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Convertible Note Purchase Agreement for Singapore

Convertible Note Purchase Agreement Template for Singapore

A Convertible Note Purchase Agreement under Singapore law is a legally binding document that outlines the terms and conditions under which investors provide debt financing to a company, with the right to convert that debt into equity under specified circumstances. The agreement complies with Singapore's Companies Act and Securities and Futures Act, and typically includes provisions for interest rates, maturity dates, conversion mechanics, and various investor rights. It's commonly used in Singapore's startup ecosystem as a bridge financing tool.

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What is a Convertible Note Purchase Agreement?

The Convertible Note Purchase Agreement is a crucial financing instrument in Singapore's corporate landscape, particularly for startups and growing companies seeking to raise capital without immediately setting a valuation. Governed by Singapore law and regulated under the Monetary Authority of Singapore's framework, this agreement provides a structured approach to bridge financing. It details the terms of debt investment, conversion mechanisms, investor protections, and compliance requirements under Singapore's regulatory regime. The document is particularly valuable when companies need quick access to capital while deferring complex valuation discussions to a future funding round.

What sections should be included in a Convertible Note Purchase Agreement?

1. Parties: Identification of the parties entering into the agreement

2. Background: Context and purpose of the convertible note arrangement

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale of Notes: Terms of the note purchase, including amount and closing conditions

5. Conversion Rights: Terms and mechanics of conversion into equity

6. Interest: Interest rate and payment terms

7. Maturity and Repayment: Maturity date and repayment provisions

8. Representations and Warranties: Statements of fact by both parties

9. Events of Default: Circumstances constituting default and consequences

10. General Provisions: Standard boilerplate clauses including governing law

What sections are optional to include in a Convertible Note Purchase Agreement?

1. Security: Provisions detailing security arrangements when the note is secured by company assets

2. Subordination: Provisions regarding ranking of the note relative to other debt when there are multiple creditors

3. Information Rights: Provisions granting investors rights to company information and financial reports

4. Board Observer Rights: Provisions granting rights to attend board meetings, typically for larger investments or strategic investors

What schedules should be included in a Convertible Note Purchase Agreement?

1. Form of Note: The actual form of the convertible note certificate

2. Conversion Mechanics: Detailed procedures for conversion

3. Capitalization Table: Current and pro-forma cap table showing impact of conversion

4. Disclosure Schedule: Exceptions to representations and warranties

5. Form of Legal Opinion: Template for legal opinion if required as closing condition

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

Singapore

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions












































Clauses


































Industries

Companies Act (Cap. 50): Primary legislation governing corporate matters including issuance of securities, requirements for share capital and convertible instruments, and directors' duties and corporate governance requirements

Securities and Futures Act (Cap. 289): Regulates securities offerings, prospectus requirements and exemptions, and provides definitions of securities and related instruments

MAS Guidelines: Monetary Authority of Singapore guidelines covering requirements for capital markets products, regulatory requirements for debt securities, and investment restrictions

Contract Law (Application of Law) Act: Covers basic principles of contract formation and contractual rights and obligations in Singapore

Registration of Business Names Act: Outlines requirements for business registration and compliance in Singapore

Stamp Duties Act: Governs applicable stamp duties on convertible instruments and tax implications of conversion

Income Tax Act: Covers tax treatment of interest payments, tax implications of conversion, and withholding tax requirements

Personal Data Protection Act 2012: Regulates the collection, use, and disclosure of personal data of parties involved in the agreement

MAS Guidelines on Digital Token Offerings: Specific guidelines applicable if the convertible note involves digital tokens or cryptocurrency

Foreign Investment Regulations: Regulatory framework governing foreign investments in Singapore businesses and securities

Currency Control Regulations: Regulations pertaining to foreign currency transactions and international fund transfers in convertible note agreements

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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