Convertible Bond Subscription Agreement Template for England and Wales

A Convertible Bond Subscription Agreement under English and Welsh law is a legally binding document that sets out the terms under which investors subscribe for convertible bonds issued by a company. The agreement details the subscription amount, interest rates, maturity date, conversion mechanisms, and circumstances under which the bonds can be converted into equity shares. It includes key protections for both the issuer and subscribers, ensuring compliance with UK financial services regulations and corporate law requirements.

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What is a Convertible Bond Subscription Agreement?

The Convertible Bond Subscription Agreement is commonly used by companies seeking to raise capital while offering investors the flexibility to convert their investment into equity at a later date. This document, governed by English and Welsh law, is particularly popular among growth companies and scale-ups as it provides a hybrid financing solution that combines elements of debt and equity. The agreement comprehensively addresses subscription terms, conversion rights, security arrangements (if applicable), and compliance with UK regulatory requirements, making it a crucial instrument in corporate financing transactions.

What sections should be included in a Convertible Bond Subscription Agreement?

1. Parties: Identification of the issuer and subscriber(s)

2. Background: Context of the bond issuance and purpose

3. Definitions: Key terms used throughout the agreement

4. Subscription: Terms of subscription, including amount and payment details

5. Bond Terms: Interest rate, maturity date, and repayment terms

6. Conversion Rights: Conditions and mechanics for converting bonds to shares

7. Company Warranties: Representations about company status and authority

8. Subscriber Warranties: Representations about subscriber's status and authority

What sections are optional to include in a Convertible Bond Subscription Agreement?

1. Security: Terms of any security provided for the bonds - include when bonds are secured against assets

2. Transferability: Restrictions on transfer of bonds - include when transfer restrictions are required

3. Tag-Along Rights: Rights of bondholders to participate in sale of company - include when requested by major investors

What schedules should be included in a Convertible Bond Subscription Agreement?

1. Form of Bond Certificate: Template of the physical bond certificate

2. Conversion Notice: Form for exercising conversion rights

3. Company Information: Details of company structure and capitalization

4. Conditions Precedent: List of documents and conditions required before completion

Authors

Alex Denne

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

Jurisdiction

England and Wales

Publisher

Genie AI

Cost

Free to use

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