Document background
The Convertible Promissory Note is a crucial financing instrument in the UAE startup ecosystem, providing a bridge between equity funding rounds. This document is typically used when companies need immediate funding but want to defer equity valuation discussions to a later date. Under UAE law, these notes must comply with Federal Law No. 8 of 2004 (Commercial Companies Law) and Federal Law No. 18 of 1993 (Commercial Transactions Law), among others. The document includes essential provisions for principal amount, interest, maturity, conversion mechanisms, and default scenarios, while considering UAE-specific requirements such as foreign ownership restrictions and commercial licensing regulations. It's particularly relevant for early-stage companies seeking to raise capital from angel investors or venture capital firms while maintaining compliance with local regulations.
