The Convertible Loan Agreement serves as a critical financing instrument in the Maltese business landscape, particularly for companies seeking growth capital while maintaining flexibility in their capital structure. This document is typically used when a company needs immediate funding but either cannot or prefers not to establish a firm valuation, or when parties want to defer the equity investment decision. The agreement must comply with Maltese law, particularly the Companies Act (Chapter 386) and financial services regulations, while also considering EU regulatory requirements. It details loan terms, conversion mechanisms, trigger events, and provides investor protections while maintaining the company's operational flexibility. The document is especially relevant for startups and scale-ups in Malta's growing technology and financial services sectors, offering a bridge between debt and equity financing.

1. Parties: Identification of the Lender and Borrower (Company), including registration details and registered addresses

2. Background: Recitals explaining the context of the loan and the parties' intention regarding potential conversion

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and interpretation rules

4. The Loan: Key terms of the loan including amount, purpose, and drawdown conditions

5. Interest: Interest rate, calculation method, payment dates, and default interest provisions

6. Repayment: Terms for repayment of the loan, including scheduled payments if any

7. Conversion Rights: Terms and conditions under which the loan can be converted into shares, including conversion price and mechanism

8. Conversion Procedure: Detailed process for executing the conversion, including notices and timing

9. Company's Representations and Warranties: Standard and specific warranties about the company's status, capacity, and shares

10. Lender's Representations and Warranties: Warranties about the lender's capacity and authority

11. Company's Undertakings: Ongoing obligations of the company during the loan period

12. Events of Default: Circumstances constituting default and consequences

13. Taxes and Expenses: Responsibility for taxes, stamp duty, and other costs

14. Notices: Process and requirements for formal communications between parties

15. Assignment and Transfer: Rights and restrictions regarding transfer of the loan or conversion rights

16. Confidentiality: Obligations regarding confidential information

17. Governing Law and Jurisdiction: Specification of Maltese law and jurisdiction

18. Execution: Signature blocks and execution formalities