In a rights issue, a listed company raises capital by giving current shareholders the chance to buy new shares before outsiders do. Rights are often priced below the market to encourage take-up. If you do nothing, your ownership percentage usually falls as new shares are issued to those who subscribe.
Key takeaways
- Rights issues raise fresh capital from existing owners first.
- Ignoring a rights offer can dilute your stake.
- The discount and the use of proceeds both deserve careful reading.
- Some markets let you sell rights; check local dealing rules and timelines.