What is Rights Issue?

Legal Definition
A rights issue is a dividend of subscription rights to buy additional securities in a company made to the company's existing security holders. When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital. Rights issues are typically sold via a prospectus or prospectus supplement. With the issued rights, existing security-holders have the privilege to buy a specified number of new securities from the issuer at a specified price within a subscription period. In a public company, a rights issue is a form of public offering (different from most other types of public offering, where shares are issued to the general public).

Rights issues may be particularly useful for all publicly traded companies as opposed to other more dilutive financing options. As equity issues are generally preferable to debt issues from the company's viewpoint, companies usually opt for a rights issue in order to minimize dilution and maximize the useful life of tax loss carryforwards. Since in a rights offering there is a No Sale Theory and no change of control, companies are more able to preserve tax loss carry-forwards than via Follow On offerings or other more dilutive financings.
-- Wikipedia
Legal Definition
Giving existing shareholders an opportunity to purchase new stock at current prices with the remaining available stock being sold in the open market at the future rate. AKA privileged subscription issue and rights offering subscription rights. Refer to su