Share Warrant
This query is : Resolved
28 July 2009
Dear experts
Could you please tell me what are share warrants and what is the purpose and benefit of issuing share warrants??
Thanks
Could you please tell me what are share warrants and what is the purpose and benefit of issuing share warrants??
Thanks
28 July 2009
Share Warrants are instruments convertible into equity shares at the end of a specified period (not exceeding 18 months). The major benefit to the subscriber of the SW is that the subscriber has to pay only 10% of the convertible value of the shares at the time of subscription and the balance 90% at the time of conversion.
In case the subcriber does not opt for conversion of SW into shares, the issuing company has the right to forfeit the 10% amount paid by the subscriber.
To the Company, it is benefitial as it gets funds without any interest liability. The conversion happens at the end of 18 months at a predetermined price with commitment from the subscriber (to the extent of 10%) which means that the dilution of equity happens at a later stage.
Please refer SEBI guidelines for the procedure for issuing SW
In case the subcriber does not opt for conversion of SW into shares, the issuing company has the right to forfeit the 10% amount paid by the subscriber.
To the Company, it is benefitial as it gets funds without any interest liability. The conversion happens at the end of 18 months at a predetermined price with commitment from the subscriber (to the extent of 10%) which means that the dilution of equity happens at a later stage.
Please refer SEBI guidelines for the procedure for issuing SW
Ankur Garg
(Expert)
29 July 2009
Percentage of upfront money has been changed from 10% to 25%.
Now subscriber has to pay 25% upfront money.
Regards
Now subscriber has to pay 25% upfront money.
Regards
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