Investing term
What is Rights issue?
Existing holders receive the right to buy more shares at a discount, by a deadline.
A rights issue lets existing shareholders buy additional shares at a discount, in proportion to their holdings, by a deadline. The company raises capital while giving current owners first dibs to avoid dilution. You usually have a choice: buy the discounted shares, sell the rights, or let them lapse — and ignoring the notice means forfeiting the value entirely.
Subscribing keeps your slice of the company whole. Doing nothing shrinks it — and forfeits rights you could have sold.
For example
You're offered the right to buy one new share at a 20% discount for every five you own — take it, sell the right, or lose it by the deadline.
Learn it by doing
That's Rights issue in theory — it clicks when you use it. Practise it hands-on in a free, interactive lesson (Stage 8, Corporate Actions: What Lands in Your Account).
Try the free lesson →Why it matters to you
A rights issue forces a decision with real money attached: subscribe and keep your slice of the company whole, sell the rights for cash, or do nothing and watch your ownership get diluted by the holders who did subscribe. Subscribing and selling leave you with the same total value — what differs is how much of the company you still own. Doing nothing is the only option whose outcome someone else decides.
⚠ Doing nothing isn't neutral
Lapsed rights are not simply thrown away. In a UK-listed rights issue the unclaimed shares are sold on and any premium over the offer price, net of costs, is paid to you — but only if a premium is actually obtained, and if your share of it comes to under £5.00 the company may keep it. You are diluted either way, and the timing and price are out of your hands. If you don't want to put in more cash, sell the rights yourself rather than ignoring the notice.