Rights Issue
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A rights issue is a capital increase in which a company offers existing shareholders the right to subscribe to new shares, usually at a set price and in proportion to their holdings. Shareholders may exercise the rights, let them lapse, or sell them where trading is permitted. On the Egyptian Exchange, subscription rights are separated from the shares and traded as instruments in their own right during the subscription period.
Example
A company offers existing holders the right to buy one new share for every four held, at a price below the market. Take it up and your percentage stays the same; decline and your stake is diluted.
Why it matters
It is how a listed company raises fresh capital from its own owners, and it is one of the few times money from shareholders reaches the company itself. The discount is not a gift — it compensates for the dilution.
A common mistake
Ignoring the offer as noise. Doing nothing is an active choice to be diluted, and rights often have value that can be sold if you do not want to subscribe.