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Rights Issue

What is a Rights Issue?

The company needs money, but instead of launching a full public IPO, it asks its current shareholders to chip in. The best part? They offer these new shares at a heavy discount to the current market price. You get "rights" based on how many shares you already own. If you ignore your broker's letters and do nothing, your ownership percentage in the company drops because they've issued new shares to everyone else. It is usually a quick way for a stressed company to raise emergency capital without too much paperwork.

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