The Situation

A Swiss startup was gearing up for a convertible loan agreement round (CLA round) to raise funds but hit a roadblock; the 10/20 non-bank rule. More than 20 investors were interested in providing a convertible loan (CLA) and the proposed CLA was interest-bearing, triggering potential regulatory and withholding tax (WHT) issues.

Our Approach

We tackled the regulatory challenges by carefully drafting, negotiating, and structuring the CLA round to keep the deal compliant with regulatory requirements and avoid WHT. We accomplished this by structuring the CLA round in a manner to ensure investor terms were at arm's length, varied (interest rates, discount, or duration) and by defining baskets for the various CLAs, to avoid regulatory pitfalls and unexpected WHT, while maintaining acceptable terms for all involved investors.

The Impact

With carefully drafted and negotiated CLAs and a well-structured CLA round, the startup secured funding without compliance nightmares, keeping investors happy and scaling stress-free.

"Alfred helped us structure our CLA round the smart way; funding secured, no tax surprises!" - Founder

The Team

Thierry Barbey, Founding Partner (Legal Advisory)

Thomas van Gammeren, Associate (Legal Advisory)

Sandro Stich, Senior Associate (Legal Advisory)