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What happens when a shareholder do nothing in a rights issue?
What this sentence from BPP means “if they do not exercise their rights, the new securities they are entitled to subscribe for maybe sold for their benefit by the company, and this would protect them from losing their wealth”
Does it mean that the value of rights issue will be given by the company to shareholder if they do not exercise rights ?As I explain in my free lectures, the rights are traded on the stock exchange and if the shareholder does not want to take up their rights then they can sell them to others on the stock exchange.
Rather than the shareholder having to have the hassle of selling them themselves, the company will sell them on their behalf and give the money to the shareholder.
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