Convertible Bond Agreement Template for United Arab Emirates

The Convertible Bond Agreement is a crucial document used when companies in the UAE seek to raise capital while offering investors the potential upside of equity participation. This sophisticated financing instrument, governed by UAE law, combines debt and potential equity features, making it attractive for growth-stage companies and investors alike. The agreement must comply with UAE Federal Law No. 32 of 2021 on Commercial Companies, relevant SCA regulations, and potentially Shariah principles if structured as Islamic securities. It typically includes detailed provisions on conversion mechanics, investor protections, company obligations, and various technical aspects such as anti-dilution provisions and adjustment mechanisms. The document is particularly relevant in the UAE's developing venture capital and growth equity markets, where companies seek alternative financing structures that offer flexibility and alignment with investor interests.

1. Parties: Identification of the Issuer (Company) and the Bondholder(s)

2. Background: Context of the bond issuance, company status, and purpose of the financing

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

4. Bond Issuance: Details of the bonds being issued, including principal amount, issue date, and maturity

5. Interest: Interest rate, calculation methods, payment dates and payment mechanics

6. Conversion Rights: Terms and conditions under which bonds can be converted into shares, including conversion price and ratio

7. Conversion Mechanics: Detailed procedures for exercising conversion rights, including notices and timing

8. Company Covenants: Obligations of the company regarding financial maintenance, information provision, and corporate actions

9. Bondholder Rights: Rights of bondholders including voting rights and participation in corporate actions

10. Events of Default: Circumstances constituting default and consequences thereof

11. Security: Any security or guarantees provided for the bonds

12. Representations and Warranties: Standard declarations by the company about its status, capacity, and compliance

13. Transferability: Terms governing the transfer of bonds to other parties

14. Meetings and Collective Action: Procedures for bondholder meetings and collective decision-making

15. Notices: Communication procedures between parties

16. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes

17. General Provisions: Standard boilerplate clauses including amendments, severability, and counterparts