An example of the agreement can be downloaded from the base. In short, converted credit and converted capital are the most traditional legal instruments used by startups to raise funds. As we have said in this paper, there are drawbacks and disadvantages to both convertible loans and convertible equity, which is why start-ups need to carefully examine these agreements in order to avoid the negative consequences. The conversion of credit to equity by a private company must also have an agreement to avoid future consequences. The consequences of a non-agreement can lead to conflicts between the two parties if the business recovers. In the debt-to-equity conversion agreement, debt securities contracted by the borrower are exchanged for equity or shares by the signing of a contract by both parties. The purpose of the debt conversion agreement could include the following situations: a proper innovation agreement between TDCH III ApS and CaymanCo with respect to the new equity credit agreement and its acquisition by CaymanCo, in accordance with the “Structure Memorandum”. The difference between convertible bond and convertible capital is essentially the presence of a “loan.” If a converted credit contract is signed between a start-up and an investor, this means that the start-up is required to repay the amount agreed with its interest to the investor if the company cannot cope with the following cycles, so that the loans are not converted into shares. If the start-up works well and moves on to the next round, the loan will be converted into shares and things are in order. Given the rapid financial needs of startups, convertible loan contracts are useful because they reduce documentation trading time because the convertible credit contract is a simple and simple document. In addition, due to the signing of a converted credit agreement, the investor will only make the investor one of the shareholders when the loan is converted into equity in the next cycle, which is also an advantage for start-ups. If we consider a convert contract, we will see in most of them many common conditions as follows: The development of a debt-to-equity conversion contract includes the following steps: In this agreement, the loan must be withdrawn in one day, is unsecured and repayable and at the discretion of the company (from the date of repayment) repayable and convertible.
Since the loan can be repaid or converted at the company`s choice, this converted loan is virtually non-capital and business-friendly – depending on the interest rate and/or the conversion price of the shares. This loan agreement does not include lender-friendly provisions, which would normally be included in loan contracts that document independent third-party loans. (b) Debt may be converted, at the investor`s choice, into one of the following events (a “potential transformation event” each) and under the terms set out in this section 9: (i) where the company has a private placement of the company`s holdings (these securities or securities are called “significant financing guarantees”) for a gross proceeds of at least $500,000 (which do not include debt). (significant funding)) (significant funding) then, unless the investor lets the company know that he does not want to convert the debt (as indicated in subsection 9 (d) ], at the same time as the completion of this significant financing, the entire debt is automatically and simultaneously converted into significant financing documents at a price corresponding to the current conversion price minus the discount and, in another way, under the same conditions as the investors under the significant financing.