Prepare a company-side convertible note diligence request list by translating the proposed financing terms into targeted evidence requests, assigning company custodians, and linking responses to documents and clauses. Begin with issuance authority, capitalization, outstanding convertible instruments, debt restrictions, and proposed representations. Separate missing evidence from unresolved legal questions, and distinguish current issuance requirements from future conversion dependencies. The deliverable is a controlled list showing what the company must collect, why it matters, who owns each response, and which decisions remain with counsel.
Use this workflow when company counsel or an in-house team receives an investor questionnaire, circulates a convertible note term sheet, or prepares a bridge financing involving existing notes or SAFEs. It is especially useful when finance, founders, outside counsel, and business teams hold different parts of the record.
The task is preparing and refining the request list—not completing substantive diligence or managing the entire closing. Requests should support decisions about the proposed financing rather than indiscriminately demand every corporate record.
This guide uses a US practice orientation and identifies Delaware corporate-law points separately. Other entities require their own authority analysis. Securities exemptions, state notices, security interests, usury, tax, and enforceability require fact-specific review by assigned counsel.
Start with these inputs:
Do not wait for complete inputs. An unavailable instrument becomes a specific request; an undecided financing term becomes an assigned question, not an assumed fact. Identify the draft version used to prepare the list so subsequent changes can be checked against it.
Use the Convertible Note Financing Transactions — Diligence request list below. You can copy this table into your working document or spreadsheet.
| Request ID | Topic/entity | Evidence requested | Deal reason | Source/ref. | Owner | Status/gap | Next action/target |
|---|---|---|---|---|---|---|---|
Assign stable identifiers such as CNR-001. Split requests where different custodians or materially different decisions require separate responses. An identified note, its amendments, and a referenced side letter are more actionable than “all financing documents.”
Use Deal reason to connect collection to issuance, conversion, repayment, priority, or a proposed representation. In Source/ref., identify the provision prompting the request and the evidence received, using document IDs and clause, page, or spreadsheet-cell references. Keep entity, execution date, version, and access classification in the linked document index.
Distinguish requested, partial, received but unreviewed, reviewed, and unresolved in Status/gap. Receipt is not a sufficiency determination. Name a primary accountable owner; identify additional contributors in Next action/target. Internal targets are not legal deadlines unless counsel verifies the underlying trigger.
Summarize proposed principal, maturity, interest, conversion events, security, and closing structure. Identify open terms and whether the company will issue uniform notes, individually negotiated instruments, or advances under an existing arrangement.
Separate evidence needed for issuance from evidence relevant to later conversion. A future financing’s share class may not exist yet; identify that dependency instead of demanding completed future records. For multiple closings, identify which balances, representations, and approvals may need refreshed evidence.
Record: Rows for missing transaction inputs, the controlling draft references, and conditional requests—for example, collateral records only if security is proposed. Assign an owner to each unresolved scoping question.
Request the operative charter, amendments, bylaws, relevant board and stockholder actions, stock ledger, and capitalization records. Ask counsel to distinguish authority for issuing the note from requirements for issuing conversion shares. Request support for authorized, issued, and reserved shares by class, identifying unresolved conversion assumptions.
For Delaware corporations, DGCL § 151(g) requires an effective certificate of designations when the relevant stock rights are established by board resolutions under charter-granted authority rather than already stated in the charter. This conditional procedure does not apply to every note issuance or conversion. See DGCL § 151(g).
Record: Separate rows for issuance approvals and conversion-share dependencies. Cite the relevant charter provisions and request filing evidence where applicable; do not treat a term-sheet description as proof that a series exists.
Request executed notes, SAFEs, warrants, side letters, amendments, waivers, and relevant investor-rights agreements. Pair them with principal balances, funding dates, repayments, and interest support. Ask finance to explain discrepancies rather than treating a capitalization spreadsheet as definitive.
Target follow-ups to actual terms: qualified-financing thresholds, holder elections, capitalization denominators, discounts, accrued-interest treatment, maturity rights, and amendment thresholds. Keep principal and interest separate where the records permit; request an explanation where they do not.
The historical Core Scientific note form contains elective conversion following defined Offering events and conditional voluntary prepayment at a premium. It illustrates why automatic conversion and repayment at par cannot be assumed from the instrument’s label. These are historical negotiated terms, not venture-financing benchmarks. See Exhibit A, §§ 1(b)(i) and 2(a).
Record: Requests for missing instruments, attachments, and balance support, identifying the conversion or repayment question each addresses.
Examine available debt and investor documents for debt-incurrence restrictions, liens, subordination, amendment limits, and consent rights. Frame each request around the proposed act: issuing debt, granting security, converting instruments, or completing a later sale. Do not assume those events receive identical treatment.
Request notices, consents, waivers, or intercreditor documents only where the text or proposed structure warrants them. A filed secured, subordinated purchase-agreement form includes prior-noteholder consents, lender approvals, security documents, and subordination deliverables among its conditions. It illustrates dependencies, not a mandatory package for unsecured startup notes. See § 4.1(e)–(l).
Record: The restriction’s clause, affected transaction, missing evidence, and accountable owner. Assign interpretation to counsel and collection to the custodian; do not request a consent as definitively required before resolving applicable exceptions.
