FAQs

What are right shares?

A rights share is an issuance of new shares to existing shareholders. These are not free however they are usually below the current market price. Issuance of these new shares to existing shareholders is known as Right shares.

Why does a Company issues Right Shares?

A rights issue occurs when a company needs to raise extra capital or a company requires liquidity.


How can an AceXS Online Trade Account holder be entitled to receive these shares?

If the share holder holds the shares in his security holding during the spot period, till the date of book close, then one is entitled to receive the Right shares.

How many shares will you get?

If you have 1000 shares of a certain company which announces 25 % rights then you will receive 250 Right shares.

How can a right share be beneficial for the shareholders?

The major benefit a shareholder gets is that the rights issued, are usually below current market price, which leads them to obtain profits.

How do you know that you have received the Right Shares?

Once the shares are credited in your account, it appears with a symbol R. For example TELE right, denoted by TELER.

Can you purchase extra right shares?

There is no obligation to purchase extra share. You may purchase them from the market as the trading of rights shares starts just after these have been issued to the shareholders.

Can these right shares be converted into ordinary shares?

Yes, you may feel free to convert them to ordinary shares.
Procedure to convert the Right shares into ordinary shares.

The company announces a date by which you have to subscribe your right shares (if not sold). You may send us your subscription request via email. Your request is processed and the rights are subscribed by debiting the equivalent amount against the right shares from your AceXS Online Trade Account.

On which rate is the right share subscribed?

The rate of subscription depends on the face value. If a company issues rights shares at a premium then, the premium is added to the face value (Par Value). If the company issues at a discount then the discounted amount is subtracted from the face value. The final value is the amount, which is debited per shares against your holding of Right shares.

How much time does the conversation take?

Right shares are converted into ordinary shares and appear in your AceXS Online Trade account after 5 to 6 weeks of the date of subscription.

When to or when not to subscribe your right shares?

The under stated scenario will help you to decide, whether to subscribe your right shares or sell them in the market. Remember, you may always buy more right shares from the market if required.


Example.

You receive a right share of XYZ and the market price for that right share is Rs.3.00 per share. If you wish, you may sell the rights in the market.



But if you subscribe the right share at Rs.10 per share, and if the market price of ordinary XYZ is 15.00 and you sell it after the conversion, then you have a benefit of Rs.5.00 per share.



NOTE: If the company’s ordinary shares are traded in the market below the par value and the company offers the right at the rate of par value, then ordinary shares are usually purchased from the market rather than subscribing the rights.