Question

v ltd.has given one right share for existing 3 equity shares value of one equity share is 100 and market value is 200 per share .find out the value of right share​

Answer 1

Value of each right share should be Rs.33.33

Explanation:

Right Shares: As per the definition given in Section 62  of Companies Act,2013,Right shares are issues of securities,in which an offer of specific securities is made first to the shareholder of a listed company.

The Right shares hold a price much lower than that of common stock/shares listed and are first offered to the shareholders of the company.

It is the discretion of the shareholders whether to purchase those right shares or not. Shareholders are also provided with the option to sell their right shares to a person who is not a shareholder in that company.

If the shareholders decide not to buy any Right shares then the company has the right to sell those right shares in the Secondary market.

The Value of Right shares can be calculated as follows:

Value of Right share = Market price of each share - Subscription price

                                                                                                                         

                                           No. of right shares required to get 1 share

                                  = $[200-100] \times \dfrac{1}{3}$

                                  = Rs.33.33