Rights Issue

Rights issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date. The rights are normally offered in a particular ratio to the number of securities held prior to the issue. This route is best suited for companies who would like to raise capital without diluting stake of its existing shareholders.

In other words, The issue of new securities to existing shareholders at a ratio to those already held, at a price. For example, a 1:2 rights issue represents the existing shareholder to receive 1 share for every two shares he/she own at same price.