Convertible Note Purchase Agreement Template for Ireland

A Convertible Note Purchase Agreement is a sophisticated financing instrument that allows your Irish company to raise capital without immediately determining company valuation. This document creates a debt instrument that converts into equity shares under specific circumstances, providing flexibility for both your company and investors during early-stage fundraising.

When do you need this document?

You'll need this agreement when your startup requires bridge financing between funding rounds, particularly when you're not ready for a full equity valuation. It's essential when existing investors want to provide additional capital before a Series A round, or when you're raising funds from angel investors who prefer convertible instruments. This document is also crucial when your company needs working capital quickly without the lengthy process of equity fundraising, or when you want to reward early investors with conversion discounts and other preferential terms.

Key legal considerations

The conversion mechanism is the most critical aspect of your agreement, defining trigger events such as qualified financing rounds, company sale, or maturity dates. You must carefully structure the conversion price, including any discount rates or valuation caps that benefit note holders. Interest accrual terms need clear definition, specifying whether interest compounds and how it's treated upon conversion. Your agreement should address anti-dilution provisions protecting investors from future down rounds, and include appropriate investor rights such as information access and participation in future rounds. Consider including automatic conversion clauses for qualifying events and negotiating maturity terms that align with your anticipated fundraising timeline.

Legal requirements in Ireland

Under the Companies Act 2014, your convertible note structure must comply with Irish corporate governance requirements and proper authorization procedures. You must ensure your company's articles of association permit the issuance of convertible instruments and that director resolutions properly authorize the transaction. The agreement must address Irish stamp duty implications, particularly regarding conversion events that may trigger duty obligations. Your document should comply with the Investment Intermediaries Act 1995 if involving regulated investment firms, and consider MiFID II regulations under the European Union Markets in Financial Instruments Regulations 2017 for sophisticated investor classifications. Tax considerations under the Taxes Consolidation Act 1997 require careful structuring, particularly regarding capital gains treatment upon conversion and any applicable reliefs for qualifying investments. Ensure proper disclosure compliance if your company has existing shareholders or is subject to securities regulations.