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What is the legal relationship between the investor, Goparity and the promoter in the case of a convertible loan?

For regular loans, there is a legal relationship between the promoter and the investor, as borrower and lender respectively, established by a loan agreement.  

In the case of a convertible loan, this relationship remains the same. However, a new option is added—namely, it’s given the right to convert outstanding capital into equity or shares in the promoter’s organisation.  

When the conversion of the debt into shares or equity takes place, the process is to be handled between the promoter and the investor. The investor becomes a shareholder of the promoter’s organisation, and a contract is signed for this purpose. 

Goparity operates as an intermediary between investors and promoters. After referring the investor to the promoter, Goparity does not intervene further in this process. 

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