{"id":12065,"date":"2022-06-03T15:59:57","date_gmt":"2022-06-03T10:29:57","guid":{"rendered":"https:\/\/kuvera.in\/blog\/?p=12065"},"modified":"2022-07-21T12:45:38","modified_gmt":"2022-07-21T07:15:38","slug":"rights-entitlement-in-the-stock-market","status":"publish","type":"post","link":"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/","title":{"rendered":"All You Need to Know about Rights Entitlement in the Stock Market"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_40 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" area-label=\"ez-toc-toggle-icon-1\"><label for=\"item-69d3e1b022caa\" aria-label=\"Table of Content\"><span style=\"display: flex;align-items: center;width: 35px;height: 30px;justify-content: center;direction:ltr;\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/label><input  type=\"checkbox\" id=\"item-69d3e1b022caa\"><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#What_Is_Rights_Entitlement_of_Share_in_the_Stock_Market\" title=\"What Is Rights Entitlement of Share in the Stock Market?\">What Is Rights Entitlement of Share in the Stock Market?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#What_is_Right_Issues\" title=\"What is Right Issues?\">What is Right Issues?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Types_of_Rights_Issues_in_India\" title=\"Types of Rights Issues in India\">Types of Rights Issues in India<\/a><ul class='ez-toc-list-level-3'><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Fully_paid-up_rights_issue\" title=\"Fully paid-up rights issue:\">Fully paid-up rights issue:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Partly_paid-up_rights_issue\" title=\"Partly paid-up rights issue:\">Partly paid-up rights issue:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Renounceable_rights_issue\" title=\"Renounceable rights issue:\">Renounceable rights issue:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Features_of_Rights_Entitlement_in_India\" title=\"Features of Rights Entitlement in India\">Features of Rights Entitlement in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#What_Happens_When_You_Let_the_Rights_Entitlement_Lapse\" title=\"What Happens When You Let the Rights Entitlement Lapse?\">What Happens When You Let the Rights Entitlement Lapse?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#How_to_Calculate_the_Value_of_a_Rights_Entitlement\" title=\"How to Calculate the Value of a Rights Entitlement?\">How to Calculate the Value of a Rights Entitlement?<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Final_Word\" title=\"Final Word\">Final Word<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Frequently_Asked_Questions\" title=\"Frequently Asked Questions\">Frequently Asked Questions<\/a><ul class='ez-toc-list-level-4'><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#How_can_you_apply_for_rights_shares_in_India\" title=\"How can you apply for rights shares in India?\">How can you apply for rights shares in India?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#What_are_the_benefits_of_issuing_Rights_Entitlements_for_companies\" title=\"What are the benefits of issuing Rights Entitlements for companies?\">What are the benefits of issuing Rights Entitlements for companies?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#How_does_a_rights_issuance_impact_share_prices\" title=\"How does a rights issuance impact share prices?\">How does a rights issuance impact share prices?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Can_you_buy_Rights_Entitlement_if_you_are_not_an_existing_shareholder\" title=\"Can you buy Rights Entitlement if you are not an existing shareholder?\">Can you buy Rights Entitlement if you are not an existing shareholder?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Can_investors_oversubscribe_to_a_rights_issue\" title=\"Can investors oversubscribe to a rights issue?\">Can investors oversubscribe to a rights issue?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/#Interested_in_how_we_think_about_the_markets\" title=\"Interested in how we think about the markets?\">Interested in how we think about the markets?<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p><span style=\"font-weight: 400;\">Nowadays, it is common for Indian businesses to raise money from the public to expand their operations, which, in turn, increases their shareholders&#8217; confidence. Rights issuance is one of the new fundraising methods, which allows existing shareholders to buy additional shares at a discount.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Rights Entitlement (RE) gives all eligible shareholders the right to subscribe to such an issue. With SEBI allowing buying and selling <\/span>rights shares online, any investor can benefit from such a bargain.<\/p>\n<p><span style=\"font-weight: 400;\">Read along to know everything about Rights Entitlement.