Rights issue means the

A rights issue is an issuance of additional shares of a company to its existing shareholders in proportion to their current shareholding. This means that each shareholder has the right to purchase additional shares at a discounted price compared to the market value of the shares. The purpose of a rights issue is for a company to raise capital for expansion or other projects while giving existing shareholders the opportunity to maintain their proportional ownership in the company. Therefore, the correct answer is: issue of shares to shareholders on favourable terms.