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Rights issue

Rights issue

A rights issue is a new share issue in which existing owners have priority to subscribe for new shares.

What is a rights issue?

A rights issue is a new share issue in which existing shareholders have priority to subscribe for the new shares, usually in proportion to their current holding. The aim is to let owners keep their stake.

 

Rights issue and dilution

Owners who subscribe for their part avoid dilution. A directed share issue is the opposite — there, shares are offered to selected investors. Both increase the share capital and are recorded in the share ledger.

Record share issues
Henrik Kristensen, NVR
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Related terms

Subscription right

A subscription right is the right to subscribe for new shares in a rights issue.

Pre-emptive right

A pre-emptive right means existing shareholders may subscribe for new shares in proportion to their holding.

New share issue

A new share issue is when a limited company issues new shares for payment to increase its capital.

Directed share issue

A directed share issue is a new share issue offered to selected investors instead of all owners.