Rights issue

A rights offering (English Rights issue) is a capital of a joint stock company with subscription rights.

Background

Thus, shareholders are not subject to the dilution effect, the legislature has provided that in all capital the existing shareholders usually a two-week granted subscription rights. This can be ruled out only in special cases. Is a prerequisite for these special cases, on the one hand, the general meeting of the corporation approved the exclusion of subscription rights in accordance with and the amount of capital in Germany, for example, does not exceed 10 % of the share capital.

Furthermore, it was already noted in the 1960s that many companies obviously use a rights issue over an underpricing of new shares as a hidden dividend increase.

Implementation of rights issues

After the shareholders at the general meeting of a public company have authorized the board of this conduct a capital increase with subscription rights (see authorized capital), the Board may decide to hold an appropriate corporate action, together with the Supervisory Board. With the taking effect with the decision disclosure obligations, the subscription period will also be announced, in which the shareholders may equivalently take the rights to acquire the new shares in proportion to their equity claim.

Within the next subscription period, in Germany at least two weeks, but in most cases this is also exactly two weeks old shareholders can then decide whether to exercise the prerogative of the acquisition of the new shares use or not. Basically, the existing shareholders have the right to sell their subscription rights, since, contrary to the subscription rights at an Open Offer, legal rights are. No exchange trading in subscription rights is not required by law and is therefore not furnished with any rights offering by the Underwriters.

At the end of the subscription period is then determined how high the final acceptance rate of the existing shareholders (including take- up ratio) was. The remaining shares, which are referred to as " hull ", then as a private placement of unsubscribed shares ( " Rump Placement" ), usually on an accelerated bookbuilding ( " accelerated bookbuilding " ) placed with interested investors in the market. There are often a consortium of banks, which guarantees for the successful placement of these remaining shares in the form of underwriting.

Situation in other countries

Situation in Switzerland

In Switzerland, both an ordinary capital increase to be decided directly by the general meeting, as well as the creation of authorized or conditional section is possible. Both resolutions require the 2/3tel majority of the voting rights present at a general meeting. In Switzerland, rights issues for capital increases are almost always mandatory, whereby rights issues have a relatively high proportion of the capital types in Switzerland. Exclusion of subscription rights is only in special cases, such as the financing of an acquisition or to use the shares for employee share programs possible.