The issuer option is an equity security securing the paid right of its owner to convert such an option into the issuer's share .
The issuer's option gives the right to purchase shares at the stipulated time and / or under the occurrence of circumstances, at a price that is predetermined.
The issuer's option should not be confused with the warrant , which gives the right to buy shares at a certain price (the warrant gives the right to buy a share, and the option - to convert). In accordance with Russian legislation (Article 2 of the Federal Law "On the Securities Market"), an issuer's option gives the right to buy a stock, rather than to convert it (according to the law: the issuer's option is an issuing security that enshrines the right of its owner to buy in term and / or upon the occurrence of the circumstances specified in it of a certain number of shares of the issuer of such an option at a price specified in the issuer's option). In this regard, the described difference between an issuer option and a warrant in Russian law is not correct.
Accommodation
The decision on the placement of the issuer's options and their placement are made in accordance with the rules for the placement of securities convertible into shares established by federal laws. At the same time, the price of placing shares in compliance with the requirements for the issuer's options is determined in accordance with the price specified in such an option.
The issuer does not have the right to place an issuer option if the difference between the number of authorized shares of the issuer and the number of shares in circulation is less than the number of shares the right to acquire which are such options. The issuer's option placement is possible only after full payment of the authorized capital of the joint stock company.
History
Option programs began to develop and be used in Russia not so long ago. Currently, they are used by such companies as SITRONICS, RusHydro, Polymetal, Vimpelcom, MTS and others. The issuer option is currently widely used in practice as a stimulating tool for top management of public companies - top managers receive issuer options in the form of a premium, which can only be monetized if the company’s market price increases.