Jurisdiction(s):
United Kingdom

Key definition

Rights issue definition

What does Rights issue mean? A rights issue is an equity fundraising in which a company offers new shares to its existing shareholders, usually pro rata to their current holdings and within a fixed timetable, often at a discount to the prevailing market price. In practice, it is a pre-emptive offer designed to preserve relative ownership and is widely used in corporate finance and capital markets work. The term is a market concept rather than a single statutory definition, but it is recognised and regulated through company law, prospectus regimes and listing rules. Key features include renounceable rights (entitlements that can be traded or sold as...

Employee share plans in UK equity fundraisings: rights issues, open offers and placings—option and LTIP adjustments, SIP and EBT mechanics, and HMRC tax treatment

Published by a LexisNexis Share Incentives expert

Practice notes

A business might need to secure extra capital for a variety of purposes. It could, for example, be to finance a planned acquisition or to satisfy continuing financial commitments. There are several routes by which a company can obtain the extra funding required, including tapping existing shareholders through a rights issue, an open offer or a placing.

When running a rights issue, open offer or placing, the company must carefully assess the effect on any current employee share plans it operates. This assessment should take place as early as possible in the decision-making process to determine whether, and if so what, steps can be taken so that employees are not put at an unfair disadvantage by a rights issue, open offer or placing. This Practice Note outlines the key points that typically arise in connection with employee share plans on a rights issue, open offer or placing, the steps that will usually need to be taken in relation to outstanding options and awards, and the relevant tax treatment.

What are rights issues, open offers or placings?

In a rights issue, the company offers shareholders the chance to subscribe for additional shares on a pro rata basis relative to each shareholder’s...

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Stephen Diosi

Mishcon de Reya

Stephen leads the Employee Incentives team at Mishcon de Reya. He has significant experience advising on the strategy, design, implementation and compliance of UK and global employee incentive arrangements, including long term incentive plans, all-employee share plans, HM Revenue and Customs tax-advantaged plans, management incentive plans and growth share and joint ownership plans. Stephen also advises on all related corporate, tax and trusts aspects, corporate governance issues, disclosure of directors' remuneration and share dealing regulations.In addition, Stephen works with companies on the impact that corporate actions have on their incentive arrangements and has acted on many public takeovers, mergers and acquisition, public to private transactions, initial public offerings, capital raising activities and private equity deals.Stephen also advises on contractual disputes and tax investigations relevant to incentives arrangements.Stephen works with a wide range of businesses across several industry sectors, including financial services, natural...

Web page updated on 21/05/2026

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