Convertible Note & Advanced Subscription Agreement
Originally published: 09/11/2017 13:19
Last version published: 17/01/2018 11:02
Publication number: ELQ-35511-3
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Convertible Note & Advanced Subscription Agreement

Convertible Note & ASA Templates by Seed Summit

Along with 500 Startups and JAG Shaw Baker, these documents- along with the others- have been produced by SeedSummit to give entrepreneurs another way of structuring a financing round.

Advanced Subscription Agreement or Convertible Note?

If you're wondering what the difference is between the 2 documents; an ASA states no obligation to repay the amount within a set time frame and also has no interest rate. This means that with it you can benefit from certain advantages of choosing a convertible debt structure without the bounds tied to a normal convertible note.

You also have to consider tax when trying to decide between the two. If the Convertible Note document is used, investors can't be eligible for SEIS/EIS tax treatment. If you use the ASA, you can possibly make your investors eligible for obtaining SEIS/EIS tax relief. Note: You should always obtain specific tax advice.

Lastly, some investors sometimes prefer the format of the convertible note over that of the ASA because it seems more familiar to them. Convertible notes have been used more because they have been around for longer.

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This Best Practice includes
1 Downloadable Convertible Note Template, 1 Downloadable Advanced Subscription Agreement Template

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