Warrants in limited companies – option programs, exercise price, valuation and tax
Share
Short answer: A warrant gives the holder the right to subscribe for new shares in the company in the future in exchange for a cash payment. The instrument is used both for capital raising and as an incentive program for, for example, employees, management, or the board of directors.
| Exercise price | The price per share that the holder must pay upon exercise. |
| Term | The period during which the warrant can be exercised. |
| Dilution | When new shares are subscribed, the number of shares in the company increases. |
| Swedish Companies Act | The issuance of warrants is regulated in Chapter 14 of the Swedish Companies Act; directed programs may also trigger Chapter 16. |
How does an option program work?
The company issues warrants with terms that specify, among other things, who is eligible to subscribe for the warrants, the price of the warrant, the exercise price for the future shares, and the period during which the warrants may be exercised.
Market value and valuation
When options are granted to employees or parties related to the company, the valuation is important both from a company law and a tax perspective. Black-Scholes or another recognized valuation model is often used as a basis, but the correct method depends on the terms of the instrument and the circumstances.
Chapters 14 and 16 of the Swedish Companies Act
Chapter 14 of the Swedish Companies Act regulates the issuance of warrants. If the issue is directed to the board, CEO, employees, or other specifically designated related groups, Chapter 16 of the Swedish Companies Act may impose special decision-making and majority requirements.
What should the document package contain?
- board proposal,
- general meeting resolution,
- full warrant terms,
- subscription list,
- allotment decision,
- valuation basis,
- any option agreement with the participant.
Common mistakes
- the exercise price is determined without a thoughtful valuation,
- adjustment rules for splits or new issues are missing,
- Chapter 16 of the Swedish Companies Act is overlooked,
- terms regarding the termination of employment are unclear,
- the tax effect is analyzed only after allotment.
Warrant package 2026/2027
The template package brings together general meeting documents, warrant terms, subscription lists, and supplementary documents in Swedish and English versions.
FAQ
Are a warrant and an employee stock option the same thing?
No. They are different instruments with different legal and tax treatments.
Can options be given for free?
This can have both company law and tax consequences. Valuation and target group must be analyzed before the program is decided.
What happens to the share capital when the warrant is exercised?
New shares are subscribed and the company's share capital increases in accordance with the terms and registration steps applicable to the issue.
The article provides general information and does not replace individual legal advice. Agreements, collective agreements, and the circumstances of the individual case may affect the assessment.
