Knowledge Base

What is a Rights Issue?

A Rights Issue is a way for a company to raise capital by offering additional shares to its existing shareholders at a discounted price. This allows shareholders to buy more shares in proportion to their current holdings before they are offered to the public.

Key Features of a Rights Issue

Offered to Existing Shareholders – Only current shareholders as of the record date are eligible.
Discounted Price – Shares are offered at a price lower than the market value.
Renounceable or Non-Renounceable Renounceable – You can trade or sell your rights to others.
Non-Renounceable – The rights cannot be transferred.
Fundraising Method – Companies use this to reduce debt, fund expansion, or improve financial health.

How to Apply for a Rights Issue via ASBA (Application Supported by Blocked Amount)

Step 1: Log in to Your Net Banking Account
Step 2: Go to the ASBA Section
Step 3: Select the Rights Issue
Step 4: Enter Your Application Details
Step 5: Review and Submit the Application

What Happens to Rights Entitlements (REs) Not Subscribed or Renounced?

If you don’t subscribe to or renounce your Rights Entitlements (REs) by the Issue Closing Date, they will expire and become void. This means you lose the opportunity to purchase additional shares at a discounted price. Essentially, any unclaimed or unexercised REs will have no value after the closing date. It’s important to act within the specified time frame to take advantage of rights issues.

Was this article helpful?

Share