What is Rights Issue

Rights Issue is when a listed company provide a change to their existing share holders to buy more shares at a discounted price. This is very helpful to company to raise money from their existing share holders. It is totally up to the share holders, they want to participate in Rights Issue or not. Even they can sell their rights shares to others. Characteristic of Rights Issue

• Allocated to shareholders who already hold stakes in current company.
• Shares are provided at a discount relative to the current market price.
• Additional shares can be bought in a ratio matching current holdings. For instance if someone has 10 shares then then can purchase 5 shares only.
• Existing share holders can sell their rights shares to others