Share purchase issue
What is a share purchase issue?
It is when a company announces it will gives current shareholders the right to buy a certain number of its shares at a set price, usually at a discount.
Where have you heard about share purchase issues?
Companies use share purchase issues to raise funds for business expansion and investment. The offering price is predetermined and established by the issuing company and their advisers. Investors and shareholders can buy the shares and sell them on, if allowed under the issue. In public companies, these are referred to as a public offering. This happened when Royal Mail went private.
What you need to know about share purchase issues.
If you own shares in a company, you may be offered the chance to take part in a share purchase issue. The company will offer you the chance to buy additional shares at a set price. You can choose whether or not to take part. If you do, you may benefit from a discount on the market price of the share. If you don't take part, your holding will be diluted by the additional shares.