Warrants have been successfully introduced to the Finnish securities markets. The Ministry of Finance has issued amendments to the decrees on the listing particulars, the listing conditions and the disclosure obligations of issuers in order to incorporate necessary changes to the legislation.
These amended decrees oblige an issuer of warrants to publish a prospectus containing information on the terms of the warranties and the target securities, as well as information on the issuer and on the listing of the warranties. With respect to the listing conditions of warrants and the obligation to release financial statements, the issuer is treated as an issuer of bonds.
Warrants may be linked to any security or securities, or to an index. The issuer of warrants need not obtain the consent of the issuer of the target security. Both put and call warrants may be issued. In many respects a warrant is comparable to an option right. The essential issue is the difference between the exercise price and the market value. However, the issue or exercise of warrants has no effect on the target security or the issuer, but is merely a contract between the holder of the warrant and the issuer of the warrant. If a warrant is out of the money, the amount paid for the subscription of the warrant realizes profit for the issuer of the warrant.
A warrant may be structured so that only the net value of the warrant is paid by the issuer to the holder at the maturity of the warrant; a warrant may also be an actual call option. The payment of the net value has so far been the most common alternative used by issuers. Warrants may be exercisable either during the maturity period or after a set expiration date. Currently over 40 warrants are listed on the Helsinki stock exchanges. The stock exchanges are in the process of examining other new financial products.
For further information on this topic please contact Ari-Pekka Saanio at Borenius & Kemppinen by telephone (+358 9 615 333) or by fax (+358 9 61 53 34 99) or by e-mail ([email protected]).
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