Older Shares on the Market

The old shares having been stripped from their rights are then denominated while the enlargement stands ex-coupon shares or ex-right shares.

Due that the value of issuance cannot be lower than that of minimum value the enlargement must be:

  • at par: the issuance value coincides with the nominal value. Those who wish to acquire a new share, furthermore than the rights must contribute to the issuing company the sum corresponding to the nominal value.
  • free: the issuance value coincides with the nominal value, but the society uses part of its reserves to transfer them to the capital. If the enlargement is totally free, the investors will only have to pay the rights of subscription. If the enlargement is partially free, apart from the rights they will have to pay the part of the new shares that are not free. For example, if an enlargement is free in a 60% and the nominal value of each share is one money unit, the investors must pay apart from the rights 0.4 money units for each new share.

With premium: it is given when the value of the issuance is higher than that of nominal value. The difference between the issuance value and the nominal value passes to engross the reserves of the issuing company.

Example of an enlargement capital:

  • In a 70% enlargement of free capital the proportion is of one new share for each 5 old ones. If the nominal value of the share is 500 m.u. and the rights quote 75 m.u. you must make the following payment for each new share:
  • an old shareholder that has 5 old shares, will only have to pay 150 m.u. for each new share.

An investor that does not own old shares will have to buy 5 rights (375 m.u.) to a shareholder of the society that is not interested in participating in the enlargement and have to pay 150 m.u. to the issuing society; so, each new share will cost him 5252 m.u.

In an enlargement of capital, the old shareholder can choose between several alternatives:

no to go to the enlargement and to sell the rights of subscription

to acquire as many new shares as he can, according to the rights of subscription that he possesses thanks to his old shares

apart from the former to purchase on the market more rights of subscription for being able to acquire more new shares

to sell part of the rights of subscription he owns and to use the rest of the rights to buy some new shares; when the sum received for the sale of the rights coincide with the sum that is paid for the new shares, it is denominated as a “white” operation.