What is a rights issue?
A rights issue (företrädesemission) is a type of new share issue where existing shareholders have priority to subscribe for the new shares in proportion to how many they already own. The aim is to let current owners keep their stake and avoid dilution. It is the most common form of issue when a company turns to its existing owner base.
Subscription rights
Ahead of the issue, each owner is allotted subscription rights based on their holding. The rights can be used to subscribe for new shares at the subscription price or — in companies where they are transferable — sold on. If you choose neither to subscribe nor to sell your rights, your ownership stake falls.
Rights issue vs directed issue
The opposite is a directed issue, where new shares are instead offered to a selected group without priority for existing owners. A rights issue protects against dilution but can take longer; a directed issue is faster but dilutes those who cannot take part.