Rights Issue

One of the ways that a company can raise additional funds is to issue new shares. They must be first offered to current shareholders and a rights issue allows a shareholder to buy extra shares in proportion to the number already held. For example, a two-for-three rights issue entitles shareholders to buy two additional shares for every three owned. The right to buy extra shares can be traded in the market.

See also: Pre-emptive Rights, New Issue, Bonus Issue