Document background
The Promissory Note Convertible To Equity is a sophisticated financing instrument commonly used in Hong Kong's startup and growth-stage company ecosystem. It provides a bridge between traditional debt financing and equity investment, offering companies immediate access to capital while deferring complex equity valuation discussions. This document type is particularly valuable when a company needs immediate funding but its valuation is not yet determined or when parties want to postpone equity negotiations to a future funding round. The agreement must comply with Hong Kong's Companies Ordinance, Securities and Futures Ordinance, and relevant financial regulations. It typically includes detailed terms about interest rates, maturity dates, conversion triggers (such as qualified financing rounds), conversion price calculations, and investor protections. The document is especially popular among technology startups and innovative companies seeking flexible financing solutions in the Hong Kong market.
