An Indian firm decides to raise additional capital through a rights issue of 50,000 equity shares. Each share has a face value of ₹200 and is offered at a premium of ₹30 per share. The underwriting commission is 1.5% of the total issue size and SEBI’s registration fee is 0.05% of the issue size. Calculate the total amount the company will receive after deducting the underwriting commission and registration fee.

Step-by-step solution

1. Determine the issue price per share: face value ₹200 + premium ₹30 = ₹230 per share.
2. Calculate the total issue size: 50,000 shares × ₹230 = ₹11,500,000.
3. Compute underwriting commission: 1.5% of ₹11,500,000 = 0.015 × 11,500,000 = ₹172,500.
4. Compute SEBI registration fee: 0.05% of ₹11,500,000 = 0.0005 × 11,500,000 = ₹5,750.
5. Subtract both charges from the gross issue size: ₹11,500,000 – ₹172,500 – ₹5,750 = ₹11,321,750.
6. The net amount the company receives is ₹11,321,750.

Concept tested: Rights issue – calculation of net proceeds

Published 13 October 2026 · How this solution was prepared and checked