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Issuance of warrants for purchase of shares
09-14-2010, 05:49 PM,
#10
 
An Interesting post. I came ac ross it as I myself am recently looking for ways to issue a warrant for my company. The Company has entered into a Service agreement with technical consultants who are providing extensive assistance in developing a bankable feasibility model and arrangement of financing for a project. In return, the consultant wants warrants which would allow the consultant to become a shareholder in the company. The warrant is to be exercised as a chasless transaction.

Whilst searching online for a solution, I found this particular thread. I found Star's proposal for a share class quite interesting. We could technically have a warrant as a seperate share class with the following slaient features
* PAR value of only Rupee 0.01 (as against the Par value of Rs10 for a regular share)
* Zero voting right, Zero dividend right, no right to attend general meetings.
* The above rights would be foa limited time period as well (as a parallel to the exericse period of the warrant)
All the above features are inline with the variation in Rights and Privileges Rules 2000

Additionally, each warrant class of share can have an option to convert the shares to regular shares within the limited time period at a specific conversion option price.

Alternatively, we can even issue a long term right issue, since that is exactly what a rights issue is, the ability (right) to purchase the stock of the company at a certain price int he future. WOuld it be possible to do that?? (lets say a 3 year rights issue, which is declined by the current sponsors. Can such a declination be secured beforehand though a warrant agreement?)

In either of the above two cases (waarant through Share class or through ling term rights issue), would it be possible to base the exercise price of the warrant or the subscription number of shares (or conversion ratio - if in case of a share class) on a formula. The reason for asking this is because the consultant wants the warrant to entitle him to a sweat equity based on a formula.

Also if we go through the rights issue process, would it be possible to allow the consultant to carry out a cash less exercise, whereby the value of the rights itself is taken as the consideration for the issue of shares and a lesser number of shares are issued.

Regard,
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Messages In This Thread
[No subject] - by kamranACA - 10-01-2009, 10:51 PM
[No subject] - by Star - 10-02-2009, 01:46 PM
[No subject] - by kamranACA - 10-02-2009, 06:32 PM
[No subject] - by Star - 10-02-2009, 07:12 PM
[No subject] - by kamranACA - 10-02-2009, 08:19 PM
[No subject] - by Star - 10-02-2009, 09:04 PM
[No subject] - by kamranACA - 10-02-2009, 11:36 PM
[No subject] - by Star - 10-03-2009, 01:09 AM
[No subject] - by pakvestor - 09-14-2010, 05:49 PM

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