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Managing convertible equity

Convertible equity allows investors to provide capital to a company in exchange for the right to receive shares at a later stage, typically during a future funding round.

Written by Astrid Doumeizel

Common types of convertible equity include SLIP (Startup Lead Investment Paper) and SAFE (Simple Agreement for Future Equity).

In Unlisted, you can register convertible equity instruments, manage multiple investors under the same agreement, and convert investments into shares when the agreed conditions are met.

This article explains how to create, manage, and convert convertible equity instruments in Unlisted.

Unlisted allows you to register and manage convertible equity agreements, but does not support digital signing, so all terms should be agreed upon and the agreement signed before activation, although you can save the instrument as a draft while preparing it.

Creating a convertible equity instrument

Step 1: Enter the instrument details

  1. Go to Financial instruments in the left-hand menu.

  2. Open the Convertible equity tab.

  3. Click + Add SLIP/SAFE.

A wizard will open to guide you through the creation process.

Start by entering the general information about the instrument:

  • Currency: Select the currency used for the investment.

  • Internal name: Give the instrument a name to easily identify it in Unlisted.

Next, define the conversion terms of the agreement.


For each condition, you can choose whether it applies to your instrument:

  • Interest rate: Choose whether the investment includes interest. If yes, enter the interest rate.

  • Discount: Choose whether investors receive a discount when converting their investment into shares. If yes, enter the discount percentage.

  • Valuation cap: Choose whether the agreement includes a valuation cap. If yes, enter the maximum valuation used to calculate the conversion price.

  • Trigger amount: Choose whether a minimum funding amount is required to trigger the conversion. If yes, enter the amount.

Next, specify the share class:

  • If the share class is defined in the agreement, select it now.

  • If the share class will only be determined at conversion, choose that option instead. You will select the share class when converting the instrument.

Finally, enter the relevant dates:

  • Agreement date: The date on which the convertible equity agreement was entered into.

  • Alternative conversion date (optional): A date specified in the agreement for a possible conversion outside the usual conversion event.

Once all the information is entered, click Add investors.
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Step 2: Add investors

In the second step, you can register the investors participating in the instrument.

You can add one or multiple investors under the same convertible equity instrument.


For each investor:

  1. Select an existing stakeholder from your company or create a new one.

  2. If you create a new stakeholder, a side panel will open. Fill in the required information to register the stakeholder.

  3. Enter the investment amount for that investor.

Repeat the process for each additional investor.


Once all investors have been added, click Add documents.


Step 3: Add documents

In this step, you can upload documents related to the convertible equity instrument.

These may include:

  • Signed SLIP or SAFE agreements

  • Subscription or investment agreements

  • Board resolutions approving the investment

  • Supporting documentation related to the investment terms

  • Other relevant legal or financial documents

Once you have reviewed the document section, select the option that matches your situation:

  • All documents have been uploaded: You have added all the necessary documents.

  • I will upload documents later: You want to complete the registration now and return to the documents later.

  • No documents to add: There are no documents to attach to this instrument.

Then click View Summary.


Step 4: Review and add the instrument

The final step displays a summary of the convertible equity instrument.


At the top, you can review the information entered in the previous steps, including the instrument details, conversion terms, and investors.
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Check that everything is correct before proceeding.


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Invite investors

You can choose whether to invite the investors to Unlisted.


We recommend inviting them so they can access their investment information through their personal portfolio.


​Save or add the instrument

You have two options:

  • Save as draft: Save the instrument without activating it. You can return to complete or edit it later.

  • Add convertible equity: Register the instrument as active in Unlisted.

Once saved, the instrument will appear in the Convertible equity tab on the Financial instruments page.


Its status will be:

  • Draft, if you saved it as a draft.

  • Active, if you added the instrument.

Managing convertible equity instruments

The actions available for an instrument depend on its status.

Managing a draft instrument

A draft instrument has been saved but has not yet been activated.

Click the three dots next to the instrument to access the available actions:

  • View: Review the instrument's information.

  • Edit note: Modify the instrument details.

  • Edit subscription: Modify the investor subscriptions associated with the instrument.

  • Delete: Delete the instrument.

