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Convertible Bond Agreement for India

Convertible Bond Agreement Template for India

A comprehensive legal agreement governed by Indian law that outlines the terms and conditions under which a company issues convertible bonds to investors. The document details the bond's principal amount, interest rate, maturity period, conversion terms, and the mechanism for converting the bonds into equity shares. It incorporates provisions compliant with the Companies Act 2013, SEBI regulations, and other relevant Indian securities laws, while establishing the rights and obligations of both the issuing company and bondholders, including conversion prices, timing, and procedures.

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Convertible Bond Agreement

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What is a Convertible Bond Agreement?

The Convertible Bond Agreement serves as a crucial financing instrument for companies seeking to raise capital while offering investors the flexibility to convert their debt investment into equity. This document is particularly useful for growing companies that need immediate funding but expect significant value appreciation in the future. Under Indian law, the agreement must comply with the Companies Act 2013, SEBI regulations, and other relevant securities laws. It typically includes detailed provisions on conversion mechanics, pricing formulas, anti-dilution protections, and regulatory compliance requirements. The document is commonly used in growth-stage funding rounds, acquisitions, or corporate restructuring situations where traditional debt or pure equity financing may not be optimal.

What sections should be included in a Convertible Bond Agreement?

1. Parties: Identification of the issuing company and the bondholder(s)/trustee

2. Background: Context of the bond issuance, company's authority to issue, and purpose of the financing

3. Definitions: Detailed definitions of terms used throughout the agreement

4. Bond Terms: Principal amount, interest rate, maturity date, and basic terms of the bonds

5. Interest Payments: Interest calculation method, payment dates, and default provisions

6. Conversion Rights: Terms and conditions for converting bonds into equity, including conversion price and ratio

7. Conversion Procedure: Detailed process for exercising conversion rights and mechanics of conversion

8. Representations and Warranties: Issuer's representations regarding authority, compliance, and financial condition

9. Covenants: Issuer's ongoing obligations and restrictions during the bond term

10. Events of Default: Circumstances constituting default and consequences thereof

11. Remedies: Rights and remedies available to bondholders upon default

12. Transfer Restrictions: Limitations on transfer of bonds and converted shares

13. Notices: Process for giving notices under the agreement

14. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction

15. Amendment and Waiver: Procedures for modifying agreement terms and waiving rights

What sections are optional to include in a Convertible Bond Agreement?

1. Security: Include when bonds are secured by company assets or guarantees

2. Anti-dilution Provisions: Include to protect bondholders from equity dilution through corporate actions

3. Redemption Rights: Include if early redemption options are available to either party

4. Foreign Investment Compliance: Include when bonds are issued to foreign investors

5. Tax Provisions: Include detailed tax treatment when bonds are issued in tax-sensitive structures

6. Trustee Provisions: Include when a trustee is appointed to represent bondholders

7. Registration Rights: Include when converted shares may need to be registered for public trading

8. Change of Control Provisions: Include to protect bondholders in case of company ownership changes

What schedules should be included in a Convertible Bond Agreement?

1. Form of Bond Certificate: Template of the physical or digital bond certificate

2. Conversion Notice: Standard form for exercising conversion rights

3. Calculation of Conversion Price: Detailed methodology for determining conversion price and adjustments

4. Company Information: Key corporate and financial information about the issuer

5. Existing Charges: List of existing security interests and charges on company assets

6. Shareholder Resolutions: Copies of relevant shareholder approvals for bond issuance

7. Board Resolutions: Copies of board resolutions authorizing the bond issuance

8. Financial Covenants: Detailed financial ratios and thresholds to be maintained

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Ƶ

Document Type

Security Agreement

Cost

Free to use
Relevant legal definitions

















































Clauses






























Relevant Industries

Technology

Manufacturing

Healthcare

Renewable Energy

E-commerce

Financial Services

Infrastructure

Real Estate

Telecommunications

Biotechnology

Software and IT Services

Educational Technology

Relevant Teams

Legal

Finance

Treasury

Corporate Secretarial

Compliance

Risk Management

Investment Banking

Corporate Development

Board of Directors

Executive Management

Relevant Roles

Chief Financial Officer

Chief Executive Officer

Finance Director

Legal Counsel

Corporate Secretary

Investment Manager

Financial Controller

Treasury Manager

Compliance Officer

Investment Banker

Corporate Lawyer

Finance Manager

Board Director

Company Secretary

Risk Manager

Industries








Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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