When a convertible note reaches maturity before the expected equity round, review the contract and cash position immediately. An anticipated funding event does not itself extend a repayment date or trigger conversion.
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Prepare a short decision pack for the board and legal advisers. It should explain the amounts due, available cash and actual rights of each noteholder.
Read the maturity clause with the whole agreement
Identify the payment date, interest calculation, any default provisions and options that arise at maturity. Check who can elect an extension or conversion and which notices or consents are required.
Do not assume the company can unilaterally roll the debt over. A provision for conversion on a qualifying financing may not apply to a round that has not completed or does not meet the contractual definition.
Example: funding is promised, not received
An investor expects to close next month, while the note matures this week. Put the actual cash forecast and funding conditions before the board. A term sheet or optimistic email should not be recorded as available repayment money.
Build the amounts-due schedule
- Principal and documented advances.
- Interest period and calculation method.
- Payments or adjustments already made.
- Different maturity dates across noteholders.
- Notices received or due under the terms.
- Cash available for the proposed response.
Ask the accountant to reconcile the contract schedule to the ledger. Explain any difference rather than choosing the lower figure without evidence.
Negotiate an actual documented response
Possible proposals may include repayment, an agreed extension or a conversion permitted by revised terms. Legal advisers should assess the relevant consent requirements and consequences for other investors.
Keep the original agreement, correspondence and executed amendment. Do not rely on a conversation with one noteholder where approval from others is required.
Coordinate any share issue separately
If conversion will occur, prepare the calculation, share class, approvals and completion documents. Review the constitution and ACRA’s allotment requirements. Changing a debt entry to equity in a spreadsheet does not complete a share issue.
If the company cannot meet obligations, obtain urgent advice on its financial position and directors’ duties. Avoid promising payment dates that lack a supportable plan.
Does a planned funding round stop maturity?
Only the actual agreement and any valid amendment can establish that. Check the terms.
Should every noteholder receive the same calculation?
Reconcile each instrument separately, including its interest, dates and rights.
Related shareholder resources
Read our company constitution guide, subscription completion checklist and deed of adherence review.
Get help with the transaction
For corporate records and share transaction support, email [email protected] or WhatsApp +65 8501 7133. Legal advisers from our associated law firms can assist with investment documents, shareholder agreements and disputes. Accounting and tax advisers can review the financial treatment.