What is a rights issue by a company and how do I benefit?

As the word suggests, a rights issue is offered to as a right for being an existing shareholder of the company. It is your entitlement. 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.