Rights Issue

Rights Issue definition

/rʌɪt/ /ˈɪʃuː,ˈɪsjuː/

What does Rights Issue mean?

An offer of new shares or other securities to existing shareholders in proportion (or pro rata) to their existing shareholdings in the company. A rights issue is one way for a company to raise equity capital and is also referred to as a type of pre-emptive offer.

Rights Issue explained

A rights issue by a traded company is usually made by means of the issue of a renounceable letter or other negotiable document (called a provisional allotment letter or PAL) which may be traded for a period before payment for the shares is due. The offer price of the shares is usually at a discount to the prevailing market price of the company’s shares. An advantage of a rights issue to existing shareholders is that they can realise the value of their right to subscribe for new shares by selling such right to subscribe in the market, nil paid (without having to take up the new shares).

Variances

Rights Offer
Rights Offering

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