How to Convert Expiring Warrant to Mothershare

Expiring Warrant

Have you already read the article about what is a warrant? Do you understand the 5 things you must know before buying a warrant and the risks of warrants that you will face?

If not, I recommend that you read those articles first so that it will be easier for you to understand this article.

As you know, warrants have a maturity date, which is the date the warrant will expire.

When a warrant is about to expire, you have two options — either convert the warrant to mothershare or let the warrant burn.

Yes, it just burns like that — not a loss?? That is up to you, whether you feel it is a loss or not. Perhaps you do not feel it is a loss because you are wealthy or a millionaire, perhaps.

When it comes to converting an expiring warrant to mothershare, there is one important thing we need to know — the cost of converting the warrant to mothershare.

I will discuss this in detail shortly. For now, let us focus on the steps to convert a warrant to mothershare.

Steps to Convert Warrant to Mothershare

I will use a case study from the warrant Pohuat – WB as an example. You can refer to the image below for the details of this warrant.

Pohuat-WB warrant overview showing exercise price and maturity date

First:

You must own the POHUAT-WB shares. If you do not own the warrant shares, how are you going to convert them to mothershare, right?

POHUAT-WB current and average price display — Current price: 0.700
Average price: 0.766

Second:

You will receive a reminder to convert the warrant. Nowadays you will receive it via email. Previously, you would receive it via a letter sent to your registered address.

Example of warrant conversion reminder letter — Example of reminder letter

Third:

Please read and understand the announcement. You can read the announcement at bursamalaysia.com.

Fourth:

Contact the Registrar if you are confused. Where can you get the registrar''s address and phone number? Do not worry, you can find it in the annual report at Malaysiastock.biz.

Fifth:

Fill in the form provided.

Warrant conversion form page 2 — Example *form*

Sixth:

Cost and bank draft.

This is the cost I mentioned earlier. Referring to the POHUAT-WB overview diagram, the exercise price is RM 1.00 and the number of units to be converted is 12,700 units.

Cost = Exercise price x Number of units

Cost = Exercise price x Number of units

= RM 1.00 x 12,700

= RM 12,700

After calculating the cost, proceed with the bank draft.

Bank draft preparation example for warrant conversion

Seventh:

Send to the registrar via post after completing the sixth step.

Eighth:

Make sure you always follow up. How do you do that? It is simple — call the registrar and ask whether your documents (form and bank draft) have arrived and get an update on your documents.

What if your documents arrive late? Based on the case study with an expired date of 21 October 2020, if your documents arrive at the registrar after that date, it is actually fine as long as your bank draft is dated before the warrant''s expired date.

The mothershare will appear in your CDS account portfolio approximately 8 days after the registrar receives the convert warrant form (it may also take 1-2 weeks).

Ninth:

Check your portfolio and adjust the average price if necessary.

Hope this is beneficial!

Frequently Asked Questions (FAQ)

How do I convert a warrant to mothershare before the expiry date?

You need to obtain the conversion form from the registrar, fill in the complete details including your CDS account number, then prepare a bank draft based on the exercise price multiplied by the number of warrant units. Send the form and bank draft to the registrar via post before the warrant''s expiry date.

How long does the warrant to mothershare conversion process take?

The conversion process usually takes around 8 working days after the registrar receives the complete documents. In some cases, it may take up to 1-2 weeks depending on the registrar.

What happens if a warrant expires without being converted?

If a warrant expires without being converted, it becomes worthless and you will lose your entire investment in that warrant. Therefore, make sure you take action before the expiry date.

Does the bank draft need to be dated before the warrant expiry date?

Yes, the bank draft must be dated before the warrant''s expiry date. Even if the documents arrive slightly late after the expiry date, as long as the bank draft is dated before the expiry date, the conversion process can still proceed.

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Further reading: