South Dakota Convertible Promissory Note Overview
A convertible promissory note in South Dakota 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 South Dakota's state securities laws. The primary state exemption is: Section 47-31B-202 exemption.
South Dakota requires Form D filing required when issuing convertible notes. The state provides standard protections for note holders through its securities regulatory framework. The interest rate must comply with South Dakota's 12% usury limit, though most convertible note rates (2-8%) fall well below this threshold. Companies should work with an attorney familiar with South Dakota securities law to ensure full compliance.
Available
Securities exemption
Required
SOS filing
12%
Usury rate
Standard
Investor protections
South Dakota Requirements
South Dakota has specific requirements for convertible promissory notes that both parties should understand before entering into the agreement.
- Interest Rate: Must not exceed South Dakota's usury limit of 12%
- 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 South Dakota law
- Governing Law: The note should specify South Dakota as the governing jurisdiction
How to Create a South Dakota Convertible Promissory Note
Follow these steps to create a South Dakota-compliant convertible promissory note using our template.
Enter Party Information
Provide the full legal names and South Dakota 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 South Dakota's 12% 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 South Dakota 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 South Dakota's recording office.
Securities Compliance in South Dakota
When issuing convertible promissory notes in South Dakota, you must comply with the state securities exemption (Section 47-31B-202 exemption), file the required Form D filing required, ensure the interest rate stays within the 12% usury limit, and follow South Dakota's investor protection requirements (standard protections). Federal Form D must be filed with the SEC within 15 days of the first sale. Our South Dakota-specific template ensures compliance with both state and federal securities regulations.
South Dakota Usury Warning
South Dakota's usury limit is 12%. Charging interest above this rate can render your promissory note unenforceable and may subject the lender to penalties under South Dakota law. Our template automatically validates your interest rate against South Dakota's current limits.
South Dakota Convertible Promissory Note FAQ
Answers to common questions about convertible promissory notes in South Dakota.
Official South Dakota Resources
Use these official resources to verify South Dakota requirements for your convertible promissory note.
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Create your South Dakota Convertible Promissory Note in under 5 minutes.
Answer a few questions and download a South Dakota-compliant document, ready for the state agency.