Since the Shanghai and Shenzhen Stock Exchange announced the entitlement management approach of the draft, in the industry believe that the warrants will be equity division reform to provide new financial instruments, and offer a variety of uses of warrants to solve the problem of the shareholder.
Idea: the non-trading stock shareholders to hope that the circulation of non-trading stock subject to circulation shareholders free send a corresponding number of warrant; line entitled subject listing flow; non-circulation of shareholders not trading warrants its release.
For example, the total share capital of A listed company is 30 million, including non-negotiable shares 20 million shares, shares of 10 million shares, non-trading stock shareholders first prepare the 5 million shares, to the circulation of shareholders free of 5 million share subscription warrants. If the expiration is 3 billion warrant is executed, the corresponding 3 billion shares of stock as currency unit, the remaining 17 million is not negotiable; later if the non-trading stock shareholders want to be 4 billion shares shall then issue 4 billion of e, the new issue of warrants may be based on prevailing market conditions and the first batch of entitlement vary.
The industry believes that this approach takes full advantage of the characteristics of the warrants, the non-trading stock shareholders, circulation shareholders and markets establishes a balance of interests if the stock price higher than the mechanism: the exercise price, circulation shareholders can select rows entitled income; such as lower than the exercise price of the warrant cannot be performed, the corresponding non-negotiable shares cannot be negotiable. In addition, the exercise of warrants can be for a period of time, its intermittent and dispersion characteristics can reduce concentration of non-trading stock listing on the secondary market impact.
Idea 2: non-negotiable shares shareholders to every circulation shareholders free send a certain amount of the warrant, a warrant subject to the corresponding number of non-circulation unit; after the listing of warrants, all non-negotiable shares for circulation; power card price is lower than the value of a contract, the warrant holders will be entitled to permit sale back to the non-trading stock shareholders.
For example, the total share capital for the company B 5 million, of which non-circulation unit 3 billion shares, shares of 2 million units. Non-trading stock shareholders to circulation shareholders free send 1 million unit warrant, was the stock price is $ 10, the right price for 6 zhengxingquan. After the listing of warrants, regardless of the number of executed in the future, the original 3 million non-negotiable shares in circulation are obtained. If the five consecutive trading day warrants at a price below $ 2, the warrant holders can the price of $ 2 will be sold to the right back to the non-trading stock shareholders.
The industry believes that this scenario is characterized by a relatively simple, one-time payments on price, the right to get the full circulation. But there are some issues to note, for example, on a non-negotiable shares shareholders of "price" and lack of restrictions. After the listing of the warrants, because of all the non-trading stock has won the right to circulate circulation, a non-shareholders to reduce the price to pay for, you might have to suppress label stock, so that the warrants cannot be executed, resulting in drastic decline. Therefore, if you adopt this approach, you should issue warrants all non-negotiable shares to limit the minimum proportion, while setting up back to the sales mechanism to ensure the circulation of the shareholders of minimum income.
Thinking of three: non-circulation of the shareholders or other institutions free of charge to each send their circulation shareholders holding shares in circulation in the same admission sales warrants, warrants exercise price for the stock over a period of time (e.g. one year) of the average price; the exercise of the warrants, the exercise price and the price of settled in cash, or by post and then converted into the share price of the shares to the shareholders of circulation; after the listing of warrants, all non-negotiable shares gain; for the protection of non-trading stock shareholder, you can set the lower limit of the stock price, such as net assets.
For example, C is a non-listed companies shares 3 billion shares, shares of 2 million units. Non-trading stock shareholders to all circulation shareholders free send 2 billion shares admitted selling warrants. In the past year marked by stock price determines the exercise price is $ 8, and set the lower bound of the settlement price to $ 4. After the issuance of warrants, assumes that a line of ex-dividend stocks with market value is $ 5, the warrant holders the right to request line, non-trading stock shareholders required to warrant holders pay cash balance of $ 3, or by each warrant sent 3/5 = 0.6 shares to the holders of the warrants.
The industry believes that this idea of the basic idea is through recognition of sales warrants exercise price to lock on the circulation of the shareholders over time, the average earnings of compensation, that is OK for some time (e.g. one year) of the average price for the exercise price, the total number of non-negotiable shares of expected, how many share prices, non-trading stock shareholders how much compensation, the better the flow of shareholder protection.
However, this kind of thought to lack of non-circulation of shareholders and the market. As for the recognition of sales in relation to the holders of the warrants, the lower the share price, the higher the value of the warrants it, thus forming on stock prices downward pressure, could result in a situation where competing to sell.
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