Directors’ Resolution to Approve Fundraising with Convertible Notes Template

Essentially, a Directors’ Resolution to Approve Fundraising with Convertible Notes is a form of short-term debt that converts into equity.  Usually, it is of use in a fundraising event. Basically, this allows investors to provide a loan to the company in exchange for shares in the company versus principal and interest and future repayment.

Basically, this template is a Directors’ Resolution to authorize the use of convertible notes in a fundraising event. 

What is in a Directors’ Resolution to Approve Fundraising with Convertible Notes?

In essence, a simple majority of directors of the company must approve a Directors’ Resolution to Approve Fundraising with Convertible Notes. Additionally, the resolution must contain the following:

Details of the meeting (if using Board Minutes): A short statement describing when and where the meeting was held.

Date of passing the resolution: When this resolution was passed.

Details of the investor(s): Information regarding the investors who will be lending money and be issued for the convertible note.

Principal amount of subscription: Amount of the note that will be issued.

Company proposal to execute a Convertible Note Instrument: The company must provide details on how the note will be provisioned and the terms of the instrument.

When Should You Use a Directors’ Resolution to Approve Fundraising with Convertible Notes?

Usually, if a meeting of the board of directors convenes to address the issue, use the Board Minutes to Issue Convertible Notes. Or, if the board resolution will pass by way of a written resolution, use the Written Board Resolution to Issue Convertible Notes.

Things to know about a Convertible Note:

• Only Start-up companies can issue a convertible note. 
• They are an instrument that acts as evidence of receipt of money initially received as debt.
• A certain minimum amount of investment is required for a Convertible Note.
• Convertible Notes can be repaid in monetary value or they can be converted into equity shares of the startup company.
• Repayment or conversion needs to take place within five years from the date of its issue. 

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