The Convertible Debenture Agreement is a crucial document for companies seeking to raise capital through debt that can later convert to equity. It's commonly used in Australia by growth companies, scale-ups, and established businesses looking for flexible financing options. The agreement must comply with Australian securities laws, particularly the Corporations Act 2001 (Cth) and ASIC regulations. It details the terms of the debenture issuance, including principal amount, interest rate, maturity date, conversion rights, and security (if any). The document is particularly valuable when companies want to defer equity dilution while providing investors with the security of debt and potential equity upside. It requires careful consideration of both debt and equity aspects, corporate governance requirements, and regulatory compliance.
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1. Parties: Identifies the issuer (company) and the debenture holder(s)
2. Background: Explains the context of the agreement, including the company's intention to issue debentures and the investor's intention to subscribe
3. Definitions and Interpretation: Defines key terms and establishes interpretation principles
4. Issue of Debentures: Details of the debenture issuance, including amount, price, and settlement
5. Interest: Interest rate, calculation method, payment dates, and interest payment terms
6. Conversion Rights: Terms and conditions for converting debentures to shares, including conversion price and ratio
7. Conversion Procedure: Process and requirements for exercising conversion rights
8. Maturity and Redemption: Maturity date, redemption terms, and early redemption provisions
9. Company Covenants: Company's obligations and undertakings to protect debenture holders
10. Events of Default: Circumstances constituting default and consequences
11. Representations and Warranties: Standard representations by both parties
12. Transfer and Assignment: Rules regarding transfer of debentures
13. Notices: Communication requirements and procedures
14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendments
1. Security: Required if the debentures are secured against company assets
2. Ranking: Specifies priority ranking if company has multiple classes of debt or security
3. Trustee Provisions: Required if a trustee structure is used for debenture holders
4. Anti-dilution Provisions: Protections against share dilution, particularly relevant for listed companies
5. Tag-Along Rights: Optional protection for debenture holders in case of company sale
6. Information Rights: Additional reporting requirements, often included for private company issuers
7. Meeting Provisions: Required if debenture holders have collective decision-making rights
1. Debenture Certificate Form: Template for the physical or electronic debenture certificate
2. Conversion Notice Form: Template notice for exercising conversion rights
3. Calculation Methods: Detailed methods for calculating interest, conversion ratios, and adjustments
4. Security Details: Details of any security granted (if applicable)
5. Company Information: Key company details, share capital structure, and existing securities
6. Warranties Schedule: Detailed warranties given by the company
7. Prescribed Events: List of events triggering mandatory conversion or redemption
Relevant legal definitions
Clauses
Relevant Industries
Financial Services
Technology
Real Estate
Manufacturing
Mining
Healthcare
Renewable Energy
Infrastructure
Start-ups
Scale-ups
Private Equity
Venture Capital
Professional Services
Telecommunications
Relevant Teams
Legal
Finance
Corporate Finance
Treasury
Compliance
Risk Management
Corporate Governance
Board Secretariat
Investment
Capital Markets
Relevant Roles
Chief Financial Officer
Finance Director
Corporate Lawyer
Investment Manager
Company Secretary
Legal Counsel
Compliance Officer
Investment Director
Treasury Manager
Corporate Finance Manager
Chief Executive Officer
Board Director
Financial Controller
Risk Manager
Investment Banker
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