Notes: Call Warrants

Abstract

A warrant is an option which gives the holder the right to subscribe for a given number of ordinary shares in the company at a predetermined exercise price within a specified time period. It does not, however, impose an obligation on the holder, ic., the holder does not have 10 exercise this right. A warrant was also known as a Transferable Subscription Right (TSR) prior to the amendment of Section 57 of the Companies 1965. With the amendment of the said section of the Companies Act, the term “TSR” is now obsolete. In Malaysia, warrants are normally issued on a detachable basis and are often provided free of charge as a sweetener for the issue of debt securities by the company at a lower coupon rate. ‘The warrants can be exercised by the warrant holders for new shares in cash or by tendering the debt securities or a combination of both, The company will specify whether the warrants can be exercised at any time during the exercise period or only on fixed dates, and the method of subscription. A warrant has a limited ife. In Malaysia, the maximum life span of a warrant is only § years.