Rights issues
A rights issue offers existing shareholders the opportunity to buy new shares, generally in proportion to their current holdings. For example, a holder of 400 shares can subscribe for 100 new shares under a one-for-four offer. Multiply the new shares taken up by their issue price to determine cash raised; split the proceeds between nominal share capital and any share premium.
Worked example
A one-for-four issue allows one new share for every four held, at the stated price.
Common mistake
A rights issue raises funds when shares are taken up; a bonus issue does not normally bring in new cash.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |