Meaning of share warrant
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.
DISTINCTION BETWEEN SHARE CERTIFICATE AND SHARE WARRANT-
1)The holder of a share certificate is a registered member of the company,while the bearer of a share warrant is not.
2)The issue of a share certificate does not require the approval of the central government while share warrant can be issue only if the articles authorize its issue and the central government has accorded its previous approval.
3)Both public and private company must issue share certificates but share warrants can be issued only by public companies.
4)A share certificate is issued in respect of partly or fully paid shares,whereas a share warrant can be issued only in respect of fully-paid shares.
5)A share warrant is a negotiable instrument,but a share certificate is not negotiable.
6)The holder of the share warrant is not qualified as a director of a company (where qualification shares are prescribed) but the holders of share certificate is so qualified.
7)The holder of a share certificate can present a petition for winding up,but the holder of a share warrant cannot do so.
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If both are the owner of the shares of the company than Y the warrant holder is not the member???
ReplyDeleteno dear both r nt the owner of company...
ReplyDeleteonly holder of share certificate is the owner of company.holder of share warrant may or may nt b the owner of company.share warrant is negotiable instrument,is transfer by mere delivery.holder of it cn buy share,stated on it,in future on the rate specify on the warrnt
thanks a lot mam.....
ReplyDeletewhat is the meaning for coupons for dividend
ReplyDeleteSo, when the shares are traded in the market, actually the share warrants are traded and the share certificate remains with the same party that originally purchased it? And if so, the holder of the warrant will receive the divident but still the certificate will be possessed by the original owner?
ReplyDeleteThis comment has been removed by the author.
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ReplyDeleteIf share warrant holder can buy shares in future and share warrants are issued only for fully paid shares,,,then share warrant holder buy it from whom??
ReplyDeleteIt's not the question of buying the share warrant first time, but it's about converting the fully paid shares into warrants, and subsequently the person who got converted his shares into share warrant then he can sell and the person who want to purchase can purchase it..
DeleteDoes the sharewarrant contain the name of its holder and the sharecertificate contain the name of the first buyer of shares only??
ReplyDeleteWill the company issue a new share warrant for each transfer of shares??
Why share warrant holders are not registered members of the company?
ReplyDeleteWhat is the need to issue share warrant??
ReplyDeleteWhat is the need to issue share warrant??
ReplyDeletekindly check my new post "share warrants-an overview"
ReplyDeleteIs amount received against share warrant included in paid up capital in Financials..?
ReplyDeleteAnd, how can a holder of share warrant claim dividend with coupons attached..should he inform the company..? What is the procedure..?
what is qualification shares?
ReplyDeleteon the death of a shareholder ,can i legal representative can sell share without getting registered?
ReplyDelete