Document background
The Convertible Equity Agreement under Dutch law is primarily utilized in scenarios where companies seek investment while deferring complex equity valuations to a later stage. This document type has gained significant popularity in the Netherlands' startup ecosystem, offering a balanced approach between debt and equity financing. It provides investors with the right to convert their investment into equity shares upon specific triggering events, such as future funding rounds, exits, or agreed milestones. The agreement must comply with Dutch corporate law requirements, particularly regarding share issuance and transfer regulations. It typically includes detailed provisions on conversion mechanics, investor rights, information rights, and corporate governance aspects, all structured within the Dutch legal framework. This instrument is particularly valuable for scale-ups and innovative companies seeking growth capital while maintaining flexibility in their capital structure.
