What is the difference between a Rights Issue and an Open Offer?
Those clients who hold on ex date of a rights issue or open offer will be entitled to receive rights or entitlements respectively.
Rights allocated from a rights issue are tradable in the market, therefore the event is open to anyone to take part.
Entitlements from an Open offer are not tradable and therefore an open offer is only available to existing shareholders.
In a rights issue, you have 3 options for your rights. You can take up your entitlement, sell your entitlement or lapse your entitlement. If you allow your entitlement to a Rights Issue to lapse, the company may pay lapsed proceeds.
It is also possible to sell part of your entitlement in order to fund the take up of the remainder of your entitlement. This is called Tail Swallowing.
An Open Offer gives only 2 options: Take up your entitlement or Lapse your entitlement. If you allow your entitlement in an Open Offer to lapse you will not usually receive any lapsed proceeds.