Rights Issue

An offer made by a quoted company to its shareholders to enable them to buy new shares in the company at a discount to the market price. Existing shareholders are usually offered shares in proportion to their existing holding. For example in a one for five rights issue, a shareholder would be invited to buy one new share for every five shares already owned. The new shares are offered at a discount to the current market price and because of that the rights have a value in themselves and can be sold separately.