konverteringsrätt

Konverteringsrätt is a term primarily used in the context of securities and finance. It refers to the right granted to the holder of a specific type of security to convert it into another type of security, typically common stock. This right is often embedded in convertible bonds or convertible preferred stock.

When a company issues convertible securities, it offers investors the option to exchange their current holdings for a predetermined number of shares of the company's common stock. This conversion can usually be exercised at the discretion of the security holder, often when the market price of the underlying common stock rises to a point where conversion becomes financially advantageous.

The decision to convert is usually driven by the potential for capital appreciation. If the value of the shares received upon conversion exceeds the value of the original convertible security, the holder can profit by exercising their conversion right. This feature makes convertible securities attractive as they offer some of the security of a bond or preferred stock while also providing the potential upside of common stock ownership.

Companies issue convertible securities for various reasons, including lowering immediate borrowing costs compared to traditional debt or preferred stock, and potentially diluting their equity base in the future if conversion occurs. The terms of conversion, including the conversion ratio and any time limitations, are clearly defined in the indenture or offering prospectus for the convertible security.