__________ is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

E-IPOs

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Private Placement

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Rights Issue

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Solution

The correct option is D Rights Issue
A rights issue is one of the ways by which a listed company raises additional capital for its operations. Difference between rights issue and other share issues is that under rights issue, shares are allotted to the existing shareholders in proportion of their existing shareholding.
Hence rights issue is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

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The directors of a company want to modernise its plant and machinery by making a public issue of shares. They wish to approach stock exchange, while the finance manager prefers to approach a consultant for a new public issue of shares. Advise the directors whether to approach stock exchange or a consultant for new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.

Q. The Directors of a Company want to modernise its plants and machinery by making a public issue of shares. They wish to approach stock exchange. While the finance manager prefers to approach a consultant for the new public issue of shares. Advise the directors whether to approach stock exchange or consultant for the new public issue of shares and why? Also advise about the different methods which the company may adopt for the new public issue of shares.

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State clearly the conditions under which a company can issue shares at a discount.

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