Promissory Note Conversion Agreement Template for England and Wales

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Key Requirements PROMPT example:

Promissory Note Conversion Agreement

"I need a Promissory Note Conversion Agreement to convert a £500,000 promissory note issued to an angel investor into Series A preferred shares, with the conversion to take place on March 15, 2025, including standard anti-dilution protections."

Document background
A Promissory Note Conversion Agreement is commonly used in England and Wales when companies wish to convert existing debt obligations into equity or other securities. This document is particularly relevant in startup funding scenarios, restructuring situations, or when implementing pre-agreed conversion rights. The agreement details the conversion mechanism, valuation methods, and timing, while ensuring compliance with UK corporate and securities laws. It provides essential protection for both the note holder and the issuing company by clearly documenting the terms of conversion and any associated rights or obligations.
Suggested Sections

1. Parties: Identifies and defines the parties to the agreement

2. Background: Details of the original promissory note and circumstances leading to conversion

3. Definitions: Key terms used throughout the agreement

4. Conversion Terms: Specific terms of converting the promissory note, including conversion price and timing

5. Conditions Precedent: Conditions that must be met before conversion can occur

6. Representations and Warranties: Statements of fact by both parties

7. Governing Law and Jurisdiction: Specifies applicable law and courts

Optional Sections

1. Anti-dilution Provisions: Protection against share dilution, used when converting to equity

2. Tax Provisions: Handling of tax implications of conversion

3. Registration Rights: Rights regarding registration of converted securities

Suggested Schedules

1. Original Promissory Note: Copy of the original promissory note being converted

2. Conversion Calculations: Detailed calculations showing conversion methodology

3. Form of Notice: Template for conversion notice

4. Corporate Authorizations: Copies of relevant board and shareholder resolutions

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 Industries
Relevant Teams
Relevant Roles
Industries

Companies Act 2006: Primary legislation governing company law in the UK, particularly relevant for share issuance and capital structure modifications in conversion agreements

Financial Services and Markets Act 2000: Regulates financial services and markets in the UK, particularly important if the conversion involves regulated financial instruments

Consumer Credit Act 1974: Relevant if the original promissory note involved consumer credit arrangements

Law of Property (Miscellaneous Provisions) Act 1989: Governs certain aspects of property law and contractual formalities in England and Wales

Contracts (Rights of Third Parties) Act 1999: Determines how third parties may enforce terms of a contract, which could be relevant if the note involves multiple parties

Financial Services and Markets Act 2000 (Regulated Activities) Order 2001: Specifies which activities require FCA authorization and regulation in relation to financial instruments

Income Tax Act 2007: Relevant for tax implications of debt-to-equity conversions and potential income tax consequences

Corporation Tax Act 2009: Governs corporate tax implications of debt conversion and restructuring

Money Laundering Regulations 2017: Compliance requirements for financial transactions to prevent money laundering and terrorist financing

Prospectus Regulation Rules: Regulatory requirements for public offerings of securities, may be relevant if the conversion involves public securities

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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