Convertible loan agreement 

Use this contract: 

• To grant a loan to a limited company incorporated in the United Kingdom.
• If you want the loan to be converted into capital instead of being repaid.
• Whether or not the loan bears interest, simple or compound, to be repaid or converted into capital.
• Whether you are lending in pounds or foreign currency, in any amount.
• When you wish to impose additional guarantees and restrictions on the borrower, or even penalties.

£20/document

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Jurisdiction: England and Wales        

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Protect yourself legally as a lender with the following options: 

• Adjustment of the loan conversion rate in the event of a significant fall in the value of the company up to the day of conversion. 
• Prohibition on selling significant assets, taking on debt or giving more advantageous guarantees to third-party creditors. 
• Obligation to regularly confirm declarations, disclose financial statements or tax returns, subject to immediate termination. 

• Interest on arrears and reminder charges in the event of late payment, with the borrower obliged to cover any legal costs in the event of enforcement. 
• Immediate termination in the event of a change of control, bankruptcy, or insolvency of the borrower. 

Safeguard your interests as a company by using the following clauses: 

• Imposition of a deadline for exercising the convertible option, as well as a preliminary condition to be met by the lender. 
• Possibility of waiving accrued interest if the option is exercised. 
• Indication of a fall in the value of the company to be tolerated by the lender, without the right to refuse the option. 
• Possibility of issuing the shares, or buying them from existing shareholders and selling them back to the lender.