A convertible loan issued by a Hong Kong-based company should be approved by ordinary decision of the company`s shareholders and its board of directors. The founders should also ensure that no further authorization is required, for example in the context of a shareholders` pact or other contractual agreement. If lenders feel that the terms of the credit note are acceptable, they ask the company for the right to pre-report credits as part of the credit note. When the entity authorizes a loan allocation to a lender, the terms of that specific loan are recorded in a credit certificate. The loan certificate is issued to the lender after receiving the loan by the company. Investor (s): investor who buys or invests as a convertible bond. Subject: The reasons why the transformation obligation is usually accompanied by an investment plan/business plan. The terms of the loan are therefore known before the loan is granted, but the registration of each loan is given after the granting of the loan. Safe`s terms are contained in a standard standard document, with the intention that start-ups and investors will not spend time and money on negotiating and developing customized and complex legal documents. SAFE shares many similarities with a “convertible loan,” although SAFE does not have a maturity date, unlike the convertible bond, and is considered “capital” in a company`s books and not a “debt.” However, in practice, the application of the IFRS principles presents uncertainties as to the treatment of the instrument and whether it should be considered a borrowing or equity instrument. Exchange rate on eligible financing: the conversion price of convertible bonds in the case of qualified financing is generally defined as the lower price of (i) a [%] rate (the “conversion discount”) of the share price; that the investor (e) pay in qualified financing, as a % based on the stage of activity and (ii) the price per share of a specified amount divided by the total number of shares outstanding of the company immediately prior to the qualified financing (including all convertible and exercisable securities that are then outstanding (the “value cap”). A credit voucher is a record of the terms of a loan.

It`s like a change note from sola or an IOU, but with more details. Due date: the period from the date of issuance when the converted debt must be repaid or converted into equity. 4. Investors get a higher priority for the founders in the event of the company`s failure. The loan is a debt. The debt will be mainly due to the debts of the shareholders in liquidation. We`ve added an appointment. During the negotiation process between the investor and the start-up, an agenda is usually signed.

The aim is to clearly and simply outline all the key aspects of financial investment (financing, corporate governance and liquidation). Typically, it is non-binding and is signed before the due diligence procedure and usually includes a period of exclusivity. Why a SAFE is attractive to an investor is that it allows the investor to invest seed funds in a start-up, with the potential to enjoy a huge boom in the growth of the company, without complex agreements and legal structures. A company has convertible or stock-exchangeable debt securities, unless the market value of the shares is equal to the amount owed at the time the instrument was converted or exchanged.