Rights Issue:

An invitation to purchase additional company shares within a set time frame at a discounted price is known as a rights issue. In contrast to an IPO, a rights issue is only made available to current shareholders in proportion to their current ownership. The rights issue provides advantages to qualified shareholders by enabling them to purchase additional shares at a discount from the market price.

The eligible shareholders have three options: they can either fully or partially subscribe for the rights issue, let the rights lapse by choosing not to exercise their right to buy additional shares, or transfer their right to acquire to another person. Renunciation of rights issues, which involve exchanging rights entitlements on a stock exchange like equity shares, are one way to transfer rights to other people.