{"id":12909,"date":"2023-07-07T03:48:18","date_gmt":"2023-07-06T22:18:18","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=12909"},"modified":"2025-04-01T22:45:33","modified_gmt":"2025-04-01T17:15:33","slug":"what-is-the-rights-issue","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-the-rights-issue\/","title":{"rendered":"What is the Rights Issue?"},"content":{"rendered":"<h2><strong>About Rights Issue:<\/strong><\/h2>\n<p>&nbsp;<\/p>\n<ul>\n<li>A rights issue is an i<strong>nvitation to existing shareholders to purchase additional new shares in the company.\u00a0\u00a0<\/strong><\/li>\n<li>This type of issue <strong>gives existing shareholders securities called rights.\u00a0<\/strong>\u00a0<\/li>\n<li>With the rights, the <strong>shareholder can purchase new shares at a discount to the market price on a stated future date.<\/strong><\/li>\n<li>The company is giving <strong>shareholders a chance to increase their exposure to the stock at a discount price.<\/strong><\/li>\n<li>Until the date at which the new shares can be purchased, s<strong>hareholders may trade the rights on the market the same way that they would trade ordinary shares.<\/strong><\/li>\n<li>The ri<strong>ghts issued to a shareholder have value<\/strong>, thus compensating current shareholders for the future dilution of their existing shares&#8217; value.<\/li>\n<li>Dilution occurs because a rights offering spreads a company\u2019s net profit over a larger number of shares. Thus, the company\u2019s earnings per share, or EPS, decreases as the allocated earnings result in share dilution.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3>Why Issue a Rights Offering?<\/h3>\n<ul>\n<li>Companies most commonly issue a rights offering t<strong>o raise additional capital<\/strong>.\u00a0<\/li>\n<li>A company m<strong>ay need extra capital<\/strong> to meet its current financial obligations.\u00a0<\/li>\n<li>Troubled companies typically <strong>use rights issues to pay down debt,<\/strong> especially when they are unable to borrow more money.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3>Q1)\u00a0What are equity shares?<\/h3>\n<p>Equity shares are long-term financing sources for any company. These shares are issued to the general public and are non-redeemable in nature. Investors in such shares hold the right to vote, share profits and claim assets of a company. The value in case of equity shares can be expressed in various terms like par value, face value, book value and so on.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/economictimes.indiatimes.com\/markets\/stocks\/news\/after-bpcl-ioc-announces-rights-issue\/articleshow\/101522630.cms\" target=\"_blank\" rel=\"nofollow noopener\"><u>After BPCL, IOC announces rights issue<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A rights issue is an invitation to existing shareholders to purchase additional new shares in the company.<\/p>\n","protected":false},"author":5,"featured_media":12910,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-12909","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/12909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=12909"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/12909\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/12910"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=12909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=12909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=12909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}