events at different points.