1 Once upon a time, when you bought broccoli you bought the whole vegetable, stems and crowns. Then it became customary for grocery store produce departments to separate the crowns from the stems and to sell the crowns at a premium. 2  Iâm not a fan of this practice, because I like both parts of the broccoli plant.
A company's first issue of common stock to the public is called an Initial Public Offering. Afterwards, a corporation may issue new equity at any time in order to finance its growth. When new common shares are offered to existing shareholders first, this is called a rights offering.
Example of a Rights Issue. For a current example see the Prudential Rights Issue. An investor holds 200 shares of UKCompany PLC. The market price of the shares stand at 100p and the company then announces a âone for fourâ rights issue.The subscription price for the extra shares is set at 80p.The value of the holding before the rights issue was: 200 shares at 100p = Â£200.00.he market price of the shares stand at 100p and the company then announces a âone for fourâ rights issue. The subscription price for the extra shares is set at 80p. The value of the holding before the rights issue was: 200 shares at 100p = Â£200.00.