Rights Issue

A company wanting to raise money for investing in the firms business can do so in a number of ways. One way is to approach existing investors with a rights issue. This is where existing investors are offered new shares in the company at a specific price, in proportion to the number of shares they already own. The price of the new shares is often at a slight discount to current share price to sweeten the deal for the shareholders.

The shareholder has the right to purchase the new shares but does not have an obligation to do. Until the investor makes their decision, they will own nil-paid rights

, and if they chose not to exercise these rights, they can sell them in the market to other investors who may wish to buy the new shares at the price offered.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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