Convertible Loan Agreement for Singapore

Convertible Loan Agreement Template for Singapore

A Singapore law-governed agreement that establishes the terms of a loan which can be converted into equity shares of the borrowing company under specified conditions. The document incorporates specific provisions required under Singapore's Companies Act and Securities and Futures Act, including conversion mechanics, interest calculations, and regulatory compliance requirements. It provides flexibility for early-stage financing while offering lenders potential equity upside.

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What is a Convertible Loan Agreement?

The Convertible Loan Agreement is commonly used in Singapore's startup ecosystem as a bridge financing instrument. It allows companies to secure immediate funding while deferring equity valuation discussions to a later date. Under Singapore law, these agreements must comply with specific regulatory requirements, including those set by the Monetary Authority of Singapore and the Securities and Futures Act. The document typically includes detailed provisions on conversion triggers, interest rates, repayment terms, and shareholder rights upon conversion.

What sections should be included in a Convertible Loan Agreement?

1. Parties: Identification of lender and borrower with full legal details

2. Background: Context of the loan and purpose

3. Definitions: Key terms used throughout the agreement

4. Loan Amount and Disbursement: Specification of loan amount and disbursement terms

5. Interest: Interest rate and calculation method

6. Conversion Rights: Terms and conditions for converting loan to equity

7. Repayment Terms: Schedule and methods of repayment

8. Events of Default: Circumstances constituting default

9. Representations and Warranties: Standard assurances from both parties

What sections are optional to include in a Convertible Loan Agreement?

1. Security: Details of any collateral - include when loan is secured

2. Information Rights: Lender's rights to company information - include for sophisticated investors

3. Board Observer Rights: Rights to attend board meetings - include for strategic investors

What schedules should be included in a Convertible Loan Agreement?

1. Conversion Mechanics: Detailed procedures for conversion process

2. Repayment Schedule: Detailed payment timeline

3. Form of Conversion Notice: Template for exercising conversion rights

4. Cap Table: Current and post-conversion shareholding structure

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

Singapore

Publisher

Genie AI

Cost

Free to use

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