Loan Conversion Agreement Template for Germany

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Key Requirements PROMPT example:

Loan Conversion Agreement

"I need a Loan Conversion Agreement under German law to convert our existing €2 million business loan from ABC Bank into preferred shares, with the conversion to take effect from March 1, 2025."

Document background
A Loan Conversion Agreement becomes necessary when parties wish to transform an existing loan obligation into a different form of financial instrument or modified loan terms under German law. This document is typically used in scenarios such as debt-to-equity conversions, loan restructuring, or when modifying fundamental terms of an existing loan agreement. The agreement must comply with German banking regulations (KWG), civil code requirements (BGB), and financial services laws. It details the conversion mechanics, valuation methods, timing, and post-conversion rights and obligations. Given the complexity of German financial regulations, the document requires careful consideration of documentation requirements, regulatory approvals, and proper execution procedures to ensure enforceability.
Suggested Sections

1. Parties: Identification of the lender and borrower, including full legal names, registration details, and addresses

2. Background: Details of the original loan agreement, reasons for conversion, and current status of the loan

3. Definitions: Key terms used throughout the agreement, including reference to original loan terms and new conversion-specific terminology

4. Conversion Terms: Core terms of the conversion including conversion amount, rate, or mechanism

5. Effective Date: When the conversion takes effect and any conditions precedent

6. Post-Conversion Rights and Obligations: Rights and obligations of parties after the conversion is completed

7. Representations and Warranties: Standard and specific confirmations from both parties regarding their capacity and authority

8. Governing Law and Jurisdiction: Confirmation of German law application and jurisdiction for disputes

Optional Sections

1. Security Provisions: Required if the original loan had security arrangements that need to be addressed post-conversion

2. Tax Provisions: Include when there are specific tax implications of the conversion that need to be addressed

3. Regulatory Compliance: Required for regulated entities or when specific regulatory requirements apply to the conversion

4. Interest Calculations: Needed when the conversion involves complex interest calculations or adjustments

5. Third Party Rights: Include when other parties' rights might be affected by the conversion

6. Default and Remedies: Required when specific default scenarios need to be addressed in the context of the conversion

Suggested Schedules

1. Original Loan Agreement: Copy or key terms of the original loan agreement being converted

2. Conversion Calculations: Detailed calculations showing the conversion methodology and results

3. Form of Notices: Standard forms for any notices required under the agreement

4. Required Regulatory Forms: Any forms required by German regulatory authorities for the conversion

5. Security Documentation: If applicable, documentation relating to existing or new security arrangements

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 | Serial Founder & Legal AI Author

Relevant legal definitions
Relevant Industries

Banking & Financial Services

Investment Management

Private Equity

Venture Capital

Corporate Finance

Real Estate

Technology & Startups

Manufacturing

Healthcare

Energy

Relevant Teams

Legal

Finance

Treasury

Compliance

Risk Management

Corporate Development

Investment

Credit Analysis

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Investment Manager

Loan Officer

Credit Risk Manager

Treasury Manager

Compliance Officer

Financial Controller

Business Development Manager

Restructuring Specialist

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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