What is a rights issue?
What is a rights issue?

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • What is a rights issue?
  • A rights issue
  • Nil paid rights
  • Underwriting
  • Fractional entitlements

This practice note explains what a rights issue is.

For more information on the corporate law aspects of rights issues, including the types of documents that rights issues involve, see:

  1. Rights issues—key considerations (a subscription to Lexis®PSL Corporate will be required)

  2. Rights issue—procedure for a listed company (a subscription to Lexis®PSL Corporate will be required)

  3. List of documents—secondary offers—placing and open offer—Main Market (a subscription to Lexis®PSL Corporate will be required)

For more information on underwriting, see: Underwriting and sub-underwriting (a subscription to Lexis®PSL Corporate will be required).

For the tax considerations relevant to a rights issue, see:

  1. Key CGT implications for shareholders in a rights issue

  2. Stamp duty and SDRT implications of a rights issue, and

  3. Key tax considerations for the issuer in a rights issue

A rights issue

A rights issue is:

  1. an offer of new shares or other securities

  2. made to existing shareholders of a company or of a particular class of shares in a company as at a specified date known as the record date

  3. on a pro rata basis (ie in proportion (or as nearly as may be in proportion) to such shareholders' existing holdings of shares (or of a particular class of shares) in that company)

  4. by way of a provisional allotment of the new shares on a nil paid basis to all the existing shareholders