English translation for convertible bond subscription agreement in English for attracting overseas investment, successful case of Law firm Veat.
Article posted in 2025-02-24 16:13:24 | VEAT
Law firm Veat received a request from cosmetics manufacturing company A (hereinafter "Client") to draft and review a Subscription Agreement for Convertible Bonds(Subscription Agreement for Convertible Bonds) for attracting overseas investment.
The Client intended to attract investment by issuing convertible bonds to overseas investors and therefore needed an English Subscription Agreement. Law firm Veat drafted a draft agreement in accordance with the Client’s request and completed the final agreement by reflecting changes arising during the negotiation process between the Client and the investor.
Investment-focused Law firm Veat, Reflects Key Investment Terms in the Contract
Law firm Veat considered the Client’s position of being the company receiving investment, and drafted the agreement to reflect conditions as favorable as possible to the Client. In particular, it organized the key terms of the convertible bonds, such as interest rates, conversion rights, and redemption clauses, so that the Client could negotiate in a favorable direction.
1️⃣ Setting Interest Rates and Payment Methods
One of the most important elements of a convertible bond is the interest rate (Interest Rate) and payment method (Payment Terms). Law firm Veat set a reasonable interest rate to prevent excessive interest burden, considering the Client’s financial status. Also, it adjusted the interest payment method and compounding applicability by reflecting the investor’s requirements.
2️⃣ Adjusting Conversion Rights Conditions
Conversion rights (Conversion Right) refers to the investor’s right to convert bonds into shares under certain conditions. Law firm Veat adjusted the conversion price (Conversion Price) and conversion ratio (Conversion Ratio) to prevent the investor from securing an excessive stake. This protected the Client from being in a disadvantageous position in the shareholder structure in the future.
3️⃣ Reviewing Redemption Rights and Early Redemption Clauses
Some investors may request early redemption rights (Early Redemption Right) and attempt to set conditions for receiving cash for the bonds under certain circumstances. Law firm Veat adjusted the wording of the contract to ensure that the investor’s early redemption requests would be limited, to reduce the Client’s financial burden.
4️⃣ Reviewing and Modifying Investor Protection Clauses
Some investment contracts include investor protection clauses (Investor Protection Clauses), which serve to reduce the investor’s risk. However, if these clauses are set too excessively, the Client’s business operations may be hampered. Law firm Veat modified the contract clauses to minimize unnecessary interference with management and guarantee the Client’s management rights.
Securing Legal Accuracy and Clarity of English Contract through Detailed Review by Foreign Attorneys
English contracts must be drafted considering international legal terminology and sentence structures, not just simple translation. Experts with extensive experience in drafting contracts domestically and internationally directly reviewed the contract and drafted it carefully to secure legal clarity. In particular, it reflected responsibility clauses, governing law, and dispute resolution clauses carefully to minimize the possibility of disputes with investors.
To prevent the Client from bearing unfair legal responsibility, clauses were set to limit liability and the law to be applied for interpretation and dispute resolution was clearly stipulated to apply a favorable legal system to the Client. Also, in the event of future international disputes, provisions were prepared to resolve disputes through arbitration to enable faster and more economical dispute resolution than litigation.
Investment Legal Partners Veat, Supporting Negotiation Process with Investors
Law firm Veat provided appropriate legal advice to the Client at the appropriate time during the negotiation process with overseas investors. It carefully reviewed changes to the contract terms proposed by the investor and advised the Client not to accept unfavorable clauses. Also, it continuously reviewed to minimize legal risks until the final contract was concluded, protecting the Client’s interests.
Complex Investment Contracts, Partner with Veat, the Leader in Investment Advisory
As domestic startups and small businesses increasingly secure funds from overseas investors, the drafting and review of international legal documents are becoming increasingly important elements. In particular, convertible bonds (CB, Convertible Bond), a form of investment contract, are widely used to provide a structure that benefits both the company and the investor.
A Subscription Agreement for Convertible Bonds is a contract concluded when an investor purchases (purchases) convertible bonds from the issuing company, and includes various clauses such as investment amount, interest rate, conversion conditions, and redemption conditions. Convertible bonds are bonds that can be converted into shares under certain conditions, and are used as a means of fundraising for the company, and offer the investor the stability of bonds and the possibility of converting into shares.
Law firm Veat, specializing in investment legal advisory, has performed over 487 investment advisory services and accumulated extensive experience in the investment attraction process for startups and companies. In particular, it has entered the TOP 5 in the Bloomberg league table for transaction volume in the first half of 2024, demonstrating its unique expertise in investment and M&A.
Furthermore, it has successfully supported IT and technology-based startups’ investment and M&A and has effectively resolved legal issues that could arise during the complex investment process.
This achievement represents a typical example of Law firm Veat's differentiated expertise and extensive experience. If you need investment-related legal advice, such as English convertible bond contracts and investment contracts, please contact Law firm Veat.
The case history is also available on the Law firm Veat blog below.