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Right Entitlement (RE) gives a right to a company’s existing shareholders to buy rights shares in the proportion of their shareholding. Right Entitlements are issued in a separate ISIN in a Demateralized form. To be an eligible shareholder to subscribe to the right issue, one must have company’s equity shares as on the record date.
Right shares are issued in proportion to existing equity shares such as 1:3 right entitlement ratio means a company issues 1 right equity share for every 3 fully paid-up equity shares held as on the record date. Right shares are issued at a discounted price compared to the share’s current market price.