ekeson1st: First and foremost, what is a Rights Issue? ARights Issue is an offer to existing shareholdersto purchase additional shares in a companyduring the company’s issue of new shares toraise additional capital.So the company will publish a notice of theRights Issue in at least two (2) national dailynewspapers. Also, the company’s registrar willsend a copy of the SEC (Securities andExchange Commission) approved Rightscircular to all existing shareholders, informingthem of the Rights offer not less than twentyone (21) days before the opening of the Rightsoffer.The company issuing the new shares usuallyask its shareholders to subscribe to the sharesusually made in proportion to their existingholdings; allowing them to buy the newlyissued shares at a fixed price, usually at adiscount to the market value of the shares beingtraded at the Nigerian Stock Exchange, NSE ,within a specific subscription period.A Rights issue is therefore one of the ways bywhich a listed company can raise funds from itsexisting shareholders. If an existing shareholderdoes not want to partake in the Rights Issue,the person can either ignore or sell the shareson the floor of the Exchange to either anexisting shareholder or new shareholder throughthe engagement of a stockbroker.
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