June 2011 question 3 b (i)

If they have a rights issue, then the new shares go to the existing shareholders and therefore the existing shareholders still control the company because the have a vote at shareholders meetings. If they have a new issue it means that lots of new shareholders will appear - they will have a vote as well, and there is a risk that the existing shareholders might end up being out-voted. (OK they still have a majority of the votes, but not a big majority.)