Right issue is for existing shareholder of the company, so it is not public issue like IPOs. In it existing shareholders have right to apply or reject the right issue. Normally company give some discount in the price of share for right issue.Originally Posted by mohan
Rights Issue is another way of raising capital from the market. The money is raised from the existing shareholders. No party except the existing shareholders can subscribe to it. And its not a compulsion on shareholders to subscribe.
It is intentionally priced below CMP. Otherwise it makes no sense for the shareholder to buy them. If its priced above CMP, then obviously it makes sense to buy from secondary mkt rather than subscribing to Rights.
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