As the name suggests, rights are all about a right or privilege to existing shareholders of a company. You are given the right; which is an option to buy shares at a certain price which you may or may not exercise depending on your choice. Let us take an example. You are holding on to 1000 shares of XYZ Ltd and you have just received an intimation that the company is planning to raise money through a rights issue. Your first question would be; what exactly is a rights issue? In simple terms, a rights issue is a means for a company to raise fresh funds from existing shareholders. Obviously, if the rights are issued are around the market price, then the shareholders may not be too interested since they can anyways buy it in the market at the current market price. That is why rights issues are priced at a discount to the market so that it acts as an incentive for the shareholders to invest in the rights issue. Rights are like the right of first refusal given to existing shareholders which you can either opt for or you can renounce.