Rights Issue

[Shahid_fss]

You are right about the difference, it creates confusion. I think the difference is due to law. Every country has its own law of companies which effects very much to the methods of issuing the shares. I will continue my study in right issue and I will consult with some other books.
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The decisions in the AGM are made by the directors and can't be changed. If it is decided that "5 rights will be issued to each shareholders having 10 shares before" then rights can't be given to any other person.
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- Suppose your company has transferred 100 rights (10 each) to you and now you have to pay 1000 to the company (U are now a debtor and remember that you have the rights not shares, shares will be transferred to you when you'll pay the money)
- If u don't have any money to pay (or u don’t want to have shares) then you'll go to the stock exchange and sell your right to any other person.
- Now you have the money to pay off the debt. You'll pay the amount and the shares will be issue to the person who has the rights.
- Shares will always be issued to the person who have the right.
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