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Overview

Listing of Subscription Warrant Securities

Subscription warrant securities issued by gratis allotment of subscription warrants (generally known as “rights offerings”) are to be listed by listing application of a listed company.

Rights offerings are a fundraising method where companies provide shareholders gratis rights (“subscription warrants“) for receiving shares in proportion to their shareholding ratios, and obtain funding and issue shares when these rights are exercised.

Rights offerings can be categorized into commitment-type and non-commitment-type offerings. The former involves a firm commitment by the underwriters to exercise unexercised subscription warrants, while the latter does not.

Merits of Listing

For shareholders

Shareholders allotted subscription warrants can maintain their shareholding ratios by exercising the subscription warrants and paying money. In addition, if they do not wish to exercise the subscription warrants (and invest additional capital), they can choose to reduce the dilutive effect on their existing shareholdings by selling the subscription warrants in the market.

For investors

Investors can acquire listed subscription warrants in the market. They can exercise subscription warrants to obtain shares by paying the cost of the exercise. Meanwhile, instead of exercising them, they can also sell the subscription warrants in the market.

For listed companies

If a shareholder chooses not to invest additional capital, it will only result in the expiration of the rights, which could lead the listed company being unable to perform satisfactory financing.
However, the listed company can also expect exercise by investors who newly acquire the listed subscription warrants in the market.