Issuance of Right Shares

Right shares are issued by a company to its existing shareholders. These shares give the shareholders the right to purchase additional shares in the company at a discounted price. The issuance of right shares is a way for companies to raise capital without having to go through the process of issuing new shares to the public.

Who are issued Right Shares?

The following are the people who are issued right shares:

1. Promoters: Promoters of the company may be issued right shares as compensation for their services. This is a way for the company to reward its promoters for their efforts in promoting the company and helping it grow.

2. Holders of Convertible Debentures: Holders of convertible debentures may also be issued right shares. This is because convertible debentures can be converted into equity shares at a later date, and right shares give the debenture holders the right to purchase additional shares at a discounted price.

3. Existing Shareholders: The primary purpose of issuing right shares is to give existing shareholders the opportunity to purchase additional shares at a discounted price. This helps to maintain the existing shareholding pattern of the company and allows shareholders to increase their stake in the company without having to purchase shares from the open market.

Conclusion

In conclusion, right shares are issued to existing shareholders of a company who are given the right to purchase additional shares at a discounted price. This helps the company raise capital without having to go through the process of issuing new shares to the public. The issuance of right shares is a way for the company to maintain its existing shareholding pattern and reward its promoters and debenture holders.