Rhode Island Convertible Promissory Note Overview
A convertible promissory note in Rhode Island 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 Rhode Island's state securities laws. The primary state exemption is: Section 7-11-401 exemption.
Rhode Island 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 Rhode Island's 21% usury limit, though most convertible note rates (2-8%) fall well below this threshold. Companies should work with an attorney familiar with Rhode Island securities law to ensure full compliance.
Available
Securities exemption
Required
SOS filing
21%
Usury rate
Enhanced
Investor protections
Rhode Island Requirements
Rhode Island has specific requirements for convertible promissory notes that both parties should understand before entering into the agreement.
- Interest Rate: Must not exceed Rhode Island's usury limit of 21%
- 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 Rhode Island law
- Governing Law: The note should specify Rhode Island as the governing jurisdiction
How to Create a Rhode Island Convertible Promissory Note
Follow these steps to create a Rhode Island-compliant convertible promissory note using our template.
Enter Party Information
Provide the full legal names and Rhode Island 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 Rhode Island's 21% 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 Rhode Island 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 Rhode Island's recording office.
Securities Compliance in Rhode Island
When issuing convertible promissory notes in Rhode Island, you must comply with the state securities exemption (Section 7-11-401 exemption), file the required Form D filing required, ensure the interest rate stays within the 21% usury limit, and follow Rhode Island's investor protection requirements (enhanced protections). Federal Form D must be filed with the SEC within 15 days of the first sale. Our Rhode Island-specific template ensures compliance with both state and federal securities regulations.
Rhode Island Usury Warning
Rhode Island's usury limit is 21%. Charging interest above this rate can render your promissory note unenforceable and may subject the lender to penalties under Rhode Island law. Our template automatically validates your interest rate against Rhode Island's current limits.
Rhode Island Convertible Promissory Note FAQ
Answers to common questions about convertible promissory notes in Rhode Island.
Official Rhode Island Resources
Use these official resources to verify Rhode Island requirements for your convertible promissory note.
Other Rhode Island Promissory Note Types
Need a different type of promissory note for Rhode Island? We offer state-specific templates for every type of promissory note.
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Create your Rhode Island Convertible Promissory Note in under 5 minutes.
Answer a few questions and download a Rhode Island-compliant document, ready for the state agency.