Document background
The Loan Conversion To Equity Agreement is a critical document used when a lender agrees to convert their outstanding loan into equity shares in the borrower company. This arrangement is commonly utilized in corporate restructuring, startup funding rounds, or when companies need to strengthen their balance sheet by reducing debt. Under Danish law, the agreement must comply with the Danish Companies Act (Selskabsloven) regarding share capital modifications and corporate governance requirements. The document typically includes detailed provisions on conversion mechanics, valuation methodology, share issuance procedures, and necessary corporate approvals. It's particularly relevant in scenarios where companies seek to improve their debt-to-equity ratio or when investors wish to take a more active ownership role in the business. The agreement also addresses tax implications, regulatory requirements, and shareholder rights post-conversion.
