Document background
The Convertible Promissory Note is commonly used in Saudi Arabia as a bridge financing instrument for companies seeking to raise capital while deferring valuation discussions. This document is specifically designed to comply with both Saudi Arabian secular law and Islamic finance principles, making it suitable for use in the Saudi Arabian market. It provides a structured framework for investment that converts to equity upon specified triggers, typically a qualified financing round or maturity date. The document includes essential elements such as the principal amount, profit-sharing mechanisms (as an alternative to interest), conversion terms, and investor rights, while ensuring all provisions are Shariah-compliant. It's particularly useful for early-stage companies and startups looking to raise interim financing before a larger equity round, while maintaining compliance with local legal and religious requirements.
