Document background
The Convertible Debt Agreement is a crucial financing instrument commonly used by Canadian companies, particularly startups and growth-stage businesses, seeking to raise capital while deferring company valuation. This document type combines elements of debt and equity financing, providing investors with the security of debt and the potential upside of equity participation. It's particularly useful in bridge financing scenarios or when companies and investors want to postpone determining a precise equity valuation. The agreement must comply with Canadian federal and provincial securities regulations, corporate law, and tax requirements. It typically includes detailed provisions for conversion mechanics, investor rights, and protection mechanisms, making it a preferred choice for sophisticated investors and companies in growth phases.