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p><a href=\"https:\/\/kuvera.in\/explore\/fixed-deposit\/c\/all\"><img loading=\"lazy\" class=\"size-large wp-image-13417 aligncenter\" src=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg\" sizes=\"(max-width: 640px) 100vw, 640px\" srcset=\"https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-1024x334.jpg 1024w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-300x98.jpg 300w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022-768x250.jpg 768w, https:\/\/kuvera.in\/blog\/wp-content\/uploads\/2022\/07\/FD-Banner_14-July-2022.jpg 1080w\" alt=\"Online Fixed Deposits on Kuvera\" width=\"640\" height=\"209\" \/><\/a><\/p>\n<h2><\/h2>\n<h2><span class=\"ez-toc-section\" id=\"What_Is_Rights_Entitlement_of_Share_in_the_Stock_Market\"><\/span>What Is Rights Entitlement of Share in the Stock Market?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Rights Entitlement (RE) refers to temporary Demat securities representing a shareholder&#8217;s eligibility to apply for a rights issue. Today, many companies issue such shares to their existing shareholders, which they can buy at a discounted price within a specific time. REs are not actual shares, but you can use them to purchase shares based on your entitlement.<\/span><\/p>\n<p>If you are an eligible shareholder, rights shares<span style=\"font-weight: 400;\"> will be credited to your Demat account in the proportion of your holdings as on a record date set by the company. You can use these entitlements to apply for the rights issue either partly or wholly. You can also sell them on stock exchanges from your holdings through the renunciation of rights issue.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, you can choose not to subscribe to the issue or trade the entitlement. It will lapse if you do not subscribe or renounce your RE within the issue closing date.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Right_Issues\"><\/span>What is Right Issues?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Now that you know about Rights Entitlement let us learn how it works with the example of Bharti Airtel:<\/span><\/p>\n<p>Bharti Airtel had announced that it was giving its investors the entitlement for rights shares worth Rs. 21,000 crore. The record date for determining shareholders&#8217; eligibility was September 28, 2021. The issue opened on October 5 and was fully subscribed by October 21.<\/p>\n<p><span style=\"font-weight: 400;\">Eligible shareholders could buy one share for every 14 Airtel shares they held at Rs. 535\/share. It was a partly paid-up rights issue, with Airtel charging only 25% fees upfront and 75% over the next three years.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So, if you owned 560 shares of Bharti Airtel Share price, you would be eligible to purchase 40 rights shares. On the other hand, if you did not own shares in multiples of 14, your eligibility would be rounded to the nearest multiple. So, if you owned 540 shares, you could buy 39 more shares.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Types_of_Rights_Issues_in_India\"><\/span>Types of Rights Issues in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The following are the various types of issuing <\/span>rights shares<span style=\"font-weight: 400;\"> in India.<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Fully_paid-up_rights_issue\"><\/span>Fully paid-up rights issue:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\"> In this type of issuance, you need to pay the entire amount at the time of application. You only have to pay once, and there is no obligation for recurring payments.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Partly_paid-up_rights_issue\"><\/span>Partly paid-up rights issue:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\"> You only need to pay a partial amount when applying for the shares. The rest of the amount is to be paid in installments when the company makes the calls.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\">\n<h3><span class=\"ez-toc-section\" id=\"Renounceable_rights_issue\"><\/span>Renounceable rights issue:<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><span style=\"font-weight: 400;\"> The shareholder can choose to exercise their right or ignore it with these rights issues. The RE holder can also sell their rights in the open market. Most companies in India issue renounceable rights.\u00a0<\/span><\/li>\n<li aria-level=\"1\"><b>Non-renounceable rights issue: <\/b><span style=\"font-weight: 400;\">These issues cannot be transferred or sold. The RE holder can either exercise their right to buy <\/span><b>rights share<\/b><span style=\"font-weight: 400;\"> or let it lapse.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Features_of_Rights_Entitlement_in_India\"><\/span>Features of Rights Entitlement in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The following are some of the critical features of RE shares to keep in mind:<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You cannot transact with <\/span>rights shares<span style=\"font-weight: 400;\"> through <a href=\"https:\/\/kuvera.in\/blog\/what-is-intraday-trading\/\">intraday trading<\/a> as their settlement occurs in the Trade to Trade (T2T) segment. In this, all &#8216;buy&#8217; and &#8216;sell&#8217; transactions need to be delivered in T+2 days.