rights issue


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. . 2001.


rights issue
An offer of new shares or other securities made to existing shareholders in proportion to their shareholdings. A rights issue is usually to be subscribed in cash (nearly always at a discount to the market price). In the case of publicly-quoted companies a rights issue is normally made by means of the issue of a renounceable letter (or other negotiable document) such as a provisional allotment letter (PAL). PALs give shareholders the right to subscribe for shares under the issue and they can sell this right in the market nil paid.
Arrangements are normally made through underwriters for the sale of shares not taken up by shareholders. In the first instance underwriters will attempt to sell the rights not taken up through the market. Any that remain unsold will be taken up by the underwriters. So even if a shareholder does nothing (known as a lazy shareholder), he may still receive a cash payment if the shares that were provisionally allotted to him are sold in the market for more than their subscription price.
Related links

Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • 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 — 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 …   Financial and business terms

  • 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


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.