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.