Convertible Note Purchase Agreement Template for Switzerland

A Convertible Note Purchase Agreement is a sophisticated financing instrument that allows you to raise capital through debt securities that automatically convert into equity under specific conditions. Under Swiss law, this agreement provides a flexible funding mechanism that bridges the gap between immediate capital needs and future equity financing rounds, making it particularly valuable for startups and growth-stage companies.

When do you need this document?

You'll need this agreement when your company requires immediate funding but equity valuation is challenging to determine or when you want to defer valuation discussions. It's essential for bridge financing before Series A rounds, when expanding operations require quick capital injection, or when strategic investors want to participate in future growth at predetermined terms. Swiss companies often use convertible notes during pre-revenue stages, market expansion phases, or when preparing for larger institutional funding rounds where current valuation metrics may not reflect future potential.

Key legal considerations

The agreement must clearly define conversion triggers, including automatic conversion upon qualified financing events, optional conversion rights, and maturity conversion terms. Interest rate provisions, whether simple or compound, and payment schedules require careful structuring to comply with Swiss commercial law. Discount rates and valuation caps protecting early investors must be balanced against company dilution concerns. Default provisions, acceleration clauses, and investor protection rights including information access and approval rights for major corporate decisions need precise drafting. Anti-dilution protections, particularly in subsequent financing rounds, and transfer restrictions on the notes require careful consideration to maintain compliance while protecting all parties' interests.

Legal requirements in Switzerland

Under the Swiss Code of Obligations, convertible notes must comply with debt instrument requirements and corporate law provisions governing equity conversion. The Swiss Financial Market Infrastructure Act (FMIA) applies when notes may be traded or when multiple investors participate, potentially triggering securities regulations. FinSA requirements may apply for prospectus or information document obligations depending on the offering structure and investor types. Corporate authorization through board resolutions and, where required, shareholder approval must follow Swiss corporate law procedures. Notarization requirements apply for certain equity conversion processes, and registration obligations may arise upon conversion. The agreement must address Swiss tax implications, including withholding tax on interest payments and stamp duty considerations, while ensuring compliance with banking regulations if applicable to the transaction structure.