Use the purchase-agreement draft to identify supporting evidence for capitalization, IP ownership, material contracts, disputes, and other proposed representations. Preserve knowledge, materiality, entity, and time-period qualifications. Counsel may recommend broader collection for a specific risk, but should state the reason rather than silently expanding scope.
For IP, prioritize founder, employee, and contractor assignments relevant to the company’s technology and known exceptions. For commercial contracts, target financing-related restrictions and termination provisions. Ask custodians to explain apparent omissions and identify records held outside the main repository.
The SEC-filed form’s conflict and default representations show how negotiated wording can guide collection; its qualifications are not universal diligence thresholds. See §§ 2.1–2.2.
Record: The representation reference, collection boundary, custodian, and explanation needed for a qualified response.
Ask securities counsel to identify the intended exemption and required factual inputs. Request relevant investor information, solicitation history, purchase commitments, acceptance records, and expected closing dates. Distinguish commitment dates from wire receipts.
The SEC states that offerings under Rules 504 or 506 or Securities Act § 4(a)(5) require Form D within 15 days after the first investor becomes irrevocably contractually committed. A deadline falling on a Saturday, Sunday, or holiday moves to the next business day. This is not a filing rule for every exemption, and state notices need separate analysis. See SEC, Filing a Form D Notice.
Record: Requests supporting exemption analysis, the first-sale determination, and filing ownership. Transfer actual filing tasks to the appropriate closing or post-closing tracker without treating this collection list as proof of compliance.
Ask custodians whether each request identifies searchable records, a realistic boundary, and clear ownership. Consolidate duplicates while preserving distinct legal purposes. Link amendments and schedules to parent documents, and expressly request missing attachments rather than inferring their contents.
Separate internal collection from investor disclosure. Route potentially privileged, personal, or commercially sensitive records for counsel’s review before external sharing. Prioritize follow-up by financing consequence, not document volume.
Record: A next action, owner, and internal target for every open row. Preserve request IDs across revisions and record draft changes that alter scope. If a document is unavailable, identify the search performed and assign counsel the decision on alternative evidence or further action.
Fictional scenario: Alder Lantern Robotics, Inc., a Delaware corporation, proposes a $1.8 million unsecured convertible note financing. Its draft term sheet specifies automatic conversion on a defined qualified financing. All parties, documents, amounts, and provisions in this example are fictional.
Finance supplies a capitalization spreadsheet, two executed earlier notes, and a bank facility. The spreadsheet records one note at $300,000, but its face principal is $250,000. A second note references an unavailable side letter. The bank facility restricts additional borrowed debt without written consent, subject to exceptions whose application remains unresolved.
| Request ID | Topic/entity | Evidence requested | Deal reason | Source/ref. | Owner | Status/gap | Next action/target |
|---|---|---|---|---|---|---|---|
| CNR-011 | Prior-note balance | Advances, amendments, interest support | Separate principal and conversion exposure | CAP-01 row 18; NOTE-01 § 1 | Controller | $50,000 difference unexplained | Reconcile before investor response; avoid unsupported balance |
| CNR-012 | Holder rights | Executed side letter and amendments | Assess rights affected by issuance | NOTE-02 § 7 | Corporate counsel | Referenced letter absent; contents unknown | Search company records, then request holder copy |
| CNR-013 | Bank restriction | Facility schedules and consent evidence | Assess debt restriction and exceptions | DEBT-01 § 6.2 | Deal counsel | Restriction located; exception unresolved | CFO collects schedules; counsel decides consent need before issuance |
These entries change the collection decision. The team prioritizes balance support, the missing side letter, and facility schedules rather than requesting unrelated commercial records. The $50,000 difference could reflect another advance, interest, or error; none is established. The missing letter cannot be described as harmless, and the facility restriction alone does not resolve whether consent is required.
Counsel also avoids assuming the earlier notes share the proposed note’s automatic-conversion treatment. Until their terms and balances are reconciled, any conversion estimate remains expressly provisional.
DecoverAI is the Legal Intelligence Platform for litigation and transactions. Its due diligence capabilities include bulk document classification to organize records and prioritize human review. Tabular review supports work across multiple documents when comparing instruments against the request list. The list and index remain team work products; counsel determines sufficiency, resolves legal questions, and approves disclosure. To discuss this company-side workflow, book a demo.
No. Prepare from proposed terms and known records, then map investor requests to existing IDs. Keep investor additions distinguishable so counsel can assess their scope and disclosure implications.
Separate rows where terms, custodians, or gaps differ. Uniform instruments may share a collection request, but preserve instrument-level references and identify individual side letters or amendments.
Collect existing instruments and capitalization support now. Mark definition-dependent requests as conditional and assign counsel to update them when thresholds, interest treatment, or capitalization definitions change.
After evidence is assessed against its stated purpose or an authorized reviewer records a reasoned disposition. An unavailable document remains an assigned gap unless counsel determines and documents how to proceed.
Scope: General professional workflow guidance using the October 13, 2026 research cutoff. Actual rights depend on the documents, governing law, facts, and deal context.
This guide is general information about legal workflows, not legal advice for any matter. It was drafted and reviewed with AI assistance. The worked example is fictional. Contract rights and procedure depend on the governing law, the actual wording, and the facts, so check the cited sources and the rules that apply in your jurisdiction before relying on it.