Rights Issue advantages

Rights Issue advantages

1. Rights Issue advantages ensures that the control of the company is preserved in the hands of the existing
shareholders.
2. The expenses to be incurred, otherwise if shares are offered to the public, are avoided
3. There is more certainty of the shares being sold to the existing shareholders.
4. It betters the image of the company and stimulates enthusiastic response from
shareholders and the investment market.
5. It ensures that the directors do not misuse the opportunity of issuing new shares to their
relatives and friends at lower prices on the one hand and on the other get more controlling
rights in the company.