Combine GESSI convertible loans and GmbH tokens

Are you the founder of a startup and would like to use a convertible loan for your next financing round and still keep the option of tokenization open?

Then this blog post is interesting for you, because Tokenize.it, in cooperation with established legal experts, has created an adapted version of the GESSI standard contract for convertible loans, which also introduces the option of converting the loan into tokenized participation rights instead of GmbH shares.

This gives you as a founder flexibility and allows you to combine the advantages of the classic convertible loan and the digital GmbH token in one contract.

Read this blog post to find out what it's all about and how to get this sample contract.

Key facts:

• Convertible loans are loan agreements that make it possible to convert the borrowed money into equity at a later date.
• The GESSI standard contracts (German Standards Setting Institute) are free sample contracts for financing rounds created by legal experts and business representatives.
• Sign up at Tokenize.it to get your standard contract adapted to convertible loans and GmbH tokens.

What are convertible loans?

What is a convertible loan and why should I use it as a founder at all?

The special thing about the convertible loan is that the investors can convert the financial claim into real company shares at a certain point in time. Typically the time and calculation formula for the amount of the shares is specified in the convertible loan agreement.

The big advantage is that investors and founders do not have to agree on a valuation of the company and the price of the shares at first, because the conversion takes place in the future. This saves both sides time, which explains the popularity of the convertible loan.

What are GmbH tokens?

With the help of Tokenize.it, founders can easily create ERC-20 tokens on the Ethereum blockchain. These tokens represent the profit participation rights of your company, which puts the investors who hold them on an equal economic footing with shareholders. As our solution is aimed at German GmbHs, we have called them GmbH tokens.

With GmbH tokens, you have other advantages in addition to the convertible loan.

• Tradability - The GmbH tokens can be easily transferred from wallet to wallet in the Ethereum ecosystem, which enables a secondary market and brings liquidity advantages. You also have the option of restricting tradability with an allow list and a lockup period.
• Security - Your GmbH tokens are unique and cannot be forged, which provides a high level of security. You create them yourself and can manage them at any time.
• Speed - Both our technical and our legal implementation enable you to raise capital quickly or invest quickly in startups. You also save yourself a trip to the notary.

If you have any further questions about our products, feel free to arrange a non-binding consultation, visit our FAQs or ask your question using our contact form. We look forward to hearing from you!

What is GESSI?

GESSI stands for German Standards Setting Institute. GESSI aims to provide both founders and investors with simple but technically consistent standard contracts to promote the standardization of the contract landscape.

GESSI is made up of people from diverse backgrounds, including representatives of companies, business angels, and venture capitalists. The documents drafted by GESSI enable users to conduct convertible loan financing rounds by drafting and reviewing standard contracts.

The documents are provided as Word files to allow adaptations to the respective case.

What does the GESSI standard contract contain?

The standard agreements of the German Standards Setting Institute (GESSI) for convertible loan financing rounds consist of three separate documents: the shareholder resolution, the convertible loan agreement, and the conversion commitment.

• The shareholder resolution authorizes the managing directors of the startup to take out convertible loans on the terms set out in the convertible loan agreement and secures the participation of all shareholders.
• The convertible loan agreement is the main document and governs the terms and conditions of the loan between the startup and the lenders.
• The conversion option is necessary for the legal enforceability of the loan conversion and requires the signature of all shareholders, the company itself, and the lenders.

All three documents should be notarized to ensure maximum legal certainty.

Combining GmbH tokens and convertible loans

Tokenize.it has adapted the GESSI standard contract for convertible loans so that the sale or acquisition of tokenized profit participation rights (GmbH tokens) is also possible with this contract in a legally secure manner as a conversion option.

So if you, as a founder, want to keep the option open to use the advantages of GmbH tokens in addition to classic convertible loans, then this contract is just right for you.

Do you want to combine the advantages of the convertible loan and the GmbH token?

Then register at Tokenize.it and secure your GESSI contract template for convertible loans and GmbH tokens.

*Tokenize.it does not provide legal advice and this blog post does not constitute legal advice. For legal questions, we recommend consulting a lawyer.