Glossary Terms

warrant

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A warrant is a financial instrument that gives the holder the right to purchase a company’s stock at a specific price on or before a specified expiration date.

Warrants are a type of stock option. Like options, warrants do not provide the rights of stock ownership, such as voting or dividend rights. They are not considered outstanding stock. However warrants should be included in a company’s “fully diluted” cap table.

Where Incentive Stock Options and Nonqualified Stock Options are granted as compensation to service providers, warrants are most often issued to investors or strategic partners in connection with a financing or a strategic initiative like a joint venture or collaborative research project.