Question

right issue are generally made at a price lower than​

Answer 1

Explanation:

A rights issue is a way by which a listed company can raise additional capital. ... Usually the price at which the new shares are issued by way of rights issue is less than the prevailing market price of the stock, i.e. the shares are offered at a discount.

Answer 2

ANSWER :

★ The current market price

• ✎ Right issues are generally made at a price lower than the current market price.

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KNOW MORE :

❒ Right Issue :-

• ➺ The issue of shares by an existing company to its existing shareholders as per the provisions of Section 62 of the Companies Act, 2013 is known as right issue.

• ➺ A right issue is directly offered to all existing shareholders of the company in proportion to their current holding on that date.

• ➺ The matters relating to right issue are incorporated in section 62 of the Companies Act, 2013.

• ➺ Generally the right shares are issued at a price which is lower than the current market price.

• ➺ Right shares are offered only to the existing equity shareholders in proportion to their original holdings.

• ➺ Only the public limited companies can issue right shares. A private limited company cannot issue right share.

❒ Objective of Right Issue :-

• ➺ To retain the power of control in the hands of the existing shareholders.

• ➺ To prevent loss to the existing shareholders or account of delusion of the value of their holdings.

• ➺ To ensure the certainty that their shares are subscribed fully.

• ➺ To benefit the existing shareholders in terms of lower price of their long association with the company.

• ➺ To avoid the share issue expenses.