Convertible profit-sharing certificates (Swedish: konvertibla vinstandelsbevis, KVB) are securities without voting rights that provide a return linked to the company's profit or dividend. They can be converted into shares at a predetermined conversion price. A KVB resembles a convertible.
Until conversion, the holder is not a shareholder. When a KVB is converted, new shares are issued, which leads to dilution for existing owners. The new shares and owners must then be entered in the share ledger.
A convertible is a loan that can be exchanged for shares in the company.
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The conversion price is the price per share at which a convertible can be exchanged for new shares.
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Conversion of convertibles means a convertible debt instrument is exchanged for new shares in the company.
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Dilution means existing owners' stake in the company decreases when new shares are issued.
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