Convertible Note Agreement Spain (Préstamo Convertible)

A Convertible Note Agreement Spain (Préstamo Convertible en Capital) is a hybrid financial instrument combining debt and equity elements — the investor (inversor) provides a loan (préstamo) to a Spanish company (typically a sociedad limitada or sociedad anónima) with the contractual right or obligation to convert the outstanding principal and accrued interest into equity (participaciones sociales or acciones) upon the occurrence of a triggering event, governed principally by the Ley de Sociedades de Capital (Real Decreto Legislativo 1/2010, de 2 de julio — LSC) Articles 401 through 416 on obligaciones convertibles, supplemented by the Código de Comercio (Código de Comercio de 1885) and the Ley 5/2015 de fomento de la financiación empresarial for platforms and crowdfunding structures.

In Spain's startup and venture capital ecosystem, the préstamo convertible has become the preferred early-stage financing instrument for seed and pre-seed rounds, partly inspired by the US SAFE (Simple Agreement for Future Equity) and convertible note structures. The legal architecture under Spanish law differs from Anglo-Saxon models — the conversion mechanism must comply with the capital increase formalities of the LSC, including the requirement for a notarial escritura pública for the capital increase (Article 22 LSC), registration in the Registro Mercantil (Articles 58 and 94 LSC), and compliance with the statutory pre-emption rights (derechos de suscripción preferente) of existing shareholders unless formally waived under Article 308 LSC for sociedades anónimas or Article 396 LSC for sociedades limitadas.

Article 401 LSC establishes that the issuance of convertible bonds (obligaciones convertibles) by a sociedad anónima requires a resolution of the Junta General de Accionistas and a capital increase authority. For startups structured as sociedades limitadas — the most common vehicle in Spain — the préstamo convertible is structured not as a bond issuance but as a bilateral loan agreement (contrato de préstamo under Article 1740 of the Código Civil) with a contractual conversion right — bypassing the obligaciones convertibles regime that applies strictly to sociedades anónimas. The conversion of the loan into participaciones sociales of an SL requires a capital increase approved by the Junta General de Socios under Articles 296–310 LSC.

Key economic terms in Spanish convertible notes follow standard venture capital conventions: the valuation cap (valoración máxima) sets the maximum pre-money valuation at which conversion occurs, protecting early investors if the company raises at a higher valuation; the discount rate (descuento) — typically 15–25% — applies a percentage reduction to the conversion price in the qualifying financing round; and the maturity date (fecha de vencimiento) triggers automatic conversion or repayment if no qualifying round has occurred.

The Asociación Española de Capital, Crecimiento e Inversión (ASCRI) — Spain's private equity and venture capital industry association — has published standardised term sheet and investment documentation frameworks including convertible note provisions, which are widely used in the Spanish startup ecosystem. The Agencia Estatal de Administración Tributaria (AEAT) regulates the tax treatment of convertible instruments — interest payments on the loan portion are subject to IRPF withholding (retención) at 19% under Article 25 Ley 35/2006, and the conversion event may trigger capital gains or corporate tax (Impuesto sobre Sociedades — IS under Ley 27/2014) analysis.

A Convertible Note Agreement Spain is needed when a Spanish startup or early-stage company requires seed or pre-seed investment without establishing a fixed valuation — the convertible structure defers the valuation question to a future priced financing round, avoiding the complexity and cost of a full equity round at an early stage.

The agreement is required when business angels (inversores ángeles) registered with networks such as the Business Angels Network España (BANE) or regional networks affiliated with the European Business Angels Network (EBAN) invest in Spanish startups through ENISA (Empresa Nacional de Innovación S.A.) co-investment programmes or directly, using the convertible loan as the investment vehicle pending the first institutional venture capital round.

A Convertible Note is needed when Spanish venture capital funds (fondos de capital riesgo — FCR) regulated by the Comisión Nacional del Mercado de Valores (CNMV) under Ley 22/2014 de entidades de capital riesgo invest through bridge financing structures ahead of a Series A round — the convertible note provides speed and flexibility compared to a full shareholder agreement (pacto de socios) and capital increase.

The document is required when a Spanish company participates in an accelerator programme — such as Wayra (Telefónica), Lanzadera (Juan Roig), or Plug and Play Spain — that provides funding in exchange for a convertible note rather than direct equity, with conversion rights exercisable at the accelerator's election or upon a qualifying round.

A Convertible Note Agreement is also needed when existing shareholders of a Spanish SL or SA wish to provide bridge financing to the company ahead of a capital round — related-party loans between shareholders and the company must be documented to comply with transfer pricing (precios de transferencia) rules under Article 18 of the Ley del Impuesto sobre Sociedades (LIS — Ley 27/2014) and market arm's-length interest rate requirements.

