Rights Issue Subscription
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FAQs
- What are right issues?
- Why would a listed company want to raise capital?
- Why does the company issue rights to shareholders?
- Important points to note
- What are my options as a shareholder if I receive rights?
- Why would I subscribe to a company's capital increase?
- Factors to consider while subscribing
- Important dates
- What happens at the end of the rights trading period?
- What happens at the end of the first subscription period?
- What does uncovered tranche mean (second round)?
- What if there are shareholders who have not participated in the first subscription?
- Difference between first and second round
- What happens after the subscription period end
- What are the risks of not selling and subscribing in the rights issues?
Question | Description |
What are right issues? | Rights issues are an invitation from a listed company to its shareholders to participate in increasing the company's capital by purchasing new shares. - The invitation is usually exclusive to the company's shareholders and is valid for a limited period of time. - The shares are purchased at the par value, which is often lower than the market price of the shares. - The number of new shares that shareholders are allowed to purchase is proportional to the number of shares they currently own. |
Why would a listed company want to raise capital? | - Expansion. - Funding new projects. - Debt coverage. |
Why does the company issue rights to shareholders? | - Rights are issued to compensate shareholders for the difference between the market value and the subscription price of the new shares, which is usually lower than the market price. |
Important points to note. | Percentage of rights to shares - Each share you own entitles you to a certain number of rights to purchase new shares. Number of shares before and after capital increase Ex-right date - This date can be found in the prospectus. - As a shareholder, you have the option to sell your rights within a certain period if you do not wish to purchase the new company shares. It also means that if you were not a shareholder at that time, you have the opportunity to buy those rights from the market and thereby become eligible for subscription and purchase the new shares at the subscription price. |
What are my options as a shareholder if I receive rights? | Option 1: Sell the rights during the trading period. - You should find the rights you are entitled to in your portfolio. The right is represented by a symbol consisting of the company ticker in addition to "_r". Option 2: Do not sell the rights and participate in the subscription. - Open the email you received from Thndr, which contains important information about the subscription (ex-right trading date, subscription deadline, subscription price per right, and the subscription application form). - Fill out the subscription form in the email, and your request will be recorded. - Your account should be funded with the necessary value for the subscription (number of rights × subscription price per right). - Custodian Charge: 20 EGP (Exempted for Express Egypt Subscribers) - Submit a request to our support team to release your rights. - Obtain a personal account statement from a branch of Ahly United Bank. - Submit your application at any of the bank branches responsible for collecting subscriptions. - Inform our support team once you have submitted your subscription request. Disclaimer - The wrong course of action is not taking any action, as you will lose the value of the rights you own. - Please note that the process of converting rights into company shares is not immediate and may take 1 to 3 months. |
Why would I subscribe to a company's capital increase? | Confidence in the company - If you have confidence in the company's future growth prospects, participating in the subscription allows you to maintain or increase your current stake. - Subscribing to the company's shares enables you to hold the shares for a long period. If you believe in the company's strong fundamentals and expect its value to increase in the future, the subscription provides an opportunity to benefit from potential growth. - By subscribing, you can potentially acquire more shares at a lower cost than purchasing them straight from the secondary market. |
Factors to consider while subscribing | Company Evaluation - Evaluate the company accurately, including financial analysis, historical performance, and future trends. Review the latest news and financial reports of the company to understand the current situation and upcoming developments. - Determine your investment objectives and personal financial needs. - Assess the current market conditions and market expectations. - It is advisable to consult with a professional financial advisor before making a subscription decision. - Understand the value of the right and the subscription time. |
Important dates | - Announcement date - Ex-Rights date - Start of trading date - End of trading date - Subscription end date |
What happens at the end of the rights trading period? | - You will not be able to sell your rights anymore. |
What happens at the end of the first subscription period? | - Those who do not sell their rights or subscribe to them at the end of the first subscription period will lose the value of the rights. |
What does uncovered tranche mean (second round)? | - Uncovered tranche refers to what occurs when shareholders do not sell their rights or subscribe to them before the end of the first subscription period. |
What if there are shareholders who have not participated in the first subscription? | - In such cases, the company may decide to have a second subscription round. In this round, any shareholder can subscribe to any number of rights they want, regardless of the amount of rights they currently hold. - It is not a rule that a second subscription round will be opened. It is the decision of the company that is increasing the capital. |
Difference between first and second round | First Round - You can only subscribe to the amount of rights you own - You have a longer period to make a decision. - There is no oversubscription. - You can subscribe for any number of shares (provided that you hold at least one subscription right from the initial subscription). - Shorter time period. - Allocation as a result of oversubscription can occur which can result in the reduction in shares received due to the amount subscription requests exceeding the remaining amount of unsubscribed rights |
What happens after the subscription period end | Allocation can occur - Shares received may be lower than expected due to the high demand in subscription, resulting in users receiving an amount of shares proportional to their subscription request. - Conversion of rights into actual shares may take 1-3 months after the end of the subscription period. |
What are the risks of not selling and subscribing in the rights issue | Risks of Subscription- Risk of share value decline.- Risk of investment failure.- Subscription value is locked for a considerable time period, money that could be needed for emergencies or other investment opportunities.Risks of Selling rights- Risk of missing out on an opportunity.- Risk of declining value of share rights.- Risk of market fluctuations. |