Q.Explain the following term/concept.
Rights Issue
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Start your 14-day free trial to unlock the full solution →A rights issue is a further issue of shares in which a company offers new shares first to its existing equity shareholders, in proportion to their existing shareholding, before offering them to the public.
Under Section 62 of the Companies Act, 2013, when a company wants to raise more capital by issuing additional shares, it must first offer them to the current equity shareholders. This protects their proportionate ownership and control (the pre-emptive right). The offer is made through a 'letter of offer' stating the number of shares offered and the time (usually not less than 15 days) within which to reply. A shareholder may (a) accept the offer, (b) reject it, or (c) renounce …
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