Share Warrant

Warrants are securities which entitle their holders to purchase ordinary shares at a fixed (specified) price by a particular date, and the same time, it is not mandatory for the holders to make such purchase. In fact, a warrant is a long-term purchase option which is issued on the securities of a company by the same company.

Features

1)     Such securities has maturities and their maturities usually exceed 5 years (of course, there are warrants without maturities)

2)     Exercising price can be fixed or changed and increased step-by-step within the lifetime of the warrant

3)     A warrant may be distributed among shareholders instead of shares, or it may be directly issued as new security

4)     There is restriction in the quantity of warrants available at market, i.e., a certain type of warrant is issued in a specified and limited quantity

5)     Exercising a warrant affects a company and causes survival of more liquidity in the company, reduces the number of available warrants and increases the number of existing shares

6)     In addition to acting as borrowing instruments, warrants provide purchase options to people in order to encourage purchase of newly-issued securities. The special feature of a warrant is that it is usually issued and guaranteed by companies.