Right issues

1. The price will be at discount

2. A right issue is where a company offers further shares, at a given price, to existing shareholders in proportion to their existing holdings.

3. When companies want to raise more capital through a further issue of shares, they are obligated to offer the new shares to the existing shareholders. (This is a right of shareholders)

4. Effects of a successful right issue

4.1. New shares are created

4.2. New money raised for the company

4.3. The total value of the company increased by the money raised

4.4. The price per share will fall depending on the extent of discount.