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Rights issue means the?

Commerce
JAMB 2018

Rights issue means the?

  • A. issue of shares to the directors of a company.
  • B. issue of shares by a company only to the founders of the company
  • C. right of shareholders to vote on any issue
  • D. issue of shares to shareholders on favorable terms
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Correct Answer: Option B
Explanation

A rights issue or rights offer is a dividend of subscription rights to buy additional securities in a company made to the company's existing security holders. When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital. Rights issues are typically sold via a prospectus or prospectus supplement.  A rights issue is when a company issues its existing shareholders a right to buy additional shares in the company. The company will offer the shareholder a specific number of shares at a specific price.


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Post-UTME Past Questions - Original materials are available here - Download PDF for your school of choice + 1 year SMS alerts