What is Right Issue?

Answer Posted / debarati guha

When doing a Secondary Market Offering of shares to raise
money, a company can opt for doing a rights issue to raise
capital. With the issued rights, existing shareholders have
the privilege to buy a specified number of new shares from
the firm at a specified price within a specified time. A
rights issue is offered to all existing shareholders
individually and may be rejected, accepted in full or (in a
typical rights issue) accepted in part by each shareholder.
Rights are often transferable, allowing the holder to sell
them on the open market.

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