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A Warrant Agreement outlines the terms and conditions under which an investor can purchase company shares at a predetermined price within a specific timeframe. These legal contracts are common in Indian startup funding rounds, giving investors the right—but not the obligation—to buy equity later.

The agreement specifies crucial details like the exercise price, expiration date, and any transfer restrictions. Under Indian securities law, warrants must be exercised within 18 months of issue, making them popular tools for phased investments in growing companies. They help businesses raise capital while giving investors flexibility in timing their share purchases.

Use a Warrant Agreement when your company needs to attract significant investment while maintaining flexibility in the timing of share issuance. This document proves especially valuable for Indian startups seeking phased funding from venture capitalists or angel investors who want the option to increase their stake later.

The agreement works well during Series A or B funding rounds, particularly when investors prefer spreading their investment over time to manage risk. It's also useful when your company needs immediate working capital but wants to delay equity dilution. For listed companies, warrants can help with rights issues or preferential allotments under SEBI guidelines.

• Standard Purchase Warrants: Common in private equity deals, giving investors the right to buy shares at a fixed price during a specific period
• Covered Warrants: Issued by financial institutions, these tradeable securities track underlying assets like stocks or indices
• Detachable Warrants: Can be separated from the primary security and traded independently, popular in Indian bond markets
• Performance-Linked Warrants: Tied to specific company milestones or performance targets, often used in startup funding
• SEBI-Compliant Listed Warrants: Specifically structured for public trading under Indian securities regulations

• Companies/Issuers: Startups, listed firms, or growing businesses that issue warrants to raise capital or incentivize investments
• Venture Capitalists: Primary warrant holders who use these agreements to secure future equity at predetermined prices
• Corporate Lawyers: Draft and review Warrant Agreements to ensure compliance with SEBI guidelines and Companies Act provisions
• Company Directors: Authorize and execute warrant issuance, ensuring alignment with shareholder interests
• Compliance Officers: Monitor warrant exercise periods and maintain regulatory compliance records

• Company Details: Gather corporate information, share capital structure, and board resolutions authorizing warrant issuance
• Warrant Terms: Define exercise price, duration (max 18 months under Indian law), and number of shares per warrant
• Investor Information: Collect KYC documents, investment capacity proof, and regulatory clearances if needed
• Performance Metrics: Establish any milestone-based conditions or vesting schedules for warrant exercise
• Compliance Check: Review SEBI guidelines and Companies Act requirements for warrant issuance
• Documentation: Use our platform to generate a legally-sound Warrant Agreement that includes all mandatory elements

• Parties and Recitals: Complete details of warrant issuer and holder, including registered addresses and authorized signatories
• Warrant Terms: Exercise price, number of shares, validity period (within 18 months), and exercise conditions
• Rights and Obligations: Clear description of warrant holder rights, transfer restrictions, and company obligations
• Exercise Mechanics: Detailed process for exercising warrants, payment terms, and share issuance procedure
• Adjustments: Provisions for corporate actions like splits, bonuses, or rights issues
• Governing Law: Explicit reference to Indian laws, SEBI regulations, and dispute resolution mechanisms

A Warrant Agreement differs significantly from a Bond Issuance Agreement in several key aspects, though both are instruments for raising capital in India. Understanding these differences helps companies choose the right financing tool for their needs.

• Nature of Investment: Warrants represent potential equity ownership, while bonds are pure debt instruments with no ownership rights
• Time Sensitivity: Warrants must be exercised within 18 months under Indian law, whereas bonds have longer, fixed maturity periods
• Risk Profile: Warrant holders bear market risk as share prices fluctuate, while bondholders receive predetermined interest payments
• Regulatory Framework: Warrants fall under SEBI's equity regulations, while bonds follow RBI and debt market guidelines
• Exit Mechanism: Warrant holders can choose not to exercise their rights, but bondholders must be repaid according to the agreed terms