can you please explain about Right issue, and suppose I have 50 qty how many shares I purchase Through right Issue. ?
Positing the extract from Varsity -
The promoters can choose to raise additional capital from its existing shareholders by offering them new shares at a discounted price (generally lower than Market Price). The company offers new shares in proportion of shares already held by the shareholders. For example, a 1:4 Rights Issue would mean that for every 4 shares held 1 additional share is offered. Although this option looks good, it limits the company to raise the capital from a small number of investors who are already holding shares of the company and might not want to invest more. A rights issue leads to creation of new shares that are offered to the shareholders, which in turn, dilutes the value of the previous held shares.
An example of a Rights issue is of South Indian Bank which announced a 1:3(One share for every 3 held) issue at a price of Rs 14 which is 30% lower than the Market Price the stock was trading (Rs 20 as on Record date 17 Feb 2017). The bank offered 45.07 lakh shares to the existing shareholders
1 Like
Thank you Karthik…
So how can I avail my right of issue. This is an online process or offline process. What is the process for same.
Thanks…But is there any online process…As my address in demat account is of my native and I am currently living in some other city.
Hi Praveen, you can download copy , which is frwded to your mail…