rights issue
Học thuậtThân thiện
Definition
Noun: 1. A method of raising new capital: A "rights issue" is an offering of new shares in a company, made exclusively to its existing shareholders. These shareholders are given the "right" to purchase additional shares, typically at a price below the current market value, in proportion to their existing holdings. 2. A pre-emptive offering: It is a type of securities offering that allows current shareholders to maintain their proportional ownership (and avoid dilution) by purchasing new shares before they are offered to the general public.
Usage
- The company announced a rights issue to fund its expansion plans, offering one new share for every five held.
- Shareholders must decide whether to exercise their rights, sell them, or let the rights issue expire.
- The board approved the rights issue at a 20% discount to the current trading price.
Advanced Usage
- "To be entitled to a rights issue": To have the legal right, as a shareholder on a specific record date, to participate in the offering.
- Shareholders of record on Friday are entitled to participate in the rights issue.
- "To underwrite a rights issue": When an investment bank guarantees to purchase any shares not bought by the existing shareholders, ensuring the company raises the intended capital.
- The investment bank agreed to underwrite the rights issue.
Variants and Related Words
- Rights Offering: A direct synonym for "rights issue," used more commonly in some regions like North America.
- Subscription Right: The individual, tradable entitlement given to a shareholder to buy a specified number of new shares in the rights issue.
- Pre-emptive Right: The fundamental shareholder right that a rights issue is based upon, protecting against dilution of ownership.
Synonyms
- Rights offering
- Privileged subscription
Related Terms and Concepts
- Dilution: A reduction in the ownership percentage and often the earnings per share of existing shareholders, which a rights issue is designed to prevent.
- Ex-rights Date: The date on which shares begin trading without the subscription rights attached.
- Renounceable: Describes a rights issue where the subscription rights can be sold to another investor in the market.
Noun
- an offering of common stock to existing shareholders who hold subscription rights or pre-emptive rights that entitle them to buy newly issued shares at a discount from the price at which they will be offered to the public later
- the investment banker who handles a rights offering usually agrees to buy any shares not bought by shareholders