Convertible Loan Stock Agreement Template for Singapore

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Key Requirements PROMPT example:

Convertible Loan Stock Agreement

"Need a Convertible Loan Stock Agreement for our Singapore-based fintech startup to secure SGD 5 million funding from three institutional investors, with conversion rights exercisable after January 2025 at a 20% discount to the next funding round valuation."

Document background
The Convertible Loan Stock Agreement is commonly used in Singapore for companies seeking flexible financing options, particularly in growth phases or pre-IPO situations. This document establishes the terms of a loan that can be converted into equity shares, typically at the option of the holder or upon specific trigger events. It includes detailed provisions on conversion mechanics, interest payments, redemption rights, and investor protections, all structured within Singapore's regulatory framework. The agreement is particularly valuable for companies that want to defer equity dilution while securing immediate funding.
Suggested Sections

1. Parties: Identification of the issuing company and the loan stockholder(s)

2. Background: Context of the convertible loan stock issuance and purpose

3. Definitions and Interpretation: Key terms used throughout the agreement

4. Issue and Subscription: Terms of issue, subscription amount, and payment details

5. Interest: Interest rate, calculation method, and payment terms

6. Conversion Rights: Terms and conditions for converting loan stock to shares

7. Redemption: Terms for redemption of the loan stock

8. Company Covenants: Obligations and undertakings of the issuing company

9. Events of Default: Circumstances constituting default and consequences

Optional Sections

1. Security: Details of any security or collateral if the loan stock is secured

2. Transferability: Terms for transferring the loan stock when transfer rights need to be restricted or specified

3. Tag-Along Rights: Rights of stockholders to join in sale of shares when minority investor protection is required

4. Anti-dilution Provisions: Protection against dilution of conversion rights when requested by sophisticated investors

Suggested Schedules

1. Form of Conversion Notice: Standard form for exercising conversion rights

2. Conversion Terms: Detailed mechanics of conversion, including formula

3. Certificate of Loan Stock: Form of certificate evidencing the loan stock

4. Company Information: Key corporate details and financial information

5. Shareholders' Agreement: Terms applicable post-conversion when new shareholders' rights need to be defined

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
Clauses
Industries

Companies Act (Cap. 50): Primary legislation governing company formation, operation, and regulation in Singapore, including share capital regulations, corporate borrowing powers, directors' duties and shareholders' rights

Securities and Futures Act (Cap. 289): Regulates securities offerings, including prospectus requirements and exemptions, and governs the operation of securities markets in Singapore

Financial Advisers Act (Cap. 110): Regulates financial advisory services and ensures proper conduct in providing financial advice related to investment products

Prospectus Requirements: Specific requirements under the Securities and Futures Act for issuing securities, including disclosure obligations and investor protection measures

MAS Guidelines: Regulatory guidelines issued by the Monetary Authority of Singapore covering corporate governance, securities offerings, and financial instruments

Income Tax Act: Tax legislation governing the treatment of interest payments and conversion features in convertible instruments

Stamp Duties Act: Legislation governing stamp duty implications on the issuance and transfer of securities and loan instruments

Foreign Investment Regulations: Regulations governing foreign investment in Singapore companies and associated exchange control requirements

Contract Act (Cap. 2): Fundamental legislation governing contract formation, validity, and enforcement in Singapore

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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