A rights issue is when a company offers its existing shareholders the option to buy additional shares at a price lower than the current market price. It is one of the ways a company raises fresh capital from its existing investor base — without going to outside investors first.
The offer is a right, not an obligation. You can subscribe, renounce your entitlement, or let it lapse. The decision is entirely yours.
The subscription ratio
The company announces a subscription ratio for example, 1:4 means you can buy one additional share for every four shares you already hold at the fixed offer price.
For existing shareholders
Since the offer goes to existing shareholders first, it gives you the opportunity to maintain your ownership percentage in the company. If you don’t participate, your stake dilutes slightly as new shares are issued to others.
Easy & quick
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