What are Rights Entitlements (RE)?
Rights Entitlements (REs) are issued to existing shareholders that represent their eligibility to apply for a Rights Issue. It involves a temporary credit of shares in a shareholder's Demat account in proportion to existing holdings.
Characteristics of REs
- Getting REs credited to your Demat account does not imply that you have received shares; you will have to apply for it based on these entitlements.
- You can buy and sell entitlements on the stock exchanges during the given trading window.
- You are guaranteed an allotment up to the number of entitlements held in your Demat account (which can be received as an existing shareholder or bought on the secondary market), subject to applying for the same.
- You can apply for more shares in your rights issue application. But, being allotted any quantity above the entitled number will be decided by the company.
- If you do not wish to apply, you can sell your entitlements on the market, i.e., renounce your rights.
- If you do not sell/renounce, nor apply for the issue within the given period, these entitlements will expire.
- Intraday trading in REs is not permitted as they are settled on a Trade-to-Trade (T2T) basis.