Understanding Rights Issue
Rights Issue
A "rights issue" is a way to get more money. But instead of going public, the business talks to its current owners. Think of the rights issue as a second IPO for a small group of people who already own shares in the company. The "rights issue" might mean that the company is making progress that looks good, but this isn't always the case. As an investment, you need to look at the right issue's reasons and decide if it makes sense. Shareholders can subscribe to the rights issue based on how many shares they own.
For example, "rights issue" 1:4 means that a member can buy one more share for every four shares they already own. When the "rights issue" happens, new shares will be given out at a price that is lower than what is going on in the markets. That is, if a stock is selling for Rs.400 per share, the right issue could be for Rs.300 per share, which is 20% less.
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Table of Contents : Corporate actions and effect on stock prices 2. Dividends - portions of profits made by the company 3. The time line to understand the Dividend payment cycle |
