How to issue convertible notes (manually on Capdesk)

This article will help to explain how to register and issue convertible notes on Capdesk. 

Before you can get started, you will need to add the Convertible Notes add-on enabled (if you have not already done so).

To enable the add-on, go on your company's profile, go to "Settings and add-ons" and ensure that "Convertible notes Addon" is selected. If it isn't, please click the box by "Convertible notes Addon" and select save to enable convertible notes.

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After you have enabled the add-on, you will need see "Convertible Notes" page appear under "Ownership".

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The next step is to add the convertible notes on Capdesk. Go on the convertible notes tab, click the green button "Add Note".

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When you click "Add Note" you will be taken to a page where you will be asked to choose a stakeholder (that is registered on Capdesk already), either select the relevant stakeholder you would like to issue convertible notes to, or you can also create a new stakeholder:

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Clicking on "Or Add New Noteholder Instead" will take you to a page requiring:

  • Type: Whether they are a legal person or legal company
  • First name 
  • Last name 
  • Email address 

or you can select an existing stakeholder as shown below:

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Once you have selected the relevant stakeholder or made a new one, you will be taken to a page that allows you to fill in the specific details of the convertible note. The fields with a red asterisk are mandatory to be filled and explained below:

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You will need to fill out:

  • Convertible note type - Denotes what type of convertible note is being issued.
    1. Standard and other convertible notes are debt which can be repaid or converted to equity depending on terms in the agreement. With standard notes there is an interest rate and possible maturity date.

    2. SAFE's are a simpler and standardised version of convertible notes developed by Y Combinator. SAFE's are not really debt and there is no interest nor maturity date attached to them.

    3. Advanced Subscription Agreements (ASA's) are essentially payments for equity in advance and, e.g. not debt, which makes them suitable for UK SEIS/EIS-investments in certain cases. Please contact Capdesk support or your legal advisor before choosing a convertible type.
  • The relevant share class 
  • The date issued 
  • Principal currency and principal amount
  • Interest %
  • Conversion terms either conversion discount or fixed conversion price:

Conversion discount % - Discount on share price of future funding round which triggers conversion of note. (Please enter a number between 1 and 100).

Fixed price conversion - The fixed price of the shares which note holders can convert their notes into.

An example of these fields being filled out is shown below:

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If you would like to assign a funding round to these notes, you will need to click the Advanced drop down and then fill in the required field. If you are missing the desired funding round and need to add another, you can find the support article here.

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If you have any documents you want the noteholder to have access to, you will need to upload before publishing the option by clicking the "Notes and Documents" drop-down and upload the document there by clicking the green "Add document" button.

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Once you've entered the relevant details and if you aren't live click the "Save Draft" button. If you are already live, you can select either "Save Draft" or "Publish and Notify" button.

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If you are still in draft mode, you can amend and edit details to do with the note, however if you have published the note you cannot edit the details of the note. To edit the note after you have saved the draft, you will need to click the "..." action button to the right of the screen, a menu will pop up as shown below, click the "edit" button and you can make amendments on the note. 

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To view the details of the note you can click the "view" button to the left of the name of the note holder. You will be shown a window like this: 

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Thanks for reading this support article, we hope it was helpful. If you need further assistance, you can reach out to us by submitting a support ticket here.