If you own stocks, you may have come across the term “rights issue”—a company’s way of raising capital by offering additional shares to existing shareholders, usually at a discount.
How It Works:
- You receive a right to buy extra shares based on how many you already own.
- The shares are offered at a discount to the market price.
- You can accept, decline, or sell your rights (depending on terms).
Pros:
- Buy shares at a lower price
- Increase your ownership in a company you believe in
Cons:
- Your stake could be diluted if you do not participate
- Temporary dip in share price post-issue