Convertible Debenture Agreement Template for England and Wales

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Key Requirements PROMPT example:

Convertible Debenture Agreement

"I need a Convertible Debenture Agreement for a tech startup raising £500,000, with conversion rights exercisable after 18 months and an interest rate of 8% per annum, with the debenture maturing in March 2025."

Document background
A Convertible Debenture Agreement is commonly used when companies seek to raise capital while offering investors the flexibility to convert their debt investment into equity shares. This agreement, governed by English and Welsh law, provides a detailed framework for the issuance of secured or unsecured debt that can be converted into shares at predetermined terms. It includes crucial elements such as conversion price, timing, interest rates, and security arrangements. The document is particularly valuable for growth-stage companies that want to defer equity dilution while accessing immediate financing.
Suggested Sections

1. Parties: Identification of the issuer and debenture holder(s)

2. Background: Context of the issuance and purpose of the debenture

3. Definitions: Key terms used throughout the agreement

4. Issue of Debenture: Terms of issuance, principal amount, and interest rate

5. Conversion Rights: Terms and conditions for converting debenture to shares

6. Repayment Terms: Schedule and conditions for repayment

7. Security: Details of any security or charge over assets

Optional Sections

1. Early Redemption: Optional provisions for early repayment of the debenture

2. Transferability: Optional provisions governing the transfer of the debenture to third parties

3. Events of Default: Optional detailed provisions specifying circumstances constituting default

Suggested Schedules

1. Schedule 1 - Conversion Formula: Detailed calculation method for converting debenture into shares

2. Schedule 2 - Form of Transfer: Standard form for transferring the debenture

3. Schedule 3 - Security Documents: Details of any charges or security arrangements

4. Schedule 4 - Repayment Schedule: Detailed schedule of repayment dates and amounts

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
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company operations, including provisions for debentures, charges registration, directors' duties, and share capital regulations

Financial Services and Markets Act 2000: Regulates financial services industry, covering financial promotion restrictions, regulated activities, and securities offering requirements

Consumer Credit Act 1974: Legislation relevant if the debenture falls within consumer credit regulations

FCA Rules: Regulatory framework covering listing requirements, prospectus requirements, and financial promotion rules for traded securities

Companies House Requirements: Administrative requirements for registration of charges and associated filing obligations

Common Law Contract Principles: Fundamental contract law principles and Misrepresentation Act 1967 governing contract formation and validity

Insolvency Act 1986: Legislation governing security interests and creditor priority in case of insolvency

Financial Collateral Arrangements (No 2) Regulations 2003: Regulations applicable when financial collateral is involved in the debenture arrangement

UK Corporate Governance Code: Governance requirements applicable if the issuer is a listed company

Market Abuse Regulation: Retained EU law governing market abuse prevention, applicable if the debentures are to be publicly traded

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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