Diploma Practice Test & Exam Prep | Canada

A Rights Issue increases the company's total equity capital by raising new cash, whereas a Capitalization Issue only reorganizes reserves into share capital without generating cash. A Rights Issue is offered to non-shareholders, while a Capitalization Issue is offered exclusively to existing shareholders. A Rights Issue does not dilute the share price, while a Capitalization Issue significantly dilutes the voting power of major shareholders. A Rights Issue is a non-discretionary corporate action, while a Capitalization Issue requires approval from the Central Bank of Sri Lanka.