The agreement is required when a Spanish company raises financing through a crowdfunding platform authorised by the CNMV under Ley 5/2015 de fomento de la financiación empresarial — participative financing platforms (plataformas de financiación participativa — PFP) may structure investment rounds using convertible loan instruments subject to CNMV regulatory requirements and investor protection thresholds under Articles 46 and 68 Ley 5/2015.

Under the Ley de Sociedades de Capital (LSC) RDL 1/2010, the Registro Mercantil maintains the register of Spanish companies. The Código de Comercio 1885 governs commercial obligations. The Agencia Estatal de Administración Tributaria (AEAT) administers Impuesto sobre Sociedades (IS) under Ley 27/2014. The Comisión Nacional de los Mercados y la Competencia (CNMC) enforces competition law. The Código Civil governs general contractual obligations under Article 1255.

A valid Convertible Note Agreement Spain under the Ley de Sociedades de Capital (RDL 1/2010) and Código Civil must contain the following essential clauses to establish the financing structure, conversion mechanics, and investor protections.

Parties and Company Details: Full legal name, NIF, Registro Mercantil registration details (tomo, folio, inscripción), and registered address of the issuing company. Full name, DNI/NIE/passport, address, and — where applicable — investment vehicle details of the investor. For institutional investors, reference to the CNMV registration number of the fund.

Principal Amount and Disbursement: The loan principal amount (importe del préstamo) and the disbursement schedule — single disbursement or tranches. The bank account details for transfer. Reference to the legal nature of the instrument as a préstamo mercantil under Article 311 of the Código de Comercio, with the commercial character documented to establish the applicable legal framework.

Interest Rate: The agreed interest rate (tipo de interés) — typically a fixed annual rate between 1% and 8% or the Spanish legal interest rate (interés legal del dinero) published annually in the Ley de Presupuestos Generales del Estado. Under Spanish tax law, the interest rate must meet arm's-length standards under Article 18 LIS for related-party loans. Interest accrues on the outstanding principal and converts together with principal on the conversion event. AEAT requires IRPF withholding (retención del 19%) on interest payments to individual investors.

Valuation Cap: The maximum pre-money valuation (valoración máxima o cap) at which the note converts — if the qualifying financing round occurs at a higher valuation, the investor converts at the cap rather than the round price, receiving proportionally more equity. The valuation cap protects early investors for the risk premium of investing before a priced round.

Discount Rate: The percentage discount (descuento) applied to the share price in the qualifying financing round — typically 15–25%. The conversion price equals the lower of: (a) the round price multiplied by (1 minus the discount); and (b) the cap price (principal plus accrued interest divided by the pre-money valuation cap, multiplied by the fully diluted share count).

Conversion Events: Automatic conversion upon a qualifying financing round (ronda de financiación cualificada) — typically defined as a priced equity round raising above a minimum threshold (e.g. €500,000 or €1,000,000). Optional conversion at investor election upon maturity. Change-of-control conversion triggered by a merger (fusión), acquisition (adquisición), or asset sale (venta de activos sustanciales). The conversion mechanics must comply with LSC capital increase formalities — waiver of derechos de suscripción preferente under Articles 308 and 396 LSC must be specifically agreed.

Maturity and Repayment: The maturity date (fecha de vencimiento) — typically 18 to 36 months — and the options upon maturity if no conversion event has occurred: repayment of principal plus accrued interest; conversion at an agreed maturity valuation; or extension by mutual agreement. Spanish law does not permit indefinite deferral without a new agreement.

Investor Protections: Most-favoured nation (MFN — nación más favorecida) clause entitling the investor to elect any more favourable terms granted to subsequent convertible note investors. Pro-rata rights (derechos de participación pro-rata) in the qualifying round. Information rights — periodic management accounts and annual audited financials. Anti-dilution provisions applicable to the conversion price if the company issues shares below the conversion price before the triggering event.

Forms-legal.com provides this Convertible Note Agreement Spain template as a starting framework. Every convertible note should be reviewed by a qualified abogado mercantilista specialised in venture capital transactions and startup financing, and coordinated with a gestor or asesor fiscal to address IRPF withholding, IS transfer pricing, and stamp duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados — ITP-AJD) implications of the conversion.

Under the Ley de Sociedades de Capital (LSC) RDL 1/2010, the Registro Mercantil maintains the register of Spanish companies. The Código de Comercio 1885 governs commercial obligations. The Agencia Estatal de Administración Tributaria (AEAT) administers Impuesto sobre Sociedades (IS) under Ley 27/2014. The Comisión Nacional de los Mercados y la Competencia (CNMC) enforces competition law. The Código Civil governs general contractual obligations under Article 1255.