# Convertible note review
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Review convertible notes and convertible loan notes (CLNs) for founders, investors, and counsel — covering interest accrual and compounding mechanics, maturity…

Review convertible notes and convertible loan notes (CLNs) for founders, investors, and counsel — covering interest accrual and compounding mechanics, maturity and redemption risk, qualified financing definition and threshold, conversion mechanics (discount rate, valuation cap, shadow preferred stock, post-money formula), MFN clause analysis, pro-rata rights, prepayment and subordination provisions, events of default, and amendment consent thresholds. Benchmarks every material term against current market standards (NVCA 2025, Carta Q1 2025, Fenwick/Cooley market data) with dual-perspective framing (founder view and investor view for every economic term). Models cap table dilution from interest accrual and conversion across multiple scenarios. Produces confidence-scored, jurisdiction-aware analysis with COMPLIANT / FLAG / NON-COMPLIANT classification, prioritized redlines, and a Glass Box audit trail. Use when reviewing or negotiating a convertible note, convertible loan note, bridge note, or demand note convertible instrument at any stage (pre-seed through Series A bridge). Jurisdiction-agnostic base with deep tracks for US (Delaware / IRC § 409A) and UK (Companies Act 2006 / SEIS-EIS). Also triggers on: SAFE comparison, shadow preferred mechanics, qualified financing threshold, valuation cap vs. discount analysis, MFN clause triggering, pro-rata side letter, maturity extension mechanics, subordination to senior debt, 409A FMV timing, QSBS eligibility path, EIS/SEIS incompatibility, FEMA constraints on convertible instruments, convertible note overhang, and bridge-to-Series-A scenario planning.

This skill reviews convertible notes and convertible loan notes clause-by-clause. It benchmarks every material term against current market standards, identifies founder-unfavorable or investor-unfavorable deviations, models cap table impact, and generates prioritized redlines with dual-perspective framing. **Covers:** - Conversion mechanics deep analysis: qualified financing definition, discount rate, valuation cap, shadow preferred stock, post-money formula, conversion price arithmetic - Interest and maturity analysis: accrual method (simple vs. compound), rate benchmarking, maturity date risk modeling, redemption mechanics, extension provisions - Investor protections: MFN clause mechanics, pro-rata rights, prepayment consent requirements, anti-dilution carve-outs, information rights - Subordination and priority: senior debt ranking, intercreditor arrangements, pari passu treatment of multiple notes - Events of default: trigger catalogue, grace periods, cure rights, acceleration mechanics, waiver consent requirements - Amendment provisions: consent thresholds, individual-holder carve-outs, majority-in-interest mechanics - Cap table dilution modeling: conversion scenarios, interest accrual impact, option pool interaction, pro-rata dilution - Tax and regulatory flags: US IRC § 409A timing, QSBS eligibility (IRC § 1202), UK SEIS/EIS incompatibility, India FEMA constraints - Market benchmarking against NVCA 2025, Carta Q1 2025, Fenwick/Cooley/Wilson Sonsini data - Dual-perspective findings (founder view and investor view for every economic term) - Quality-verified output with Glass Box audit trail **Does not:** ...

## Jurisdictions

Global



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