Mezzanine, Pre-IPO & SPACs
What is the call option (right to demand sale) on a convertible bond, and what limits apply?
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A call option is the right of the issuer or a person it designates to demand that bondholders sell the convertible bond at a set price; the regulations call it a 'convertible bond purchase option', and in practice it is also called a right to demand sale.
When a listed company grants this right to its largest shareholder or their specially related persons (including when the company sells convertible bonds it has acquired to them), the bond must carry a condition preventing them from acquiring, through the call option, shares in excess of their respective shareholding ratios at the time of issuance. This limit was introduced by a 2021 amendment to keep the call option from being used as a way for the largest shareholder to increase its stake.
This answer is general financial information as of 14-10-2026, not investment advice. Rules and tax rates change, so please also check the latest guidance from the source institution.