What is renounceable rights issue?

A renounceable rights issue is when existing shareholders are given the right to sell (renounce) their rights entitlement to someone else. This means that instead of purchasing the additional shares themselves, shareholders can transfer their rights to another investor.

In a renounceable rights issue:

• Shareholders receive Rights Entitlement (RE) to buy more shares at a discounted price.
• If they don't want to buy the shares, they can sell or transfer their rights to another party.
• The new buyer of the rights can then purchase the shares at a discounted price.

This gives existing shareholders the flexibility to either:

1. Buy additional shares.
2. Sell or transfer their rights to others, usually in the market.