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Simple Convertible Loan Agreement

Simple Convertible Loan Agreement Template for Denmark

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Simple Convertible Loan Agreement

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Document background
The Simple Convertible Loan Agreement is commonly used in the Danish startup and growth company ecosystem as a flexible financing instrument. It provides a straightforward way for companies to secure bridge financing or early-stage investment while deferring company valuation discussions. This document type is particularly valuable when immediate equity investment is not practical or when parties prefer to link the company's valuation to a future funding round. The agreement complies with Danish law, including the Danish Companies Act and financial regulations, and typically includes provisions for loan terms, interest, conversion mechanics, and investor protections. The Simple Convertible Loan Agreement is designed to balance the interests of both investors and companies while maintaining legal certainty under Danish jurisdiction.
Suggested Sections

1. Parties: Identification of the Lender and Borrower with full legal names and registration details

2. Background: Context of the loan arrangement and purpose of the agreement

3. Definitions and Interpretation: Key terms used throughout the agreement, including Conversion Price, Maturity Date, and Qualifying Event

4. Loan Amount and Drawdown: Specification of the loan amount, currency, and disbursement procedures

5. Interest: Interest rate, calculation method, and payment terms in compliance with Danish Interest Act

6. Repayment: Terms for repayment of the loan, including Maturity Date and early repayment provisions

7. Conversion Rights: Conditions and mechanics for converting the loan into shares, including conversion price and timing

8. Conversion Procedure: Step-by-step process for executing the conversion, including necessary corporate actions

9. Representations and Warranties: Standard statements about legal capacity, authority, and accuracy of information

10. Borrower Covenants: Ongoing obligations of the Borrower during the loan term

11. Events of Default: Circumstances constituting default and consequences

12. Notices: Communication requirements and contact details

13. Assignment and Transfer: Rules regarding transfer of rights under the agreement

14. Governing Law and Jurisdiction: Specification of Danish law as governing law and jurisdiction for disputes

15. Counterparts and Execution: Provisions for signing and executing the agreement

Optional Sections

1. Security: Include when the loan is secured by specific assets or guarantees

2. Information Rights: Include when Lender requires specific reporting or information access rights

3. Anti-dilution Protection: Include when protection against share dilution is required for conversion rights

4. Board Observer Rights: Include when Lender is granted right to appoint board observer

5. Subordination: Include when the loan needs to be subordinated to other debt

6. Tax Provisions: Include when specific tax treatment or allocations need to be addressed

7. Cryptocurrency Provisions: Include when loan or repayment involves cryptocurrency

Suggested Schedules

1. Conversion Notice Form: Template form for exercising conversion rights

2. Calculation of Conversion Price: Detailed methodology and examples for calculating conversion price

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

4. Corporate Authorities: Copies of required corporate approvals and resolutions

5. Drawdown Notice Form: Template form for requesting loan disbursement

6. Shareholders' Agreement Terms: Key terms from shareholders' agreement that will apply post-conversion

Authors

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Relevant legal definitions
Agreement
Applicable Law
Business Day
Company
Completion
Conversion Date
Conversion Notice
Conversion Price
Conversion Rights
Conversion Shares
Default Interest Rate
Drawdown Date
Drawdown Notice
Event of Default
Exit Event
Financial Year
Group
Interest Payment Date
Interest Rate
Lender
Loan
Loan Amount
Maturity Date
New Shares
Qualifying Financing
Qualifying Financing Round
Relevant Documents
Repayment Date
Security
Share Capital
Shareholders
Shareholders' Agreement
Subscription Price
Subsidiary
Tax
Valuation Cap
Working Day
Relevant Industries
Relevant Teams
Relevant Roles
Industries
Danish Companies Act (Selskabsloven): Governs corporate matters including share capital, share classes, and the process of converting debt to equity. Particularly relevant for the conversion mechanism and the issuance of new shares.
Danish Contracts Act (Aftaleloven): Regulates contract formation, validity, and enforcement. Essential for ensuring the loan agreement meets basic contractual requirements under Danish law.
Danish Capital Markets Act (Kapitalmarkedsloven): Relevant for securities regulations and requirements, particularly when the loan converts to equity, ensuring compliance with securities laws.
Danish Interest Act (Renteloven): Governs interest rates, calculation methods, and default interest. Important for structuring the interest provisions of the loan.
Danish Bankruptcy Act (Konkursloven): Relevant for understanding creditor rights and the treatment of convertible loans in case of bankruptcy or restructuring.
Danish Financial Business Act (Lov om finansiel virksomhed): May be relevant if either party is a regulated financial institution or if the loan arrangement falls under financial services regulations.
Danish Money Laundering Act (Hvidvaskloven): May be relevant for due diligence requirements and verification of parties, particularly for larger loan amounts.
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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