Warrant register: Overview, definition, and example
What is a warrant register?
A warrant register is an official record maintained by an issuer that tracks the details of issued warrants, including the identities of the warrant holders, the number of warrants held, the dates of issuance, and any transfers or exercises of the warrants. The register ensures transparency and accuracy in managing warrants and enables the issuer to verify ownership and fulfillment of obligations.
For example, if an investor exercises a warrant to purchase shares of a company, the warrant register is updated to reflect the reduction in the number of outstanding warrants and the identity of the warrant holder.
Why is a warrant register important?
A warrant register is important because it provides an organized, up-to-date record of warrant ownership and activity. This ensures proper administration, prevents disputes, and allows the issuer to manage obligations like warrant exercises, transfers, or expiration.
For businesses, maintaining a warrant register ensures compliance with legal and contractual obligations and builds trust with investors by ensuring transparency and accountability in warrant management.
Understanding warrant register through an example
Imagine a company issues 1,000 warrants to several investors, allowing them to purchase shares at a fixed price within a specified time frame. The company maintains a warrant register listing each warrant holder’s name, the number of warrants held, and the terms of the warrants. If an investor transfers some of their warrants to another party, the register is updated to reflect the new ownership.
In another example, a startup issues warrants as part of a funding round. When an investor exercises their warrants, the register is updated to reflect the exercise, reducing the number of outstanding warrants and recording the issuance of new shares to the investor.
An example of a warrant register clause
Here’s how a warrant register clause might look in an agreement:
“The Company shall maintain a Warrant Register for the purpose of recording the issuance, transfer, and exercise of all Warrants. The Warrant Register shall include the name and address of each registered holder, the number of Warrants held, and any changes resulting from transfers or exercises. The Company shall update the Warrant Register promptly upon receipt of notice of any such changes and shall make the Register available for inspection by Warrant Holders upon reasonable request.”
Conclusion
A warrant register is a vital tool for managing and recording the issuance, transfer, and exercise of warrants. It ensures transparency, reduces the risk of disputes, and helps businesses fulfill their obligations to warrant holders accurately.
By maintaining a detailed and updated warrant register, businesses can ensure compliance, foster trust with investors, and efficiently manage their financial instruments.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.