What additional element is part of a prospectus for rights issues?

In the context of rights issues, the prospectus serves as a critical document that provides potential investors with essential information about the offering. One key aspect of a rights issue is that it allows existing shareholders the opportunity to purchase additional shares at a predetermined price, often at a discount.

A distinctive feature of a rights issue is the level of disclosure required. The prospectus tends to include a lower level of disclosure compared to an initial public offering (IPO), primarily because the investors are typically existing shareholders who already possess familiarity with the company and its operations. This means that the expectation is not for complete transparency as would be necessary for new investors; instead, the emphasis is on the specifics of the rights offering and any pertinent financial information that existing shareholders may need to make an informed decision.

This lower level of disclosure reflects the understanding that existing investors are already aware of the business's fundamentals and risks, thus allowing for a more streamlined prospectus that focuses on the specific details of the rights issue rather than a comprehensive overview of the entire company.