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">The trading of RE shares starts on the issue opening date and usually closes in 3 to 4 working days before closing.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">You can trade rights equity shares during any market trading session, including pre-open sessions, continuous trading sessions, block deal sessions, and post-closing sessions.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">RE shares trade with a separate ISIN against the shareholder&#8217;s holdings. Their NSE symbol and BSE scrip code are also different.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Any shortages in Rights Entitlement get closed directly at the highest prevailing price.\u00a0<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_Happens_When_You_Let_the_Rights_Entitlement_Lapse\"><\/span>What Happens When You Let the Rights Entitlement Lapse?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">If you are an eligible investor, you will get the Rights Entitlement credited to your Demat account. However, if you do not buy the <\/span>right shares through the issue or sell them, you can lose money as it lapses.<\/p>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Investors lose money from RE in two ways:<\/span><\/p>\n<ol>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">They can forget about applying for the <\/span>rights shares<span style=\"font-weight: 400;\"> via the RE or let them expire.<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">Investors who buy RE from others can forget to apply for it before the deadline.<\/span><\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">It may be a good idea to invest in a well-performing company that credits its RE to you. However, you will always want to check a company&#8217;s performance, financials, and objectives for raising funds before you invest. If a company is not doing well, it is a good idea not to be lured in by the discounts.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">On the other hand, you can always sell the Rights Entitlement to other shareholders to avoid losses. Even if the shares do not perform well, you can still profit from them through sales.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_to_Calculate_the_Value_of_a_Rights_Entitlement\"><\/span>How to Calculate the Value of a Rights Entitlement?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">To calculate the REs, companies apply a ratio on the current shareholding of all their investors on a specific date. This date is the record date, a cut-off date that determines which shareholders are eligible for a rights issue.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The RE price is usually between a company\u2019s share price and its offer price. The base value of RE is calculated on the first day of RE issuance by using the following formula:<\/span><\/p>\n<p>&nbsp;<\/p>\n<pre><strong>Base price of rights shares = Closing price \u2013 Rights Entitlement price\r\n\r\n<\/strong><\/pre>\n<p><span style=\"font-weight: 400;\">Therefore, if the share price of Company ABC is Rs. 140\/share and it goes for a rights issue at Rs. 120\/share, its RE price would be Rs. 20. Every day after its issue opens, the closing price of this RE would be its base price.\u00a0<\/span><\/p>\n<p><b>.<\/b><span style=\"font-weight: 400;\"> If you import your stock portfolio to<\/span><a href=\"https:\/\/kuvera.in\/\"><span style=\"font-weight: 400;\"> Kuvera<\/span><\/a><span style=\"font-weight: 400;\">, you can find out what a stock&#8217;s current price is, it&#8217;s high, it&#8217;s low, its 52-week high, its 52-week low, its change over a year, its change over five years, its price to earnings per share, its market capitalization to book value, its TTM EPS, dividend yield, market capitalization, trading volume, and average trade volume are. <\/span><a href=\"https:\/\/app.kuvera.in\/\"><span style=\"font-weight: 400;\">Kuvera&#8217;s app<\/span><\/a><span style=\"font-weight: 400;\"> also lets you buy and sell stocks.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Final_Word\"><\/span>Final Word<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Rights issuance has become a new way for companies to quickly raise cash from their existing investors. Before investing in <\/span>the right shares, check the company&#8217;s fundamentals instead of deciding based on the discounts.<\/p>\n<p>&nbsp;<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"How_can_you_apply_for_rights_shares_in_India\"><\/span>How can you apply for rights shares in India?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">You can apply online for rights shares through either the ASBA (Applications Supported by Blocked Amount) or the R-WAP (Registrar&#8217;s Web-based Application Platform) facility.