Definitions: issue of shares: rights issues
A rights issue is an arrangement by which existing shareholders are given the right to subscribe for more shares in the company, on payment of consideration, in proportion to their holding of shares in the class in respect of which the rights may be exercised. To make the rights issue attractive the price of the new shares is usually lower than the current value of the issued shares. A public company will usually make a rights issue by issuing a renounceable letter of allotment, see CG50293. Where a company holds some of its own shares in treasury (CG50209) it cannot subscribe for further shares in itself in a rights issue. But this does not prevent the rights issue qualifying as a share reorganisation for the purposes of TCGA92/S127 to TCGA92/S131, see CG51746.