The Ins and Outs of Rights after Issue Lighten up rdge! I understand your frustration, but some are genuinely interested in how Rights work. ........
The situation with Rights is very straightforward, but even my former Finance students had a little difficulty understanding. So let me clarify a few points for those unsure of how Rights can be handled:
1] In our case, every MPV shareholder will receive 1 right for each share they own as of the date of record. Each 6 rights plus $3.50 will entitle the shareholder to one new share.
2] Whether your shares are currently in your regular trading, RRSP, TFSA or any other account, that particular account will receive the Rights associated with the number of shares in that account. My wife and I have a regular margin, RRSP, and a TFSA, each with shares of MPV in them. Each of the accounts will therefore get one Right for every share of MPV in that account.
3] It will then be your choice as to whether you wish to exercise the Rights in each account (see point 1 above).
4] Once the Rights are issued to each shareholder, shortly thereafter they will be called to trade on those exchanges where the parent MPV currently trades. They will have their own symbol, and the market price will depend on many factors, just as the share price of MPV does. They will trade just like any security.
4] If you decide not to execute the Rights issued to you, you can sell them on the open market, just as you would shares in any security. Rights are deemed a "security" in the Financial Markets. In the event you decide to sell those Rights in a particular account, the cost base (for the purposes of determining your capital gain) will be "zero". However Canadians do not pay capital gains tax on profits in their RRSP or TFSA.
Hope this helps.
Cheers,
Brit
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