rights issue

rights issue
An issue of shares for cash by a company to its existing shareholders on a basis pro rata to their existing shareholdings. The issue will normally be at a substantial discount to the current share price (usually between 20% and 40% discount). The rights issue is a means of implementing pre-emption rights. On a rights issue, existing shareholders will receive a provisional allotment letter, which tells them how many shares they have the right to subscribe for and the subscription price for the rights. They may exercise their rights and subscribe for the shares. Alternatively, they may sell the provisional allotment letter to another person who can subscribe for the shares. This is known as selling the rights nil paid. A third alternative is to take no action by the deadline for subscription. In this case, the company will sell the shares in the market, retain the subscription price and remit any excess proceeds from the sale to the shareholder who failed to take up his rights. Dresdner Kleinwort Wasserstein financial glossary
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subscription rights / rights offer Euroclear Clearing and Settlement glossary
Privilege granted to existing shareholders of a company to subscribe to shares of a new issue against payment. Rights are often tradable in the secondary market. Euroclear Clearing and Settlement glossary
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An offer of securities to existing shareholders by a company in proportion to their existing holdings. Exchange Handbook Glossary
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An offer to sell a new issue of shares by a company to its existing shareholders, usually at a price which is lower than the market price.
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An invitation to existing shareholders to purchase additional shares in the company. London Stock Exchange Glossary

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rights issue rights issue issue2

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   One of the ways that a company can raise additional funds is to issue new shares. These new shares must be first offered to current shareholders and a rights issue allows a shareholder to buy an additional number of shares for each share held. For example, a two-for-three rights issue entitles shareholders to buy two additional shares for every three owned. Rights can be traded in the market.

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rights issue UK US noun [C] STOCK MARKET
an occasion when a company offers new shares at a lower price than usual to its existing shareholders, or the number of shares made available in this way: »

The acquisition will neither dilute shareholders' earnings nor prompt a rights issue.

»

Much of the rights issue proceeds were used to plug a financial black hole.


Financial and business terms. 2012.

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Look at other dictionaries:

  • rights issue — an issuing of extra shares. A company may raise additional capital from its members as opposed to from the public at large by issuing extra shares; this is called a rights issue. See pre emption; pre emption clause. Collins dictionary of law. W.… …   Law dictionary

  • rights issue — rights issues N COUNT A rights issue is when a company offers shares at a reduced price to people who already have shares in the company …   English dictionary

  • rights issue — rights .issue n BrE technical an offer of company ↑shares at a cheaper price than usual, to people who own some already …   Dictionary of contemporary English

  • rights issue — rights ,issue noun count BUSINESS an offer of SHARES at a special low price by a company to people who already own shares in it …   Usage of the words and phrases in modern English

  • Rights issue — When doing a Secondary Market Offering of shares to raise money, a company can opt for doing a rights issue to raise capital. With the issued rights, existing shareholders have the privilege to buy a specified number of new shares from the firm… …   Wikipedia

  • rights issue — noun an offering of common stock to existing shareholders who hold subscription rights or pre emptive rights that entitle them to buy newly issued shares at a discount from the price at which they will be offered to the public later the… …   Useful english dictionary

  • rights issue — A method by which listed companies on a stock exchange raise new capital, in exchange for new shares. The name arises from the principle of pre emption rights, according to which existing shareholders must be offered the new shares in proportion… …   Accounting dictionary

  • rights issue — A method by which listed companies on a stock exchange raise new capital, in exchange for new shares. The name arises from the principle of pre emption rights, according to which existing shareholders must be offered the new shares in proportion… …   Big dictionary of business and management

  • rights issue — UK / US noun [countable] Word forms rights issue : singular rights issue plural rights issues business an offer of shares at a special low price by a company to people who already own shares in it …   English dictionary

  • rights issue — subscription rights / rights offer Privilege granted to existing shareholders of a company to subscribe to shares of a new issue against payment. Rights are often tradable in the secondary market …   Euroclear glossary

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