In order to raise share capital, ABC Ltd., is issuing shares and giving privilege to the existing shareholders to subscribe to the new issue of shares according to the terms of conditions of the company. Identify the method of floatation used by the company.

Right issue

Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company. The shareholders are offered the ‘right’ to buy new shares in proportion to the number of shares they already possess