Glossary · Corporate Actions
Rights Issue
An offer by a listed company to existing shareholders to purchase additional shares at a discounted price, in proportion to their current holdings. Used to raise new capital.
01—What is Rights Issue?
The definition — and what it means in practice.
A rights issue is a corporate action where a listed company offers existing shareholders the right to buy additional shares, usually at a discounted price. The offer is made in proportion to current shareholdings (for example, one new share for every certain number already owned). It is a way for the company to raise fresh equity capital without immediately issuing shares to the wider market.
For an investor, a rights issue matters because it can change your ownership percentage and your average cost per share. If you take up the rights, you invest more money to maintain your proportional stake. If you do not participate (and the rights are not sold or otherwise compensated), your holding may be diluted as the total number of shares increases. The discount can also affect short-term price behaviour.
If you own 100 shares, a 1-for-10 rights issue lets you buy 10 more shares at a set discounted price, or your percentage ownership may fall.
- Only existing shareholders are entitled, based on a stated ratio linked to their current holding.
- The subscription price is usually discounted to encourage participation and raise capital.
- Not taking up rights can dilute your ownership as the company’s share count increases.
- Rights issues can affect near-term trading and pricing because supply and demand change.
02—How rights issue works on the PSX
The Pakistan-specific rules, conventions, and numbers.
On the Pakistan Stock Exchange (PSX), a rights issue is something you encounter as a shareholder through the company’s announced corporate action timetable, including key cut-off dates such as the record date. Shares are held electronically through the Central Depository Company (CDC), so eligibility is based on who is recorded as the shareholder at the relevant time.
If you decide to add shares through the rights issue, the transaction ultimately results in additional shares being credited in your CDC holding via the normal post-trade and depository processes. If you buy or sell the company’s shares around the rights issue period, remember that PSX equity settlement is T+1 (one business day), so the timing of when a trade becomes settled can matter for how your holdings appear for processing corporate actions.
03—Common misconceptions
Where investors most often get this wrong.
A rights issue means the share price will definitely go up later.
A rights issue mainly raises capital and increases the number of shares. Market prices can move either way depending on prospects, dilution effects, and demand.
If I ignore the rights issue, nothing changes for me.
If new shares are issued and you do not participate (or otherwise realise value from the right), your percentage ownership can be diluted.
A rights issue is the same as bonus shares.
Bonus shares are typically issued without cash payment. Rights issues require shareholders to pay the subscription price to receive the new shares.
04—Using rights issue on BSL
Where this term shows up across the platform — with live data.
- Check upcoming corporate action dates on the ex-dates page.
- Review your holdings and eligible positions in Stocks.
- See related announcements on Board Meetings.
- Learn other PSX terms in the Glossary.
05—Frequently asked questions
What investors ask about rights issue on the PSX.
Frequently Asked Questions
A rights issue on the PSX is when a listed company offers existing shareholders the option to buy additional shares, usually at a discount, in proportion to their current holding, to raise new capital.
Participation is optional. If you do not take up the offer (and do not otherwise monetise the right where applicable), your percentage ownership may fall because the company issues more shares overall.
Eligibility is based on shareholdings recorded at the relevant cut-off point (commonly a record date). Since shares are held electronically at the CDC, your entitlement depends on what is reflected in your depository position.
Yes. A successful rights issue increases the company’s outstanding shares, which can dilute existing holdings if an investor does not participate, and can influence near-term trading dynamics.
It can. PSX equity trades settle on T+1, meaning ownership for processing purposes may depend on when trades are executed and when they settle relative to the corporate action timetable.
06—Related terms
Keep building the picture.
Any event initiated by a listed company that affects its shareholders. Common corporate actions include dividends, bonus shares, rights issues, stock splits, and mergers.
The cutoff date set by a company to determine which shareholders are officially registered and therefore entitled to receive a declared dividend or corporate action benefit. Distinct from the payout date, which is when the distribution is actually made.
The period during which a company closes its shareholder register to determine who is eligible for a dividend, bonus shares, or rights issue. Investors must hold shares before the book closure date to qualify.
Additional shares issued to existing shareholders free of charge, in proportion to their current holdings. A company may issue bonus shares instead of or alongside a cash dividend.
A corporate action in which a company divides its existing shares into multiple shares, reducing the share price proportionally without changing the overall market capitalisation.
A company whose shares are officially traded on the Pakistan Stock Exchange, following SECP and PSX approval and compliance requirements.
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