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Convertible Note Contract Template for Singapore

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Key Requirements PROMPT example:

Convertible Note Contract

"Need a Convertible Note Contract for raising S$500,000 from three angel investors, with a 20% discount rate and 8% interest rate, convertible upon our Series A round expected in March 2025."

What is a Convertible Note Contract?

The Convertible Note Contract is commonly used in Singapore's startup ecosystem as a bridge financing instrument. It offers companies a way to raise capital without immediately setting a valuation, while providing investors with the potential upside of equity ownership. This document type is particularly relevant for early-stage companies seeking funding between S$50,000 and S$5 million, structured in compliance with Singapore's regulatory framework. The contract typically includes provisions for conversion triggers, interest rates, maturity dates, and valuation caps, all aligned with local securities laws and corporate regulations.

What sections should be included in a Convertible Note Contract?

1. Parties: Identifies the issuer (company) and the note holder(s)

2. Background: Context of the convertible note issuance and purpose of the funding

3. Definitions: Key terms used throughout the agreement including conversion price, maturity date, etc.

4. Principal Amount and Interest: Details of the loan amount and interest calculation

5. Conversion Rights: Terms and conditions for converting the note to equity

6. Maturity and Repayment: Date and terms of repayment if not converted

7. Events of Default: Circumstances that trigger default and consequences

8. Representations and Warranties: Statements of fact and assurances by the issuer

9. Governing Law and Jurisdiction: Specification of Singapore law as governing law and jurisdiction

What sections are optional to include in a Convertible Note Contract?

1. Early Redemption Rights: Optional provisions allowing the company to repay the note before maturity

2. Anti-dilution Protection: Provisions protecting noteholder from dilution through subsequent share issuances

3. Information Rights: Rights of noteholder to receive financial and other company information

4. Board Observer Rights: Rights of noteholder to attend and observe board meetings

5. Most Favored Nation Clause: Protection ensuring noteholder receives best terms offered to other investors

What schedules should be included in a Convertible Note Contract?

1. Form of Conversion Notice: Template notice for exercising conversion rights

2. Calculation of Conversion Price: Detailed formula and examples for conversion price calculation

3. Company Cap Table: Current shareholding structure and post-conversion scenarios

4. Term Sheet: Summary of key commercial terms agreed between parties

5. Form of Note Certificate: Template certificate evidencing the convertible note

Authors

Alex Denne

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

Relevant legal definitions



































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Industries

Companies Act (Cap. 50): Primary legislation governing corporate entities in Singapore, covering share issuance, corporate governance, and company operations

Securities and Futures Act (Cap. 289): Regulates securities offerings, financial markets, and investment instruments in Singapore

Contract Law: Common law principles governing contract formation, enforcement, and remedies in Singapore

Money-lending Act (Cap. 188): Regulates money lending activities and interest rate restrictions in Singapore

MAS Guidelines: Regulatory guidelines issued by the Monetary Authority of Singapore affecting financial instruments and securities

Securities and Futures Regulations: Detailed regulations implementing the Securities and Futures Act, including specific requirements for financial instruments

Financial Advisers Act: Regulates financial advisory services and related activities in Singapore

Income Tax Act: Tax legislation affecting the treatment of convertible notes, interest payments, and conversion events

Stamp Duties Act: Governs stamp duty obligations on financial instruments and share transfers

Exchange Control Regulations: Rules governing international financial transactions and currency controls in Singapore

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, 聽Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination, 聽Severance Pay, Governing Law, Entire Agreemen

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