Arizona Convertible Promissory Note Overview
A convertible promissory note in Arizona is a debt instrument commonly used in startup financing that converts into equity upon a triggering event. As a security, it must comply with both federal regulations (SEC Rule 506 under Regulation D) and Arizona's state securities laws. The primary state exemption is: ARS 44-1844 exemption.
Arizona requires Form D filing required when issuing convertible notes. The state provides enhanced protections for note holders through its securities regulatory framework. The interest rate must comply with Arizona's 10% usury limit, though most convertible note rates (2-8%) fall well below this threshold. Companies should work with an attorney familiar with Arizona securities law to ensure full compliance.
Available
Securities exemption
Required
SOS filing
10%
Usury rate
Enhanced
Investor protections
Arizona Requirements
Arizona has specific requirements for convertible promissory notes that both parties should understand before entering into the agreement.
- Interest Rate: Must not exceed Arizona's usury limit of 10%
- Written Agreement: Must be in writing and signed by the borrower (maker)
- Clear Terms: Principal amount, interest rate, payment schedule, and maturity date must be clearly stated
- Default Terms: Late fees, grace periods, and acceleration clause must comply with Arizona law
- Governing Law: The note should specify Arizona as the governing jurisdiction
How to Create a Arizona Convertible Promissory Note
Follow these steps to create a Arizona-compliant convertible promissory note using our template.
Enter Party Information
Provide the full legal names and Arizona addresses of both the lender (payee) and borrower (maker). Include the date the note is being executed.
Define Loan Terms
Specify the principal amount, interest rate (within Arizona's 10% usury limit), payment schedule, and maturity date. Our template calculates the payment breakdown automatically.
Set Default and Late Payment Terms
Define the grace period, late fee amount, acceleration clause triggers, and notice requirements. Our Arizona template includes compliant default language.
Sign and Execute
The borrower must sign and date the note. Consider notarization for added legal protection. Both parties should retain a copy. If secured by collateral, file the appropriate security instrument with Arizona's recording office.
Securities Compliance in Arizona
When issuing convertible promissory notes in Arizona, you must comply with the state securities exemption (ARS 44-1844 exemption), file the required Form D filing required, ensure the interest rate stays within the 10% usury limit, and follow Arizona's investor protection requirements (enhanced protections). Federal Form D must be filed with the SEC within 15 days of the first sale. Our Arizona-specific template ensures compliance with both state and federal securities regulations.
Arizona Usury Warning
Arizona's usury limit is 10%. Charging interest above this rate can render your promissory note unenforceable and may subject the lender to penalties under Arizona law. Our template automatically validates your interest rate against Arizona's current limits.
Arizona Convertible Promissory Note FAQ
Answers to common questions about convertible promissory notes in Arizona.
Official Arizona Resources
Use these official resources to verify Arizona requirements for your convertible promissory note.
Other Arizona Promissory Note Types
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Create your Arizona Convertible Promissory Note in under 5 minutes.
Answer a few questions and download a Arizona-compliant document, ready for the state agency.