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Loan To Equity Conversion Agreement Template for Singapore

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Key Requirements PROMPT example:

Loan To Equity Conversion Agreement

"Need a Loan To Equity Conversion Agreement for converting our Series A loan of SGD 2 million into preferred shares at a pre-agreed valuation, with anti-dilution protection and board representation rights for the investor."

Document background
The Loan To Equity Conversion Agreement is typically employed when a company seeks to strengthen its balance sheet by reducing debt obligations or when a lender wishes to take an equity position in the company. This document is particularly relevant in Singapore's dynamic business environment, where companies often transition from debt to equity financing. The agreement must comply with Singapore's robust regulatory framework, including the Companies Act and MAS guidelines. It details the conversion mechanism, share valuation, representations and warranties, and addresses corporate governance requirements specific to Singapore's legal system.
Suggested Sections

1. Parties: Identification of the lender and borrower/company

2. Background: Details of existing loan arrangement and reason for conversion

3. Definitions: Key terms used throughout the agreement

4. Conversion Terms: Specifics of how the loan will be converted to equity

5. Conversion Price: Methodology for determining share price and number of shares

6. Conditions Precedent: Requirements to be met before conversion can occur

7. Completion Mechanics: Process and timing for executing the conversion

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

9. Governing Law: Specification of Singapore law as governing law

Optional Sections

1. Anti-dilution Provisions: Protection against future share dilution - include when requested by converting lender

2. Board Representation: Rights to appoint directors - include for significant equity conversions

3. Tag-along Rights: Right to join in sale of shares - include for minority shareholder protection

4. Drag-along Rights: Right to force minority shareholders to join in sale - include for majority shareholder protection

Suggested Schedules

1. Existing Loan Agreement: Copy of the original loan agreement being converted

2. Conversion Calculation: Detailed calculation of shares to be issued

3. Form of Share Certificate: Template of share certificate to be issued

4. Shareholders' Agreement: New or amended shareholders' agreement post-conversion

5. Corporate Authorizations: Board and shareholder resolutions approving conversion

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

Relevant legal definitions































Clauses

























Industries

Companies Act (Cap. 50): Primary legislation governing corporate matters including share issuance, share capital requirements, directors' duties and obligations, and procedures for alteration of share capital

Securities and Futures Act (Cap. 289): Regulates securities offerings, disclosure requirements, prospectus requirements, and imposes restrictions on share transfers

Financial Advisers Act (Cap. 110): Sets out requirements for financial advisory services and related licensing requirements

MAS Guidelines: Regulatory framework from Monetary Authority of Singapore covering financial instruments and capital market regulations

Contract Law: Common Law principles governing contract formation, consideration, terms and conditions, and remedies for breach

Stamp Duties Act (Cap. 312): Legislation governing stamp duty implications for share transfers and document stamping requirements

Income Tax Act (Cap. 134): Tax legislation covering implications of debt to equity conversion, treatment of interest, and capital gains considerations

Personal Data Protection Act 2012: Legislation governing the handling of personal data and consent requirements in business transactions

Corporate Governance Code: Guidelines and requirements for corporate governance, shareholders' rights, and restrictions

Foreign Investment Regulations: Regulations concerning foreign ownership restrictions and exchange control requirements if applicable

Competition Law: Regulations governing market competition and substantial shareholding implications

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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