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Rights issues

Last updated 11 January 2005

Companies may periodically issue their shareholders with rights to purchase additional shares.

A particular issue might be described as a 'one-for-four' issue, meaning that you are entitled to purchase an additional share for every four shares you currently own. You can choose to exercise the right, sell it on the stock exchange or allow it to lapse.

Unless you deal regularly with rights issues or other similar products, the only tax consequences that may arise involve the capital gains tax measures. For information on how the capital gains tax measures apply to rights issues, see the publication Personal investors guide to capital gains tax.