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What is a Share Warrant?


Last Updated:   Category: Share Market    
Author: Member Level: Gold    Points: 10


Share Warrant; Meaning of Share Warrant; Contents of Share Warrant; Conditions for issue of Share Warrant



Meaning: A share warrant is a bearer document of title to shares and can be issued only by public limited companies and that to against fully paid up shares only.

A share warrant cannot be issued by a private company, because the share warrant states that its bearer is entitled to a number of shares mentioned there in. It is a negotiable document and is easily transferable by mere delivery to another person. The holder of the share warrant is entitled to receive dividend as decided by the company.

A share warrant is accompanied by attached coupons for the payment of future dividends.

There are three parts of a share warrant:
(1) The counter foil.
(2) Share Warrant proper.
(3) The dividend coupons.

Conditions for the issue of a share warrant:

(1) Only public limited companies: Share warrant can be issued by the public limited companies. It cannot be issued by private companies.

(2) Against share certificate of fully paid up shares: A share warrant is only issued against share certificate of fully paid up shares.

(3) Provision in the Articles: There must be a provision in the Articles of Association regarding the issue of share warrant. If there is a provision, the company can issue a share warrant. If there is no provision in the Articles, the company cannot issue a share warrant.

(4) Permission of the Central Government: Prior permission from the Central Government is necessary for the issue of share warrant.

(5) Share warrant not issued originally: Share warrant are not issued originally at the time of initial issue.

(6) AT the request of the share holder: A share warrant is issued at the request of the Shareholders / member and not by the company at its own initiative.

So, these were the conditions for the issue of a share warrant.

Thank you.


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