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One of the ways that a company can raise additional funds is to issue new shares. They must be first offered to current shareholders and a rights issue allows a shareholder to buy extra shares in proportion to the number already held. For example, a two-for-three rights issue entitles shareholders to buy two additional shares for every three owned. The right to buy extra shares can be traded in the market.
See also: Pre-emptive Rights, New Issue, Bonus Issue