Ann: Renounceable Issue, page-5

Renounceable rights are offers issued by a company to shareholders to purchase more shares of the company’s stock, typically at a discount. Renounceable rights have a value and can be traded. Shareholders that have received renounceable rights have three choices of what to do with the rights:

• Shareholders can act on the rights and buy more shares as per the particulars of the rights issue.
• Shareholders can sell them on the market.
• Shareholders can pass on taking advantage of their rights.

The reason a company would offer their shareholders renounceable rights is to raise more capital to invest in their business.