The Convertible Loan Agreement Template is essential for Australian companies seeking bridge financing or early-stage investment through convertible debt instruments. This document type is particularly valuable for startups and growth companies that need immediate funding but prefer to defer company valuation to a future date. The template covers all critical aspects required under Australian law, including compliance with the Corporations Act 2001 and ASIC regulations. It details the loan terms, conversion mechanisms, investor rights, and protection measures, making it suitable for both sophisticated investors and companies looking to raise capital. The agreement typically precedes a larger equity funding round and includes provisions for automatic conversion upon qualifying funding events, along with necessary safeguards for both the company and investor.
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1. Parties: Identification of the lender, borrower (company), and any guarantors
2. Background: Context of the agreement, including the company's business and purpose of the convertible loan
3. Definitions and Interpretation: Key terms used throughout the agreement and rules for interpretation
4. Loan Amount and Drawdown: Specification of the loan amount, drawdown conditions and mechanics
5. Interest: Interest rate, calculation method, and payment terms
6. Conversion Rights: Terms and conditions for converting the loan into equity, including timing and trigger events
7. Conversion Price and Mechanics: Formula for determining conversion price and detailed process for conversion
8. Repayment Terms: Conditions and timing for repayment if conversion rights are not exercised
9. Company Representations and Warranties: Standard company warranties about its status, capacity, and business condition
10. Lender Representations and Warranties: Warranties from the lender, including sophisticated investor status if applicable
11. Events of Default: Circumstances constituting default and consequences
12. General Terms: Standard contract provisions including notices, amendments, governing law, etc.
1. Security: Include when the loan is to be secured against company assets
2. Guarantees: Required when personal or corporate guarantees are provided
3. Anti-dilution Provisions: Protection for the lender against share dilution, particularly relevant for high-growth companies
4. Information Rights: Additional reporting obligations, typically requested by sophisticated investors
5. Board Observer Rights: Rights for the lender to attend board meetings, common in larger investments
6. Pre-emptive Rights: Rights for the lender to participate in future funding rounds
7. Tag-along Rights: Rights for the lender to join in any sale of shares by major shareholders
8. Most Favored Nation Clause: Protection ensuring the lender gets the best terms offered to other convertible loan holders
1. Schedule 1 - Loan Details: Key commercial terms including loan amount, interest rate, maturity date
2. Schedule 2 - Conversion Formula: Detailed calculation methods for conversion price under different scenarios
3. Schedule 3 - Company Capital Structure: Current share capital structure and fully diluted cap table
4. Schedule 4 - Drawdown Notice: Form of drawdown notice for accessing the loan funds
5. Schedule 5 - Conversion Notice: Form of notice for exercising conversion rights
6. Schedule 6 - Warranties: Detailed list of company warranties
7. Appendix A - Share Rights: Rights attaching to shares post-conversion
8. Appendix B - Deed of Adherence: Form of deed for the lender to sign upon conversion to become shareholder
Relevant legal definitions
Clauses
Relevant Industries
Technology
Financial Services
Healthcare
Biotechnology
Clean Energy
E-commerce
Software
Manufacturing
Professional Services
Media and Entertainment
Retail
Education Technology
Relevant Teams
Legal
Finance
Executive Leadership
Corporate Development
Investment
Compliance
Company Secretariat
Treasury
Risk Management
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Company Secretary
General Counsel
Investment Manager
Venture Capital Associate
Corporate Lawyer
Finance Director
Startup Founder
Investment Director
Legal Counsel
Financial Controller
Company Director
Investment Analyst
Compliance Officer
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