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Convertible Note Purchase Agreement for Malaysia

Convertible Note Purchase Agreement Template for Malaysia

A comprehensive legal agreement governed by Malaysian law that establishes the terms and conditions under which an investor provides funding to a company through convertible notes. The document details the investment amount, interest rate, maturity date, conversion mechanics, and investor rights. It incorporates specific provisions compliant with Malaysian Companies Act 2016 and Capital Markets and Services Act 2007, including necessary corporate authorizations and securities regulations. The agreement balances investor protection with company flexibility, providing detailed mechanisms for conversion into equity, repayment terms, and default scenarios.

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What is a Convertible Note Purchase Agreement?

The Convertible Note Purchase Agreement is a crucial financing instrument commonly used by Malaysian companies, particularly startups and growth-stage businesses, to secure early-stage or bridge funding. This document is typically employed when a company needs to raise capital but either wants to defer equity valuation or seeks a more flexible financing structure than immediate equity investment. The agreement must comply with Malaysian corporate and securities laws, including the Companies Act 2016 and Capital Markets and Services Act 2007. It contains essential provisions for the issuance of convertible notes, including investment terms, conversion rights, investor protections, and compliance with local regulatory requirements. The document is particularly relevant for companies planning future equity financing rounds, as it provides a pathway for note conversion into equity at predetermined terms or upon qualifying events.

What sections should be included in a Convertible Note Purchase Agreement?

1. Parties: Identification of the Company (Issuer), Investor(s), and any other relevant parties

2. Background: Context of the investment and purpose of the agreement

3. Definitions and Interpretation: Key terms, calculation methods, and interpretation rules

4. Purchase and Sale of Notes: Terms of the note purchase, including purchase price and closing mechanics

5. The Notes: Detailed description of the notes, including principal amount, interest rate, and maturity date

6. Conversion Rights: Terms and mechanics of conversion, including conversion price, timing, and procedures

7. Repayment Terms: Conditions and procedures for repayment of the notes

8. Company Covenants: Ongoing obligations of the company during the term of the notes

9. Events of Default: Circumstances constituting default and consequences

10. Representations and Warranties: Standard representations by both company and investors

11. Information Rights: Investor rights to receive company information and financial statements

12. Confidentiality: Provisions regarding confidential information

13. General Provisions: Standard boilerplate clauses including notices, amendments, governing law

What sections are optional to include in a Convertible Note Purchase Agreement?

1. Board Observer Rights: Include when investors are granted rights to observe board meetings

2. Pre-emptive Rights: Include when investors are given rights to participate in future fundraising

3. Tag-Along Rights: Include when investors are given right to join in sale of company shares

4. Foreign Investment Provisions: Include when there are foreign investors requiring compliance with Malaysian foreign investment laws

5. Security Provisions: Include when the notes are secured by company assets

6. Subordination: Include when there are existing creditors requiring subordination arrangements

7. Most Favored Nation: Include when investors should benefit from better terms given to future investors

What schedules should be included in a Convertible Note Purchase Agreement?

1. Schedule 1: Form of Note: Template of the actual convertible note certificate

2. Schedule 2: Conversion Mechanics: Detailed procedures and calculations for conversion

3. Schedule 3: Capitalization Table: Current and post-conversion capitalization of the company

4. Schedule 4: Company Disclosure Schedule: Exceptions to representations and warranties

5. Schedule 5: Registration Rights: Terms for registration of converted shares

6. Schedule 6: Technical Description of IP: Description of key intellectual property if relevant to valuation

7. Appendix A: Form of Conversion Notice: Template notice for exercising conversion rights

Authors

Alex Denne

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

Jurisdiction

Malaysia

Publisher

Ƶ

Cost

Free to use
Relevant legal definitions































Clauses






























Relevant Industries

Technology

E-commerce

Financial Services

Healthcare

Biotechnology

Software Development

Clean Technology

Digital Media

Manufacturing

Consumer Products

Agriculture Technology

Education Technology

Relevant Teams

Legal

Finance

Corporate Development

Executive Leadership

Treasury

Compliance

Corporate Secretarial

Investment

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Chief Legal Officer

General Counsel

Corporate Secretary

Finance Director

Investment Manager

Legal Counsel

Venture Capital Associate

Investment Banker

Corporate Lawyer

Financial Controller

Business Development Director

Startup Founder

Company Director

Compliance Officer

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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