Template Description

This EGM resolution template, titled "Approval for Raising Debt Capital through Convertible Note," is designed for use by companies under the Companies Act, 2013. The document is a 2-page MS Word document which is mandatory for companies planning to raise debt capital by issuing convertible notes. It ensures compliance with statutory requirements and facilitates a clear and structured approach to securing investment. The intended audience includes companies, investors, and legal professionals.

Understanding The EGM Resolution for Issuance of Convertible Note

Terminologies:

1. Board Resolution: An official document formalizing decisions made by the board of directors during a meeting, as mandated by the Companies Act, 2013.
2. Convertible Note: A form of short-term debt that converts into equity, typically at a future financing round, offering flexibility in financing options.

Procedure for Approval of Convertible Note:

Convene Extraordinary General Meeting (EGM):

Schedule the EGM to discuss and approve the issuance of convertible notes. Circulate the meeting notice, agenda, and any related documents to members at least 7 days prior.

Approval for Issuance:

During the meeting, pass a special resolution to authorize the raising of debt capital through convertible notes. Discuss and approve the terms and conditions of the Convertible Note Agreement with the investor.

Details of Investment:

Document the investor's name and the total amount to be invested in the resolution. Outline key terms and conditions of the convertible note as specified in the agreement.

Execution of Agreement:

Authorize the execution of the Convertible Note Agreement between the company and the investor.

Certification:

Ensure the resolution is certified true copy and signed by the Director on behalf of the board.

Key Considerations:

The resolution should reference relevant sections of the Companies Act, 2013 (e.g., Section 62(3), 179).

Terms of conversion should be clearly stated in the agreement.

The resolution should be comprehensive enough to cover negotiation, execution, and compliance aspects.

Conclusion

This resolution template helps companies efficiently navigate the process of raising capital through convertible notes, offering a structured method to gain shareholder approval and comply with legal requirements. By using this template, companies can streamline the documentation process, ensuring that all necessary approvals and agreements are in place for a successful capital raise.