What is the right to rights? Important tips that one must know about the right to trading rights


Authorization of rights: A right is issued by a company to its shareholders on a predetermined date called the record date. Now there is a question in the minds of investors about this. Can a person who is not a shareholder of the issuing company on the registration date request a capital increase?

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Can a person who is not a shareholder of the issuing company request a capital increase?

In one of its recent tweets, NSE indicated that it is possible for a person who is not a shareholder of the issuing company on the record date to request a capital increase. However, they must purchase rights and subscribe to the rights issue before the issue closes.

How are the rights offered?

In this regard, there are some important indicators that an interested person should know about the right to rights. The rights are offered to shareholders in proportion to the number of shares held on that record date, according to the official website of NSE. A shareholder can refuse to subscribe to the capital increase and simply allow the “right” to expire. Alternatively, the shareholder can waive/exchange the right in favor of another person for a price.

How to trade rights?

Rights can be traded on the NSE stock market trading platform. The payment guarantee will be provided for the transactions and the payment will be made obligatorily in dematerialized mode.

In the event that the Rights are neither subscribed nor waived by the closing date of the issue, they lapse after the closing of the issue and the ISINs linked to these Rights will be suspended.

Commercial details on the right to rights

Here are some important trading-related details that interested investors should know about the rights:

1) Type of market – Normal
2) Book Type – Regular Lot (RL), Stop Loss (SL)
3) Series available for trading – BE and BL
4) Lot size – 1 share
5) Order Type – Day, Immediate or Cancellation (IOC), Market and Limit Order
6) Price Stages – According to parent stock stages
7) Price range – +/- 40%

The rights would be traded on the NSE equity market segment.

In case of further questions and details, interested persons can log on to the official website of NSE at nseindia.com.


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