Rights Issue
What is a Rights Issue?
A rights issue is a type of corporate action that enables company's current shareholders to purchase extra shares in proportion to their existing holdings, generally at a reduced price. Eligible shareholders will receive right entitlements (REs) in their demat accounts, which can be used to apply for the rights issue or trade on the market. However, if the REs are neither sold nor utilized for the rights issue, they will eventually expire and become worthless.
How can I apply for Rights Issue?
The RTA will put up the exact link on their website once the issue is live. The same goes for the banks which will support the issue. Alternatively, to apply for a rights issue, shareholders can use the Applications Supported by Blocked Amount (ASBA) process if their bank supports it.
What is a Right Entitlement?
Rights Entitlements (REs) are temporary demat securities that represent the shareholder’s eligibility to apply for the rights issue. Rights entitlements are offered to shareholders as a ratio to the number of securities held on the record date.
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