You may hold shares in a certain company and then you hear of a Rights Issue during the annual AGM..in simple terms it takes place when a company offers existing shareholders a chance to buy additional shares but only in proportion to the shares they hold. In most cases a rights issue is done at a discounted price..For example with shares trading at 20/=, a company may offer a rights issue where a shareholder is given one right for every share held with four right required to buy an extra share at 18/= At the end of the day if you have 20 shares you will end up with 5 extra shares..Rights issue is meant to raise capital while at the same time rewarding them with lower prices which in the long run helps them maintain a proportionate stake in the company..For the meantime, Uchumi Supermarkets will launch a 1.5 billion shilling rights issue by December to fund expansion while NBK plans to hold a rights issue next year to raise Sh10 billion to fund this transformational plan..Thats BUSINESS SIMPLIFIED FOR TODAY
Posted on: Thu, 12 Sep 2013 12:57:44 +0000
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