Commentary

D6.231 Rights issue—shareholder options

Corporate tax
Corporate tax | Commentary

D6.231 Rights issue—shareholder options

Corporate tax | Commentary

D6.231 Rights issue—shareholder options

A shareholder has three options when a rights issue is made:

  1.  

    (a)     take up the rights and acquire the additional shares (D6.232)

  2.  

    (b)     sell the rights nil paid (D6.233); or

  3.  

    (c)     let the rights lapse and potentially receive cash

A rights issue may give rise to fractional entitlements. For example, a shareholder holding eleven shares would, on a one for two rights issue, be entitled to five and a half shares. In practice, a company may sell fractional entitlements to other shareholders (or into the market if it is a listed plc) and distribute the proceeds

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