Warrants Issued by the Listed Companies Can’t be Transferred Unless Trading Approval From Exchange Has Been Granted | SEBI
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- Last Updated on 17 November, 2023
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Informal Guidance No. CFD/PoD/OW/2023/45315/1, Dated 10.11.2023
Paramount Communications Limited (hereinafter referred as ‘the Company’) a publicly listed company in its Extra Ordinary General Meeting (EGM) held on 11 Jan, 2023 has approved the issue of convertible equity warrants to persons other than the promoters. The said equity warrants were under the lock-in period of 1 year as prescribed under reg 167(2) of SEBI (Issue of Capital and Disclosure Requirement) Regulations, 2018. However, the warrants allotted can be transferred post lock-in period.
Further, the Warrants so issued were neither listed on any stock exchange nor would be listed on completion of one year from the date of allotment. However, the security holder has the right to convert those warrants into equity shares of the company at any time within 18 months from the date of allotment of such warrants.
The Company sought the guidance of the SEBI “Whether the holder of the Equity Warrants, being non-promoter entity transfer their warrants after lock-in but before conversion into equity shares?”
The SEBI replied that Reg 167(2) of the ICDR Regulations provides that in case of warrants which are not listed on stock exchanges, such securities shall be locked in for a period of one year from the date of allotment. Whereas, Regulation 168 (2) of the ICDR Regulations deals with the restrictions on the transferability of the shares.
Reg 168(2) provides that the specified securities allotted on a preferential basis shall not be transferable by the allottees till trading approval is granted for such securities by all the recognised stock exchanges where the securities are listed.
Thus, in the instant case warrants issued by the Company cannot be transferred until the trading approval from all the recognized stock exchanges is received where the equity shares of the company are listed.
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