Announcement: The company announces its intention to issue new shares and offers rights shares to existing shareholders. The announcement includes details such as the number of shares being offered, the subscription price, and the ratio at which rights shares will be allocated.
Allocation: Existing shareholders receive rights entitlements based on their current shareholding. The ratio determines how many rights shares a shareholder is entitled to purchase for each share they currently own. For example, if the ratio is 1:1 and a shareholder owns 100 shares, they will receive 100 rights entitlements.
Subscription Period: Shareholders are given a specific period, known as the subscription period, during which they can exercise their rights entitlements by purchasing the rights shares at the predetermined subscription price. The subscription period is typically limited usually a few weeks.
Trading: Rights entitlements can often be traded on the stock market, allowing shareholders who do not wish to exercise their rights to sell them to other investors who want to buy more shares at the discounted price.
Exercise or Letting Expire: Shareholders have the choice to either exercise their rights by purchasing the rights shares or let their rights expire. If a shareholder chooses not to exercise their rights, the rights shares may be allocated to other shareholders or sold to outside investors.
Read more: https://myefilings.com/issue-of-rights-shares/