Subscription Right

From Open Risk Manual

Definition

Subscription Right. Privileges allotted to existing security holders, entitling them to subscribe to new securities at a price normally lower than the prevailing market price.


Issues and Challenges

Why prevailing? It could be a new security of exactly the same class. Is this always new securities? Notes May 25: May be more an accounting or legal term for bonus issue, more accurate than scrip or bonus issue which reflects what happens in the books of the company. THis would mean that capitalization issue is seemingly synonymous with Bonus Issue / Scrip Issue (see moneytterms.co.uk which says that capitalization is less common but more correct, for scrip. "The share capital on the balance sheet has to increate by the nominal value of the newly issued shares. This is balanced by an equal decrease in another part of hte shareholder's funds such as retained income of valuation reserves"

Disclaimer

This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.