Can I apply for a rights issue online? Yes, you can apply for rights shares online but how? Well, eligible shareholders can subscribe to the rights issue of shares online through the ASBA net banking process, or via the Registrar and Transfer Agent (RTA) website. One can even apply for rights shares offline by filling out physical forms.
Do you want to purchase rights shares? If yes, here is a detailed guide outlining the step-by-step process to subscribe for rights shares online, how to download rights issue application form, and how to buy and sell rights entitlement.
Before applying for any rights issues, you must first understand what the rights issue is, and how it works.
What is Rights Issue of Shares?
A rights issue is an additional offering of shares by a company to its existing shareholders. In rights issue offering, a company allows its current shareholders to buy more shares at a discounted price, in proportion to their current holdings.
The company offering rights shares announces a record date, the date by which you must have shares in your demat account, to be eligible to participate in the rights offer.
You will be clear now that eligible shareholders can apply in the rights issue. But again the question arises - is it mandatory to apply for rights shares for all shareholders? No, offering rights shares is just an opportunity for shareholders to buy more shares, they can either choose to apply or not.
Current Rights Issues in India
How does rights issues work?
When a company announces rights issues, it makes a public announcement and also notifies all shareholders via email. Investors will be communicated with the Rights Entitlement via email.
Rights Entitlement are temporary demat securities or rights shares in proportion to their current holdings. It represents how many rights shares an investor can apply for. A shareholder can even use their RE to apply for rights shares or sell REs in the secondary market or let it lapse. The choice is yours!
How to Apply for Rights Issue Online through ASBA?
The process to subscribe to rights shares through net banking ASBA is similar to how we apply in IPO. Any bank that provides an ASBA facility allows users to submit rights issues applications online through a net banking portal. HDFC, ICICI, Axis, SBI, and many other Indian banks offer rights issue application facilities.
How to purchase rights shares online via net banking;
- Log in to your bank net banking website or mobile app.
- Go to IPO/FPO/Buyback option, where all the rights issues will be listed.
- Select the rights issue, you wish to apply for.
- Provide your broker demat account details i.e., DP ID and Demat account number.
- Enter the quantity or number of rights shares you want to purchase.
- Ensure to have sufficient funds in your bank account.
- Accept the terms & conditions and submit the order.
- The bank will block the application amount.
- Once rights shares are allotted, funds will be debited and allotted shares will be credited to your demat account.
Apply in Rights shares via RTA Website
Investors can also submit rights issue applications online with RTAs i.e., KFin Tech, LinkInTime, etc. The rights issue application process is similar across all RTAs.
Let’s take an example of how to purchase rights shares in KFIn Technologies
- Go to the KFin Technologies Rights Issue Page.
- Click on Email and Mobile Registration.
- Select the shareholding type, whether physical or select DP (CDSL or NSDL) you have a demat account.
- Enter details, including DP ID, client ID, and captcha, and tap on submit.
- Register your mobile number and email ID.
- Now, you can apply for right shares and make payment via UPI or net banking.
- Once your order is successfully placed, you will receive an email citing rights issue application details.
- Once the rights issue closes, you will receive an allotment of rights shares in your demat account.
Offline ASBA process to participate in Rights offer
When any company announces a rights offer, the company’s registrar and transfer agent send a Composite Application Form (CAF). Alternatively, investors can download the application form from the BSE and NSE websites.
Fill out the necessary details in the rights issue application form. Information to be filled in includes;
- Cheque or DD details (non-ASBA)
- Select Depository participant - NSDL or CDSL.
- PAN number
- Provide your DP details (you can check demat account number with your broker)
- Signature
The duly signed form can be submitted at any Self-Certified Syndicate Bank (SCSB) branch.
Rights Issue Application Form
Right Issue application form is used to participate in rights offer offline. You can find the application form on the BSE and NSE website and also on the Registrar’s website.
How to download Rights issue application form from BSE
- Go to BSE link.
- Tap on right issue of your choice.
- You will find the rights issue details.
- Click on the Application form link to download.
How to download Rights issue application form from NSE
- Go to NSE link.
- Click on the company name.
- Issue information page will be open.
- Click on the download option respective to the Application Form.
- The rights issue application form will be downloaded.
Apply for Rights Issues online through your Broker
You cannot apply for rights shares directly through your broker’s platform. Whether you have a demat account with any stock broker – Zerodha, Angel One, Groww, etc., you can purchase rights shares either via ASBA or through RTA’s portal.
Some brokers may provide details on upcoming rights issues. Log in to your broker’s trading account, and navigate to the Rights Issues under corporate actions or Rights Issue tab, where you can see all the upcoming and open rights issues.
How a non-shareholder can apply for a rights issue?
If you do not hold the company’s shares by the record date, you won’t be an eligible shareholder for the rights offer. Now, the question is can non-shareholders apply for rights issues? Yes, non-shareholders can participate in rights offer by purchasing Rights Entitlements from the open market.
Rights Entitlement are traded just like shares on the stock exchange. So anyone who acquired RE will become an eligible shareholder and thus, can subscribe to the rights shares.
Application for rights issues can be submitted online via the ASBA process or via RTA website.
How to Buy and Sell Rights Entitlement?
All eligible shareholders receive Rights Entitlement in their demat account at least a day before the Rights issue opens for subscription.
Investors who do not want to exercise their RE have an option to sell RE in the secondary market, whereas others who do not own the company’s shares but are interested in the rights offer can purchase it.
Earlier, the renunciation of rights shares was offline, but with the introduction of RE in demat form, now, they can now be traded online.
Buying and selling RE on the stock exchange is similar to buying and selling stocks. Only delivery trading is allowed in RE, intraday orders cannot be placed. There is no floor or cap price for RE. Trading in RE is permitted for a few days before the issue closing date.
Investors who do not want to buy rights shares can sell RE online and receive money. For shareholders who neither subscribe to rights shares nor sell their RE, their RE will lapse or expire after the issue closure.
