Internationally, Convertible Notes have become an attractive option to raise capital for businesses, especially start-ups and small to medium enterprises. Over the years they have evolved into more modern, simpler to use capital raising instruments. Convertible Notes do not have a specific form and can be easily drafted to ensure that they are aligned to local, regional and global regulatory norms.
The Commercial Companies Law of 2001 (CCL) in Bahrain was amended with regards to issuance of convertiblenote securities (also referred to as Convertible Notes) by closed joint stock companies. The amendment is a positive step towards facilitating the fund-raising process for private companies, placing Bahrain in the forefront as the first and only onshore jurisdiction in the Arab world to legislate for and allow Convertible Notes.
With this publication, we aim to provide an overview and some clarity that will help simplify the concept and the approach to Convertible Notes for business owners who are considering issuing Convertible Notes. It also helps, if the process owners have the right advisors to help them navigate through these complexities while they proceed to raise capital. With the right approach a business owner can raise funds while reducing their overall cost of capital and in the process enhance their shareholder value.
