Ordinary Shares or Stock Units

Ordinary Shares or Stock Units

Ordinary shares or stock units

As already shown, a private company becoming public with-out seeking Stock Exchange quotation, or private or public company granted quotation on the Stock Exchange for the first time, may raise capital by the issue of ordinary shares. This is also probably the most popular method by which an existing public company (and already quoted) raises more capital. This latter is done by the offering of shares to its present shareholders at a price below that currently ruling in the market. This is known as a 'rights' issue or 'making an issue on bonus terms'. Example: ordinary shares are issued on a one-for-one basis (one 'rights' for every existing share) at £40 per share, to existing shareholders, while the market price of the existing ordinary share is £50. A fuller explanation of 'rights' issues will be given in a future webpage .

If the new shares issued carry the same rights in every respect as the old, they are known as ranking - pants. There can, however be slight modifications to this they may tunic (i.e., equal in rights to existing shares) after the payment of the first dividend, or they may only rank when fully paid (if partly paid). It is in any case only smatter of time before the new shares are identical in rights with the old.


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