Term · Capital Measures & Financing
Subscription rights discount
In briefThe subscription rights discount is the price reduction of new shares in a rights issue compared with the current price. For small caps it is often large in order to place a capital increase despite low liquidity.
Definition
The discount at which new shares are offered relative to the current price in the context of a rights issue.
How it is calculated
Formula. Discount = 1 − subscription price ÷ reference price.
Why it matters for small caps
In the small-cap segment the discount is often high in order to place a capital increase despite low liquidity and risk.
Common misreadings
- A high discount is sometimes seen as a gift; economically, only participation protects against dilution.
In the process
Frequently asked
What is the subscription rights discount?
It is the discount of the subscription price relative to the reference price. It makes the new shares more attractive to subscribers.
How is the discount calculated?
You relate the subscription price to the reference price and determine the percentage difference. This yields the discount of the issue.
Is a high subscription rights discount a gift?
No, economically only participation protects against dilution. Anyone who does not subscribe loses value pro rata.
Related terms
Sources
Primary
Bundesministerium der Justiz – Aktiengesetz (AktG)
https://www.gesetze-im-internet.de/aktg/
https://www.gesetze-im-internet.de/aktg/
Methodology
IFRS Foundation – IAS 33 Earnings per Share
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
https://www.ifrs.org/issued-standards/list-of-standards/ias-33-earnings-per-share/
Education only, not investment advice. Ranges and thresholds are didactic orientation values, not an official standard.