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The record date in the right issue is the cut-off date as on a person must have company’s share to receive Right Entitlement. Thus, the concept of record date identifies the eligible shareholders to subscribe to a company’s right issue in the proportion of their shareholding. The record date is clearly specified in the Right Issue Prospectus.
For instance, company issues right shares in the ratio of 1:6, 1 right share for every 6 fully paid-up equity shares held on the record date, 5 Jan. In such case, one must have the company’s share in their Demat account as on 5 Jan to receive Right Entitlement.
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