Document background
The Loan Conversion Agreement is a crucial document used when parties wish to transform debt obligations into equity ownership, commonly utilized in corporate restructuring, startup funding, or financial distress scenarios. This agreement type is particularly relevant in Hong Kong's dynamic business environment, where debt-to-equity conversions are frequently used as part of investment strategies or corporate reorganizations. The document must comply with Hong Kong's Companies Ordinance and Securities and Futures Ordinance, particularly regarding share issuance and securities regulations. It typically includes detailed provisions on conversion triggers, price calculation mechanisms, resulting shareholding structures, and necessary corporate and regulatory approvals. The agreement serves as a bridge between the original loan documentation and the new equity arrangement, ensuring a clear legal framework for the transformation of the creditor-debtor relationship into a shareholder relationship.
