A rights issue is an issue of shares to existing shareholders.
It is similar to a capitalisation issue (
IHTM18099), but with a rights issue the
shareholder has to pay for the “new” shares, usually at
a preferential price. A shareholder may chose either to purchase
the additional shares or to sell the “right” to
purchase the shares.
On the first day on which dealings in the “new” shares begins on the stock exchange, the quotation of the “old” shares is adjusted to exclude the benefit of the right to purchase the new shares.
If the shares are marked XRts at the date of death, and the
“new” shares were purchased, ensure that the
deceased’s estate includes the “new” shares, with
a deduction for the purchase price if this was not paid until after
the date of death.
If the “rights” were sold, ensure that the proceeds of sale are included in the estate.