A Rights Issue lets companies raise funds by offering new shares to existing shareholders at a discount, in proportion to holdings, within a fixed time frame.
A Rights Issue Offering is a method by which a company raises capital by offering new shares to existing shareholders in proportion to their current holdings. This offering allows shareholders to buy additional shares at a discounted price, often below the market price, within a specified time frame.
The goal of a rights issue is to raise funds for various purposes, such as expansion, reducing debt, or other corporate activities. Shareholders have the option to accept, reject, or sell their rights to other investors. The rights issue can be fully or partially subscribed, depending on shareholder interest.
Example:
A company offers 1 new share for every 5 shares held, at ₹100 each. A shareholder with 100 shares can buy 20 new shares at the discounted price.
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