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the first process, investors with an ASBA-enabled bank account can apply for rights shares in a process similar to that of IPOs. In the case of the second process, you can apply for RE shares using internet banking or the UPI facility.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"What_are_the_benefits_of_issuing_Rights_Entitlements_for_companies\"><\/span>What are the benefits of issuing Rights Entitlements for companies?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">The following are some of the benefits of using RE to raise capital:<\/span><\/p>\n<ul>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">It helps retain the confidence of existing shareholders.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">RE is cost-effective to raise funds as it does not require much advertisement or underwriting.<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-level=\"1\"><span style=\"font-weight: 400;\">It is one of the fastest methods for a company to raise capital without increasing its debt burden.<\/span><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"How_does_a_rights_issuance_impact_share_prices\"><\/span>How does a rights issuance impact share prices?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">As rights issuance increases the ePHR, it brings down the share price. As a result, all existing shareholders&#8217; total holdings will decrease. It also brings down the company&#8217;s EPS (earnings per share).\u00a0\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"Can_you_buy_Rights_Entitlement_if_you_are_not_an_existing_shareholder\"><\/span>Can you buy Rights Entitlement if you are not an existing shareholder?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Yes, investors who are not eligible for any RE can buy it from the stock market or through an off-market transaction. After this, they can apply for rights share when the issue opens.\u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<ul>\n<li aria-level=\"1\">\n<h4><span class=\"ez-toc-section\" id=\"Can_investors_oversubscribe_to_a_rights_issue\"><\/span>Can investors oversubscribe to a rights issue?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><span style=\"font-weight: 400;\">Yes, when people apply for additional shares over and above their entitlements, it can lead to an oversubscription. However, renounces (people who bought an RE) cannot apply for additional shares beyond their entitlements.<\/span><\/p>\n<p>&nbsp;<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Interested_in_how_we_think_about_the_markets\"><\/span>Interested in how we think about the markets?<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p>&nbsp;<\/p>\n<p>Read more: <a href=\"https:\/\/kuvera.in\/blog\/category\/zen-and-the-art-of-investing\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Zen And The Art Of Investing<\/strong><\/a><\/p>\n<p>Watch\/hear on YouTube:<\/p>\n<p>&nbsp;<\/p>\n<p><iframe loading=\"lazy\" title=\"Kuvera Insights\" width=\"640\" height=\"360\" src=\"https:\/\/www.youtube.com\/embed\/videoseries?list=PLDSzQdT9nLmCysU31bg4Ngh7WY2p3UiiI\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe><\/p>\n<p>&nbsp;<\/p>\n<p>Start investing through a platform that brings goal planning and investing to your fingertips. Visit <a href=\"https:\/\/app.kuvera.in\/\"><strong>Kuvera.in<\/strong><\/a> to discover <a href=\"https:\/\/kuvera.in\/blog\/direct-plans-better\/\"><strong>Direct Plans<\/strong><\/a> and <strong><a href=\"https:\/\/app.kuvera.in\/explore\/fixed-deposit\/c\/all\">Fixed Deposits<\/a><\/strong> and <a href=\"https:\/\/kuvera.in\/user\/login\"><strong>start investing today.<\/strong><\/a><\/p>\n<p>#MutualFundSahiHai #KuveraSabseSahiHai!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Nowadays, it is common for Indian businesses to raise money from the public to expand their operations, which, in turn, increases their shareholders&#8217; confidence. Rights issuance is one of the new fundraising methods, which allows existing shareholders to buy additional shares at a discount.\u00a0 Rights Entitlement (RE) gives all eligible shareholders the right to subscribe [&#8230;]<\/p>\n<p><a class=\"btn btn-secondary understrap-read-more-link\" href=\"https:\/\/kuvera.in\/blog\/rights-entitlement-in-the-stock-market\/\">Read More&#8230;<\/a><\/p>\n","protected":false},"author":11,"featured_media":12106,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[99,593],"tags":[1197,1199,1198,899,1196,691],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.6 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Rights Entitlement of shares in the stock market? - Kuvera<\/title>\n<meta name=\"description\" content=\"Rights Entitlement (RE) refers to temporary Demat securities representing a shareholder&#039;s eligibility to apply for a rights issue. 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