Why open offer matters to a first-time founder
An open offer can raise equity while giving current owners a chance to limit dilution. The timetable, price and take-up affect funding certainty. Founders must coordinate company-law approvals, disclosure, allotment and investor communications rather than treating it as an informal invitation to invest.
Examples of open offer
A listed company offers shareholders one new share for every ten they hold at ₹200 each, below the current market price. A holder may subscribe for the allocation during the offer period. Any entitlement not taken up usually lapses under the offer’s stated terms.
Common misunderstanding
An open offer is not identical to a rights issue. Open-offer entitlements are generally not tradeable, while rights may often be sold or transferred, subject to the relevant market and terms. Legal requirements and terminology vary by jurisdiction and whether the company is listed.
When to use it
Use the term when discussing a structured capital raise offered to existing shareholders without tradeable rights. Set out eligibility, ratio, price, deadline, dilution and treatment of untaken shares. Obtain legal, tax and regulatory advice before launch, especially for listed or cross-border companies.