What is a Directors’ Resolution to Issue Convertible Notes (Initial Round)?
A Directors’ Resolution to Issue Convertible Notes is a resolution to be passed by the directors of a company to approve the issue of convertible notes. This document is for the initial round of convertible notes issued by a company, and may be used if your company has not issued convertible notes before, and does not have a Convertible Note Instrument in place.
What happens to a Convertible Note if the startup fails?
It largely depends on how the note was drafted. In cases where it is not guaranteed by any of the principles, it is taken as a regular debt. However, if the company has some money, it pays for the liabilities, and the remaining amount is distributed to the equity holders.
Most convertible notes do come with personal guarantees.
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