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Convertible Note Agreement Template for Malaysia

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Key Requirements PROMPT example:

Convertible Note Agreement

"I need a Convertible Note Agreement for my Malaysian technology startup to secure RM 500,000 in funding from an angel investor, with a 20% discount rate on conversion and 8% annual interest rate, maturity date of March 15, 2025."

Document background
The Convertible Note Agreement serves as a crucial financing instrument in the Malaysian business landscape, particularly for startups and growing companies seeking to raise capital while deferring company valuation. This document type combines elements of debt and potential future equity, offering companies a flexible financing solution while providing investors with the security of debt and potential upside of equity participation. The agreement must comply with Malaysian regulatory requirements, including the Companies Act 2016 and securities regulations, while addressing key commercial terms such as interest rates, maturity dates, conversion triggers, and investor rights. It's particularly useful in bridge financing rounds or when traditional equity financing might be premature or impractical.
Suggested Sections

1. Parties: Identification of the issuing company and the note holder(s)

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

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Subscription and Issue: Terms of note subscription, payment details, and issuance conditions

5. Principal and Interest: Loan amount, interest rate, calculation method, and payment terms

6. Conversion Rights: Conditions and mechanics for converting the note to equity, including conversion price and timing

7. Qualifying Financing: Definition and terms of qualifying financing events that trigger automatic conversion

8. Maturity and Repayment: Maturity date, repayment terms, and options at maturity

9. Company Covenants: Company's obligations and restrictions during the note term

10. Events of Default: Circumstances constituting default and consequences

11. Representations and Warranties: Standard company and investor representations

12. Confidentiality: Confidentiality obligations and permitted disclosures

13. Notices: Communication procedures between parties

14. General Provisions: Standard boilerplate clauses including governing law, assignment, and amendments

Optional Sections

1. Pre-emptive Rights: Rights of note holders to participate in future financing rounds

2. Information Rights: Company's obligations to provide financial and other information to note holders

3. Board Observer Rights: Rights of note holders to appoint board observers

4. Most Favored Nation: Protection ensuring note holders receive best terms offered to other investors

5. Change of Control: Special provisions for company sale or change of control

6. Security: If the note is secured, provisions regarding collateral and security arrangements

7. Tax Provisions: Specific tax-related provisions and obligations

8. Shareholder Approval: Requirements for shareholder approval of conversion terms

Suggested Schedules

1. Schedule 1 - Note Certificate: Form of convertible note certificate

2. Schedule 2 - Conversion Notice: Form of notice to be used when exercising conversion rights

3. Schedule 3 - Company Cap Table: Current capitalization table of the company

4. Schedule 4 - Subscription Details: Details of note subscription amount, interest rate, and maturity date

5. Schedule 5 - Constitutional Documents: Company's constitution and relevant corporate authorizations

6. Schedule 6 - Conversion Calculations: Detailed methodology for calculating conversion price and number of shares

7. Schedule 7 - Events of Default: Detailed list and description of events of default

8. Schedule 8 - Required Consents: List of required regulatory and third-party consents

Authors

Alex Denne

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

Relevant legal definitions





































Clauses






























Relevant Industries

Technology

Financial Services

E-commerce

Healthcare

Biotechnology

Renewable Energy

Software Development

Manufacturing

Consumer Products

Professional Services

Education Technology

Fintech

Agricultural Technology

Digital Media

Telecommunications

Relevant Teams

Legal

Finance

Corporate Development

Treasury

Compliance

Executive Management

Investment

Company Secretarial

Board of Directors

Risk Management

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Legal Counsel

Investment Manager

Corporate Secretary

Finance Director

Venture Capital Associate

Investment Analyst

Corporate Lawyer

Compliance Officer

Board Director

Company Secretary

Financial Controller

Treasury Manager

Business Development Director

Startup Founder

Managing Partner

Industries







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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