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An Open Offer is another way of a listed Company to raise addional money. The same as a rights issue they are based on pro rata basics. The different between a Rights Issue and an Open Offer is:- You are able to purchase shares at a preferable rate which are called Non-renounable, this means that you are unable to sell or offer the rights to anyone else. If you don't want to take up the offer, the shares simply lapse. The offer gives you a minimum number of shares you can apply for, however you have the opportunity to purchase excess shares.
At the closing date the Company's Registrars will calculates how many shares have been applied for, and than the Company will work out how many shares are to be issued to raise the cash required. If more shares have been applied for than the Company actually wants to issue. Than they will firstly announce that shareholders who applied for the minimum entitlements will be issued and than pro rata the excess shares applied for.
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