1. What is a Rights Issue?  

  • A Rights Issue is when a company offers its current shareholders the chance to buy more shares at a discounted price, typically for a limited time. The discounted shares are offered in proportion to the number of shares the shareholder already owns, allowing existing investors to increase their holdings at a reduced rate.


2. When am I eligible for the Rights Issue?  

  • You are eligible if you own shares of the company on the specific "record date" set by the company. On this date, the company checks its list of shareholders, and if you’re listed, you’re entitled to participate in the Rights Issue based on the shares you hold.


3. Why does a company offer a Rights Issue?  

  • Companies initiate a Rights Issue mainly to raise capital. This funding can be used for various purposes such as expanding the business, acquiring new assets, or paying off existing debts. By raising money directly from current shareholders, the company often gains capital faster and maintains its existing ownership structure.


4. How many shares will I get under the Rights Issue?  

  • The number of shares you can buy under the Rights Issue is based on a ratio set by the company. For example, a 1:15 Rights Issue ratio means you can buy 1 additional share for every 15 shares you already own. This ratio helps maintain a fair distribution based on each shareholder’s existing stake in the company.


5. How can I apply for the Rights Issue?  

There are two methods to apply for a Rights Issue:

  • Online ASBA (Application Supported by Blocked Amount): Visit the Self-Certified Syndicate Bank (SCSB) website, which allows you to apply directly online.

  • Offline/Physical ASBA: Submit a physical application at a designated branch of an SCSB to participate. You can check the complete list of SCSBs online to confirm where to apply.


6. What is Right Entitlement (RE)?  

  • Right Entitlement, or RE, is the specific number of shares you have the right to purchase in the Rights Issue. Keep in mind that RE is only valid for a limited time. If you don’t apply and pay for the RE by the Rights Issue deadline, these shares won’t be credited to your Demat account.


7. How is RE different from regular shares?  

  • Regular shares are bought and sold in the open market based on current prices, while RE gives you the right to buy additional shares at a set discount. RE is credited to your account in a dematerialized form temporarily and must be exercised or sold before it expires.


8. What is the difference between a Rights Issue and Rights Entitlement?  

  • A Rights Issue is the company’s offer to issue new shares, allowing them to raise funds. Rights Entitlement (RE) refers to the rights given to existing shareholders to subscribe to these new shares. REs can be traded on the market for a limited period, but if they are not used to buy shares, they will expire when the Rights Issue closes.


9. When will RE be credited to my account?  

  • Your RE will be credited to your Demat account in a dematerialized form before the Rights Issue opens, under a unique ISIN (International Securities Identification Number). The ISIN remains frozen until the Rights Issue officially opens, after which you can decide to act on it.


10. What can I do with my Rights Entitlement?  

 With your Rights Entitlement, you have three options:

  • Use your entitlement to purchase the shares and gain ownership.

  • Sell your RE in the secondary market, where they can be traded for a limited time.

  • Take no action, in which case your RE will expire, and you will lose the chance to buy shares under this offer.


11. I sold my shares after the record date; am I still entitled to the Rights Issue?  

  • Yes, if you owned shares on the record date, you are eligible for the Rights Issue, even if you sold your shares after this date. Your entitlement remains based on your holdings on the record date.


12. I bought RE in the secondary market but forgot to participate in the Rights Issue. What happens now?  

  • If you bought RE but didn’t use it to apply for the Rights Issue, your RE will expire after the closing date of the Rights Issue. This means the value of your RE will become zero, and any money you spent buying it in the secondary market will be lost. To avoid this, make sure to use your RE to apply for the Rights Issue before it expires.