Advantages of Right Issue.
Options
A
B
C
D
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Company AccountsQ-2 | Bonus Issue and Right IssueQuestion 4910 of 112
All Questions Correct Answer
✅ Option — Correct Option
All Options:
- A
- B
- C
- D
Detailed Solution & Explanation
Advantages of Right Issue are as follows:
1. Right shares ensure reduction in dilution of financial and governance rights of
existing shareholders & maintain their proportional holding in the company.
2. It is a cost-effective way of raising capital since issue of prospectus is not required.
3. Right issue is a better method of raising capital than a public issue since it is
logistically much easier to handle.
4. The additional shares can be acquired by the existing shareholders at a lesser
(discounted) price than the market price of the existing shares.
More Questions from Company Accounts
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Minimum subscription
Reserve Capital and Capital Reserve carry the same meaning.
As per Table F, the Minimum rate of interest that can be charged on calls- in-Arrear and that can be allowed on calls-in-advance are 10% p.m. and 12% p.m. respectively.
Re-issue of forfeited shares is allotment of shares but not a sale. [May 2018, 2 Marks]
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