What is Right issue of share - Smart Working

What is Right issue? 

If you are an investor in stock market so it's very important to know about What is Right issue of share ? . 

Right Issue is prosses by the company is raising extra capital from market . 
And offer some new share to existing shareholders. 

Right issue can make those company who has already listed in stock exchange . And now they required more extra capital for new project or for other purpose.  
And they don't want to make borrow . 

Company will offer first right issue to existing shareholders .Existing shareholders have right to buy share in discount prices but not obligation. 

A Right issue Is an upportunity for existing shareholders to increase their stake in a company and by that we can decrease cost of stock. 

A rights issue of shares must follow all SEBI’s regulation on issue of shares. A listed 
company making a rights issue shall fix a record date to determine the eligibility of the 

shareholders for the rights issue. 

How can apply for Right Issue ? 

Any one existing shareholders can apply for Right issue through an ASBA (Application supported by blocked account) . You can apply for Right issue like an IPO . 

The existing equity shareholder 
are given right to apply for new share in certain properstions to the share already held by them. 

There is three option to raise fund from equity market 

1. IPO ( Initial Public Offer ) 
2. Right issue 
3. Follow on public offer . 

Why the company offer Right Issue ? 

1. If the company debt ratio is increase 
So Company will offer you Right issue 
Because from that way company easily collect from equity market. And also increase equity ratio. 

2. For  Starting a new project and there Is much money required so company can collect money from market through Right issue. 

3 . Company Can Improve debt to equity ratio. 

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