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Question
State, with reasons, whether the following statement is True or False :
Right shares are issued to the general public.
Solution
This statement is False.
Ans. (1) Right shares are issued to the existing equity shareholders of the company. Right issue means offering of shares to the existing equity shareholders. When the company raises the capital by issue of additional equity share capital to its existing shareholders.
(2) It is the specific right given to the existing equity shareholders.
(3) Equity shareholders are eligible for right/bonus shares, if issued by the company. He may choose to subscribe to the right and add to his holdings with the company or give up this right.
(4) The right is exercised in proportion to the existing holding as decided by the Board.
(5) The notice should be issued to members about the Rights issue. The Right issue must be kept open for reasonable period of time for a member to do the needful.
(6) Right issue therefore is not meant for public, but only and only for the equity shareholders of the company.
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|
|
Equity Shares |
Preference Shares |
|
On Application |
Rs 3 per share |
Rs 3 per share |
|
On Allotment |
Rs 5 per share |
Rs 4 per share |
|
|
(including a premium) |
|
|
On First Call |
Rs 4 per share |
Rs 3 per share |
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Pass necessary journal entries for the above transactions in the books of Sandesh Ltd.
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