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 flotation used by the company.

Right issue

The correct answer is option 3- Right issue.

A right issue is when a company offers new shares to its existing shareholders, giving them the privilege or "right" to buy the new shares in proportion to their current holdings, often at a discounted price. This is the method described in the given scenario, where ABC Ltd. is raising share capital by offering shares to existing shareholders according to the terms and conditions set by the company.

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.