How do I convert convertible loans and GmbH shares into profit participation rights?
With the cap table cleanup in the Professional package, without the variable fee.
With the cap table cleanup, you convert existing convertible loans or GmbH shares into profit participation rights. For convertible loans, an amendment agreement with each lender is enough. For GmbH shares, a one-time notary appointment is required. The cleanup is included in the Professional package and is exempt from the variable fee.
Why is a cap table cleanup worthwhile?
- Settle outstanding convertible loans: Instead of converting the loans into GmbH shares later through a notarised capital increase, you convert them into profit participation rights. The convertible loan then ends.
- Fewer shareholders in the commercial register: Business angels who are currently shareholders hold profit participation rights without voting rights afterwards. Your cap table stays VC-ready (more on the cap table).
- One instrument for everyone: Existing and new investors hold the same form of investment.
How do I convert a convertible loan?
- Set the terms: You set the number of profit participation rights and the valuation on which the conversion is based. Depending on the existing agreement, accrued interest is converted as well or paid out separately.
- Sign an amendment agreement: You conclude an amendment agreement with each lender, in writing or signed electronically, without a notary.
- Issue the profit participation rights: You issue the profit participation rights on the platform. Once the lender receives them, the convertible loan ends.
How do I convert GmbH shares?
The GmbH buys back the shareholder's shares, and in return the shareholder receives profit participation rights of the same euro value. Both amounts are offset against each other, so no money changes hands. This requires a shareholder resolution and a one-time notary appointment for the buy-back agreement. Beforehand, your tax advisor should confirm that the GmbH is allowed to buy back the shares.
Who prepares the documents?
The startup prepares the conversion itself. We provide the templates; ask your account manager at beel for them. Especially for GmbH shares, we recommend involving legal and tax advisors.
What does the cleanup cost?
The cleanup is included in the Professional package, with no variable fee (What does beel cost?). Notary fees apply for the notary appointment for GmbH shares.
beel points out that it does not provide legal or tax advice. The conversion can have tax consequences for the startup and the investors. Clarify this with your tax advisor beforehand.