There are different types of rewards companies give to their shareholders as a gift for being their shareholder. Right issue, Buyback, Split and much more are types of rewards. However, Do you know how to apply for rights issue online? If your answer is no, let’s discuss this topic in this article with related details.
Table of Contents
What is the Rights Issue?
A rights issue is a way for a publicly traded company to raise more funds. Rather than going public, the firm allows its existing shareholders to acquire freshly issued shares in proportion to their current share holdings.
The rights are offered in ratio to the stockholders holding of stocks or convertible securities on the record date.
Advantage of Rights issue for company
The primary concept is to raise new funds. A business entity does not frequently go for a rights issue. Typically, such an issue happens when a company needs financing for a significant acquisition or business growth.
Firms, on the other hand, utilize rights issues to save themselves from being knocked out. Because a rights issue increases the organization’s equity base, it also allows it to leverage its assets more effectively.
As the firm’s debt-to-equity ratio decreases, it gets more confident about increasing debt in the long term.
How to apply for rights issue online?
A firm grants you the right to apply for more shares based on the amount of shares you currently own in a rights issue. The Rights Issue stocks will be offered at a discount to the current price, practically as if they were a gift for all stockholders.
Before the rights issue starts, qualified stockholders will get the rights entitlement (RE) in their respective demat accounts. These REs are not rights issue shares in themselves.
They must be used in order to register for rights shares. The REs will be provisional demat securities that will expire if you do not utilize them to register or to sell the rights.
Example
Above picture is a example of online application during the reliance right issue which taken place in 2020. This is just a idea, Some companies online application forms can be slightly different from this form.
Process
The request for a rights issue is made via ASBA (Applications Supported by Blocked Amount). You can subscribe digitally much like an IPO, if your bank allows it.
If not, you should have received a courier containing the Composite Application Form (CAF) from the firm’s RTA (Registrar and Transfer Agent). You must fill out the application and submit it to a unit of the Self Certified Syndicate Banks (SCSBs).
SEBI has provisionally permitted a firm’s Registrar and Transfer Agents to accept rights requests digitally through its web portal due to the COVID circumstance. You can identify the RTA and their contact information on your firm ‘s official site.
Details of rights issue apply online
The form will contain information about the Rights Issue, including the Rights Issue percentage and the Book Closure Deadline.
The following information must be filled in:
- DD/CHEQUE Information (non ASBA)
- If your DP begins with IN, choose NSDL. If the DP ID is entirely numeric, choose CDSL.
- PAN (Personal Identification Number) Fill in the PAN of the additional account holder if you have a joint account.
- Fill in your DP information. Your DP ID and Beneficiary information can be found in the profile area of your brokerage account.
- Your signature is required. If it’s a joint account, both account owners’ signatures are required.
After that, you can submit it to any Self Certified Syndicate Banks unit (SCSBs). On the registration form, you’ll find a list of banks.
Note:
If you need more clarification you can go through a pdf of linkintime by clicking here.
Conclusion
More or less right issues are gifts from a company to their shareholders if the company is in good condition. However, a very few companies in Indian market go for the right issue option when they need to raise the funds.
This is all from our side regarding How to apply for rights issue online? Let us know your views about how to apply for rights issue in the comment section.
Other Interesting blogs related to right issue example
How to Apply for Buyback of Shares Online
Difference Between IPO and FPO
FAQ About apply rights issue online
What is a rights issue India?
An offer to current shareholders to buy extra stocks of the firm at a cheaper price is known as a rights issue.
Can NRI apply for rights issues?
Yes, NRI can apply for the rights issues.
what happens if i don't apply for rights issue?
Your RE stocks will expire if you don't apply for the right issue.
When was Reliance's rights issue closed?
It was opened for subscription on May 20,2020 and closed on June 03,2020.
When was tata Steel's rights issue closed?
Tata Steel's right issue happened in 2017 with the ratio of 2:25 at a premium of Rs 605.00 per share.
