These are nothing but Bearer documents which are title to buy the specified number of
equity shares at specified price during the future period. The life period of the warrants
are normally too long. The warrants are normally issued by the company only in order to attract the issue of fixed bearing securities viz preference shares and debentures. The following are the various type of warrants:
Detachable warrants: Warrants which are issued along with the host securities; detachable
Puttable warrants: The warrants issued are sold back to company before expiry date
Naked warrants: Warrants issued without any host securities
Advantages of the warrants
Making other host securities more attractive
It facilitates the companies to stand on its own leg and reduces the rate to depend
on the intermediaries
The exercise of the warrants only during the future period which fosters better
planning for the company
Lower cost of debt due to greater attraction towards warrants - denominated in
terms of equity shares - which are at later date
Warrants are highly liquid which means they are traded in the Stock Exchanges
provided the warrants should not be exercised.

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