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Debt To Equity Conversion Agreement

Debt To Equity Conversion Agreement Template for South Africa

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Key Requirements PROMPT example:

Debt To Equity Conversion Agreement

"I need a Debt to Equity Conversion Agreement for converting a R5 million corporate loan into ordinary shares of our South African manufacturing company, with completion planned for March 2025 and maintaining our current BEE status."

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Document background
The Debt To Equity Conversion Agreement is a crucial instrument in South African corporate restructuring and debt refinancing scenarios. It is typically employed when companies seek to improve their balance sheet structure, reduce debt burden, or address financial distress. The agreement must comply with South African Companies Act requirements, BEE legislation, and where applicable, Exchange Control Regulations. It details the conversion mechanics, including debt amounts, conversion ratios, share valuation methods, and resulting shareholding structure. This document is particularly relevant in the current economic climate where companies may need to restructure their obligations while providing creditors with equity participation opportunities.
Suggested Sections

1. Parties: Identification of the debtor company, creditor(s), and any other relevant parties to the agreement

2. Background: Context of the existing debt, reason for conversion, and current shareholding structure

3. Definitions and Interpretation: Definitions of key terms and interpretation rules for the agreement

4. Debt Acknowledgment: Confirmation of the existing debt amount and its validity

5. Conversion Terms: Core terms of the conversion including conversion ratio, share price, and number of shares to be issued

6. Implementation Mechanism: Step-by-step process of how the conversion will be implemented

7. Conditions Precedent: Required approvals and conditions that must be met before conversion

8. Representations and Warranties: Standard and specific warranties from all parties regarding capacity, authority, and accuracy of information

9. Completion: Actions to be taken at completion, including documentation and registration requirements

10. Post-Conversion Rights: Rights attached to the new shares and any specific shareholder rights

11. Tax Provisions: Treatment of tax implications and responsibilities

12. Governing Law and Jurisdiction: Specification of South African law and jurisdiction details

13. General Provisions: Standard boilerplate clauses including notices, amendments, and entire agreement

Optional Sections

1. Multiple Creditor Provisions: Required when multiple creditors are converting debt to equity, addressing ranking and priority

2. Regulatory Compliance: Specific section for listed companies or when regulatory approvals are required

3. BEE Provisions: Required when conversion affects BEE status or compliance

4. Security Release: Needed when existing debt is secured and security needs to be released

5. Foreign Exchange Provisions: Required for cross-border transactions requiring Reserve Bank approval

6. Drag-Along/Tag-Along Rights: Optional provisions for future share transfers and exits

7. Anti-dilution Protection: Optional protection for converting creditors against future dilution

8. Interim Period Provisions: Required when there's a significant gap between signing and completion

Suggested Schedules

1. Debt Schedule: Detailed breakdown of the debt being converted, including interest calculations

2. Share Capital Structure: Pre and post-conversion shareholding structure

3. Calculation Schedule: Detailed calculations of conversion ratios and share numbers

4. Form of Share Certificate: Template for new share certificates to be issued

5. Required Corporate Resolutions: Forms of shareholder and board resolutions required

6. Completion Checklist: List of actions and documents required for completion

7. Regulatory Filings: Forms and notices required for regulatory compliance

8. Amended Constitutional Documents: Updated MOI or other constitutional documents reflecting new share structure

Authors

Alex Denne

Head of Growth (Open Source Law) @ tiktok³ÉÈË°æ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions









































Clauses






























Relevant Industries

Financial Services

Mining

Manufacturing

Real Estate

Technology

Retail

Energy

Infrastructure

Healthcare

Telecommunications

Agriculture

Construction

Professional Services

Relevant Teams

Legal

Finance

Treasury

Corporate Development

Compliance

Risk Management

Board Secretariat

Corporate Finance

Mergers & Acquisitions

Regulatory Affairs

Relevant Roles

Chief Financial Officer

Finance Director

Corporate Finance Manager

Legal Counsel

Company Secretary

Financial Controller

Treasury Manager

Restructuring Officer

Investment Banker

Corporate Lawyer

Compliance Officer

Risk Manager

Board Director

CEO

Debt Restructuring Specialist

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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