Define the term - right issues, Finance Basics

Define the term - Right Issues

If an existing company intends to raise extra funds, it can do so by borrowing or b issuing new shares. One of the most general methods for a public company to use is to offer existing shareholder the opportunity to subscribe further shares. This mode of finance is known as 'Right Issues'. Existing shareholders have right to entitlement of further shares in proportion to their existing shareholding. Rights of entitlement of a shareholder, who doesn't want to buy the right share, can be sold to someone else.

N = Number of outstanding shares/ Number of new shares to be offered

Where N= Number of rights needed to buy one new share

 

Posted Date: 9/24/2013 2:35:33 AM | Location : United States







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