Dagang NeXchange Berhad Annual Report 2019

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) DAGANG NeXCHANGE BERHAD 152 16. CAPITAL AND RESERVES (CONTINUED) Warrant reserve (continued) The salient features of the Warrants are as follows: i) Each Warrant entitles the registered holder (“Warrant holders”) to subscribe for new ordinary shares in the Company at the exercise price of RM0.50, which may be exercised at any time from the date of issuance to the close of business on the market day immediately preceding the date which is the fifth anniversary from the date of the issuance of Warrants which falls on 30 July 2021 (“Exercise Period”). ii) Any Warrants not exercised during the Exercise Period will thereafter lapse and cease to be valid. iii) Warrant holders must exercise the Warrants in accordance with the procedures set out in the Deed Poll and shares allocated and issued upon exercise shall rank pari passu in all respects with the then existing shares of the Company, and shall be entitled for any dividends, rights, allotments and/or other distributions after the issue and allotment thereof. iv) The Warrant holders are not entitled to any voting rights or to participate in any distribution and/or offer of further securities in the Company until and unless such Warrant holders exercise their warrants for new shares in the Company. v) The Deed Poll and accordingly the Warrants, are governed by and shall be construed in accordance with the laws of Malaysia. The movement of the Warrants since the listing and quotation thereof is as follows: Entitlement for ordinary shares At At 1.1.2019 Issued Exercised 31.12.2019 Number of unexercised Warrants 711,396,809 - - 711,396,809 The fair value of RM0.008 per Warrant is determined using the Binomial Option pricing model based on the following key assumptions: Interest rate 3.19% Expected volatility of the Company’s share price 39.85% Share option reserve The share option reserve comprises the cumulative value of employee services received for the issue of share options. When the option is exercised, the amount from the share option reserve is transferred to share capital. When the share option expire, the amount from the share option reserve is transferred to retained earnings. At an extraordinary general meeting held on 27 January 2016, the Company’s shareholders approved the establishment of an Employee Share Option Scheme (ESOS) of up to 5% of the issued and paid-up share capital of the Company, to eligible Directors and employees of the Company and of its subsidiaries (“Eligible Persons”). A total of 38,912,800 ESOS options were offered to Eligible Persons as defined in the ESOS By-Laws to subscribe for new ordinary shares in the Company under its ESOS. On 14 September 2016, the Group granted share options to qualified employees and Executive Directors to purchase shares in the Company.