📘 What is a Right Share?
A Right Share is a type of offer where a company gives its existing shareholders the first opportunity to purchase new shares at a discounted price. This offer is usually made to raise capital, and shareholders can buy additional shares in a fixed ratio within a limited time.
🔹 Key Features of Right Shares:
- Only for Existing Shareholders: The right is offered only to those who already hold the company’s shares.
- Discounted Price: Shares are offered at a price lower than the current market value.
- Fixed Ratio: For example, a 10:2 ratio means for every 10 shares held, the shareholder can buy 2 right shares.
- Limited Time Period: Shareholders must decide within a short time, usually 15–30 days.
- Transferable: In some cases, this right can be sold to someone else.
🧩 Example:
If ABC Company announces a right share in a 10:2 ratio at Rs. 100 per share:
- If you own 1,000 shares, you are eligible to buy 200 right shares.
- If the market price is Rs. 150, you're getting new shares at a cheaper price.
📊 Why Do Companies Issue Right Shares?
- To raise capital for expansion or operations.
- To reduce debts.
- To fund new projects.
- To give preference to current shareholders.
🔚 Conclusion:
Right shares offer a good opportunity for current shareholders to buy shares at a lower price. It helps maintain ownership percentage and gain potential profit. However, it's optional—you can choose to accept or ignore the offer.
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