How to activate a draft instrument

  1. Find the draft instrument in the Convertible equity tab.

  2. Click the three dots and select Edit note.

  3. Go through the wizard and review the information entered in each step.

  4. Make any necessary changes.

  5. On the final step, click Add convertible equity.

The instrument will now appear with the status Active.

Managing an active instrument

An active instrument has been registered in Unlisted but has not yet been converted into shares.

Click the three dots next to the instrument to access the available actions:

  • View: Review the instrument's details.

  • Edit note: Modify the instrument information.

  • Edit subscription: Modify the subscriptions associated with the investors.

  • View stakeholder: Access the relevant stakeholder information.

  • Convert: Start the process of converting the investment into shares.

  • Delete: Delete the instrument.

Converting convertible equity into shares

When the conditions for conversion have been met, you can convert the instrument into shares directly from Unlisted.

Step 1: Start the conversion

  1. Go to Financial instruments.

  2. Open the Convertible equity tab.

  3. Find the instrument you want to convert.

  4. Click the three dots next to it.

  5. Select Convert.

A side panel will open.

Start by reviewing the instrument details to make sure the registered information is correct.

Step 2: Choose the conversion method

You can choose between automatic and manual conversion.

Automatic conversion

With automatic conversion, Unlisted calculates the conversion price and the number of shares to allocate to each investor based on the registered agreement terms.

To use this option:

  1. Select Automatic conversion.

  2. Enter the company valuation at the conversion date.

  3. Unlisted calculates the conversion based on the applicable terms, including any discount or valuation cap.

Manual conversion

With manual conversion, you define the conversion price yourself.

To use this option:

  1. Select Manual conversion.

  2. Enter the conversion price per share.

Unlisted uses this price to calculate how many shares each investor will receive.

Step 3: Select the conversion details

For both conversion methods, you must specify:

  • Conversion reason: Select the reason for converting the instrument.

  • Share class: If the share class was not defined when creating the agreement, select the share class the investors will receive.

Step 4: Review the conversion calculations

Before proceeding, review the conversion summary.

Unlisted displays:

  • Investment amount: The amount being converted into shares.

  • Share price: The price per share used for the conversion.

  • Number of shares: The total number of shares to be issued.

  • Nominal value: The nominal value of the shares being issued.

Below the summary, you will find a detailed breakdown for each investor, showing the shares they will receive.

How share rounding works

Since shares must be allocated in whole numbers, Unlisted calculates the maximum number of whole shares that can be issued based on each investment amount and the conversion price.

For example, if an investor has NOK 10,000 to convert and the share price is NOK 300, they can receive 33 shares.

The remaining NOK 100 is not enough to purchase another whole share.

When this happens, Unlisted indicates the remaining amount that must be paid to the investor as a supplement.

Review these calculations carefully before completing the conversion.

Step 5: Set the issue date

Enter the issue date, which is the date on which the new shares will be issued.

You can then choose between:

  • Save as draft: Save the conversion details without completing the conversion.

  • Convert and issue shares: Complete the conversion and issue the shares.

If you choose to convert, Unlisted will ask you to confirm the action.

Review the information one final time and confirm the conversion.

Step 6: Review the converted instrument

Once the conversion is completed, the instrument will appear with the status Converted in the Convertible equity tab.

For converted instruments, the available actions are:

  • View note: Review the original instrument details.

  • View stakeholders: Access the stakeholders associated with the instrument.

Important: Once an instrument has been converted, it can no longer be edited. Make sure all the information and calculations are correct before confirming the conversion.

Confirming a capital increase

If the conversion of your convertible equity instrument triggers a capital increase, you must also confirm the resulting transaction.

To do so:

  1. Go to the Transactions page.

  2. Find the transaction created by the conversion.

  3. Review the transaction details.

  4. Confirm the transaction.

Once the transaction is confirmed, the newly issued shares will be reflected in your cap table.

Conclusion

Unlisted allows you to manage the full lifecycle of your convertible equity instruments, from registering a SLIP or SAFE agreement to converting the investment into shares.

You can register multiple investors under one instrument, define the conversion terms, manage agreements in draft or active status, and review the share allocation before conversion.

Remember that converted instruments cannot be edited, and that any resulting capital increase must be confirmed on the Transactions page to update your cap table.

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