Rights issue means the
Rights issue means the
- A) Issue of shares to the directors of a company on favourable firms
- B) Issue of shares of a company only to the founder of the company
- C) Rights of shareholder to vote on any issue
- D) Issue of shares to shareholders on favourable terms
Correct Answer: D) Issue of shares to shareholders on favourable terms
Explanation
This question is asking what is meant by rights issue.A rights issue refers to the situation where a company offers its existing shareholders the opportunity to purchase additional shares at a discounted price. This is done in proportion to their current shareholding.
In simpler terms, if you are already a shareholder of a company and the company decides to raise more funds by issuing new shares, they will give you the right to buy these new shares before they are offered to the public. This is called a rights issue.
The correct option in this question is Option D: Issue of shares to shareholders on favorable terms. This means that the company is offering its existing shareholders the chance to buy new shares at a discounted price or with some other favorable terms.
So, in summary, a rights issue is when a company offers its existing shareholders the opportunity to buy more shares at a discounted price before they are offered to the public. This helps the company raise additional funds and allows shareholders to increase their ownership in the company.