Commentary

D6.230 Rights issue—definition

Corporate tax
Corporate tax | Commentary

D6.230 Rights issue—definition

Corporate tax | Commentary

D6.230 Rights issue—definition

A rights issue generally falls within the share reorganisation rules (D6.101–D6.103) and should therefore be tax neutral for shareholders.

A rights issue involves a company granting existing shareholders the right to subscribe for shares in the company, normally at a discount to the prevailing market price of the shares concerned. (Note, in cases where only some of the shareholders, or only some of the shareholders of a given class, are given the right to subscribe for additional shares, the transaction is not a reorganisation of capital.)

The key features of a rights issue are:

  1.  

    (a)     new shares are issued

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