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The Convertible Promissory Note Purchase Agreement is a fundamental financing instrument in the Canadian startup and growth company ecosystem. It is typically used when companies need bridge financing between equity rounds, or when valuation determination is premature or complex. The agreement, structured under Canadian federal and provincial laws, provides a framework for debt that can convert into equity upon triggering events such as qualified financing rounds, acquisition, or IPO. It includes essential provisions for principal amount, interest rate, maturity date, conversion mechanics, and investor rights, while ensuring compliance with Canadian securities regulations. This document type is particularly valuable for companies seeking flexible financing solutions while deferring complex valuation discussions, and it offers investors potential upside through equity conversion features.
