{"id":20205,"date":"2024-02-07T08:43:49","date_gmt":"2024-02-07T03:13:49","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=20205"},"modified":"2025-04-05T23:05:17","modified_gmt":"2025-04-05T17:35:17","slug":"what-is-rights-issue","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-rights-issue\/","title":{"rendered":"What is Rights Issue?"},"content":{"rendered":"<h2><strong>About Rights Issue:<\/strong><\/h2>\n<ul>\n<li>A rights issue is an <strong>offering of rights to the existing shareholders<\/strong> of a company that gives them an opportunity <strong>to buy additional shares directly from the companyat a discounted price<\/strong> rather than buying them in the secondary market.\u00a0<\/li>\n<li>It gives preferential treatment to existing shareholders, where they are <strong>given the right (not obligation<\/strong>) <strong>to purchase shares<\/strong> at a lower price <strong>on or before a specified date<\/strong>.<\/li>\n<li><strong>The number of additional shares<\/strong> that can be bought <strong>depends on the existing holdings<\/strong> of the shareowners.<\/li>\n<li><strong>Until the date<\/strong> at which the new shares can be purchased<strong>, shareholders may trade the rights on the marketthe same way<\/strong> that they would <strong>trade ordinary shares<\/strong>.<\/li>\n<li>Existing shareholders <strong>can also choose to ignore the rights<\/strong>; however, if they do not purchase additional shares, <strong>then their existing shareholding will be diluted post-issue of additional shares.<\/strong><\/li>\n<li><strong>Dilution occurs because<\/strong> a ri<strong>ghts offering spreads a company\u2019s net profit over a larger number of shares.<\/strong> Thus, the company\u2019s <strong>earnings per share, or EPS, decreases<\/strong> as the allocated earnings result in share dilution.<\/li>\n<\/ul>\n<h4><strong>Why issue a Rights Offering?<\/strong><\/h4>\n<ul>\n<li>Companies most commonly issue a rights offering to <strong>raise additional capital<\/strong>. A company may need extra capital to meet its current financial obligations.\u00a0<\/li>\n<li>Troubled companies typically use rights issues <strong>to pay down debt,<\/strong> especially when they are unable to borrow more money.\u00a0<\/li>\n<\/ul>\n<hr \/>\n<h3><strong>Q1<\/strong>: What is earnings per share?<\/h3>\n<p>Earnings per share or EPS is an important financial measure, which indicates the profitability of a company. It is calculated by dividing the company\u2019s net income with its total number of outstanding shares. It is a tool that market participants use frequently to gauge the profitability of a company before buying its shares.<\/p>\n<p>\n<strong>Source:<\/strong><a href=\"https:\/\/www.cnbctv18.com\/market\/indiabulls-housing-finance-share-price-rights-issue-opens-all-you-need-to-know-price-dates-18992661.htm\" target=\"_blank\" rel=\"nofollow noopener\">Indiabulls Housing Finance rights issue opens today; Here&#8217;s All You Need To Know<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Rights Issue is an offering of rights to the existing shareholders of a company that gives them an opportunity to buy additional shares directly from the company at a discounted price<\/p>\n","protected":false},"author":5,"featured_media":20206,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-20205","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\/20205","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=20205"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/20205\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/20206"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=20205"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=20205"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=20205"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}