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Convertible Note Contract

Convertible Note Contract Template for Malaysia

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Key Requirements PROMPT example:

Convertible Note Contract

"I need a Convertible Note Contract for my Malaysian tech startup to secure RM500,000 in funding from a local angel investor, with a 15% discount rate on conversion and 8% annual interest rate, maturing on March 1, 2025."

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Document background
The Convertible Note Contract is a vital financing instrument in the Malaysian business landscape, particularly for startups and growth companies seeking to raise capital while deferring valuation discussions. This document is typically used when a company needs interim financing before a larger equity round, or when parties prefer to postpone setting a definitive company valuation. The agreement must comply with Malaysian corporate and securities laws, including the Companies Act 2016 and Capital Markets and Services Act 2007. It outlines crucial terms such as principal amount, interest rate, maturity date, conversion triggers, valuation caps, and discount rates. The document also addresses investor rights, company obligations, and various scenarios such as qualified financing rounds, exit events, or maturity conversion.
Suggested Sections

1. Parties: Identification of the Note Issuer (Company) and the Noteholder(s)

2. Background: Context of the convertible note issuance, including the company's intention to raise funds and the investor's intention to invest

3. Definitions: Definitions of key terms used throughout the agreement, including Conversion Price, Maturity Date, Qualifying Financing, etc.

4. Subscription and Issue: Details of the note subscription, including principal amount, issue date, and payment terms

5. Interest: Interest rate, calculation method, payment frequency, and compound interest provisions

6. Conversion Rights: Terms and conditions for conversion, including conversion triggers, price calculation, and mechanics

7. Maturity and Repayment: Terms regarding maturity date, repayment obligations, and early repayment provisions

8. Company Representations and Warranties: Standard representations about company status, authority, and capacity to enter into the agreement

9. Noteholder Representations and Warranties: Investor's representations regarding investment capacity and understanding of risks

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

11. Notices: Communication procedures between parties

12. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments

Optional Sections

1. Security: Include when the note is secured against company assets

2. Subordination: Include when there are multiple creditors and ranking needs to be established

3. Information Rights: Include when noteholder is granted specific information or inspection rights

4. Board Observer Rights: Include when noteholder is granted the right to appoint board observer

5. Pre-emptive Rights: Include when noteholder is granted rights to participate in future funding rounds

6. Most Favored Nation: Include when offering protection against more favorable terms in future note issuances

7. Tag-Along Rights: Include when noteholder is granted right to participate in sale of company shares

8. Foreign Investment Provisions: Include when note involves cross-border investment

Suggested Schedules

1. Schedule 1 - Note Certificate: Form of note certificate evidencing the debt

2. Schedule 2 - Conversion Notice: Form of notice to be used when exercising conversion rights

3. Schedule 3 - Cap Table: Current and post-conversion capitalization table

4. Schedule 4 - Company Information: Key company details including corporate information and existing indebtedness

5. Schedule 5 - Calculation of Conversion Price: Detailed methodology for calculating conversion price in various scenarios

6. Schedule 6 - Deed of Adherence: Form of deed for new noteholders to adhere to the agreement

Authors

Alex Denne

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

alex.den.21@genieai.co
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Relevant Industries

Technology

Financial Services

E-commerce

Healthcare

Biotechnology

Clean Energy

Manufacturing

Software

Consumer Products

Professional Services

Real Estate

Education Technology

Telecommunications

Digital Media

Logistics

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Executive Leadership

Investment

Corporate Secretarial

Risk Management

Compliance

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

Investment Manager

Corporate Lawyer

Finance Director

Company Secretary

Investment Analyst

Venture Capital Associate

Fund Manager

Corporate Development Manager

Treasury Manager

Legal Counsel

Financial Controller

Business Development Director

Startup Founder

Managing Partner

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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