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The Convertible Loan Agreement Template is designed for use in the United Arab Emirates when a company seeks to raise capital through a loan that can later be converted into equity shares. This financing instrument is particularly popular among growth-stage companies and startups in the UAE ecosystem, offering flexibility to both investors and companies. The template incorporates all necessary elements required under UAE Federal Law No. 32 of 2021 (Commercial Companies Law) and related regulations, including provisions for interest/profit calculation, conversion triggers, and share issuance procedures. It addresses specific UAE requirements regarding foreign ownership, corporate governance, and optional Sharia compliance. The document is structured to protect both lender and borrower interests while ensuring enforceability under UAE law.

1. Parties: Identification of the Lender and Borrower (Company), including full legal names, registration details, and addresses

2. Background: Context of the agreement, including company's business, purpose of the loan, and basic transaction structure

3. Definitions and Interpretation: Key terms used throughout the agreement, including Conversion Price, Conversion Rights, Qualifying Event, etc.

4. Loan Amount and Disbursement: Details of the loan amount, disbursement conditions, and drawdown procedures

5. Interest/Profit Rate: Specification of interest/profit rate, calculation method, and payment schedule, ensuring Sharia compliance if required

6. Conversion Mechanism: Terms and conditions for converting the loan into shares, including trigger events and conversion price calculation

7. Conversion Procedure: Step-by-step process for executing the conversion, including notices, timing, and documentation requirements

8. Representations and Warranties: Standard and specific warranties from both parties, including company's authority to issue shares upon conversion

9. Covenants: Ongoing obligations of the borrower, including information rights and operational restrictions

10. Events of Default: Circumstances constituting default and consequences, including acceleration rights

11. Termination: Circumstances and procedures for terminating the agreement

12. Confidentiality: Obligations regarding confidential information and announcements

13. Notices: Communication procedures and contact details for formal notices

14. Governing Law and Jurisdiction: Specification of UAE law as governing law and jurisdiction for disputes