{"id":14765,"date":"2026-06-13T09:14:34","date_gmt":"2026-06-13T09:14:34","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?p=14765"},"modified":"2026-06-08T09:14:42","modified_gmt":"2026-06-08T09:14:42","slug":"rights-issue-in-india-explained","status":"publish","type":"post","link":"https:\/\/lemonn.co.in\/blog\/finance\/rights-issue-in-india-explained\/","title":{"rendered":"Rights Issue in India Explained: Should You Subscribe or Sell Your Rights?"},"content":{"rendered":"
\"Rights<\/figure>\n\n\n

What is a Rights Issue?<\/strong><\/h3>\n\n\n\n

A rights issue is when a company offers existing shareholders the right (but not the obligation) to purchase additional shares at a price below the current market price, in proportion to their existing holding. Example: 1:4 rights issue at \u20b9500 means for every 4 shares held, you can buy 1 additional share at \u20b9500, when market price may be \u20b9700.<\/p>\n\n\n\n

Why Companies Do Rights Issues<\/strong><\/h3>\n\n\n\n
    \n
  • Raise capital for expansion, debt repayment, or acquisitions<\/li>\n\n\n\n
  • Rights issues are faster and less expensive than fresh IPOs<\/li>\n\n\n\n
  • Existing shareholders get priority \u2014 less dilution than QIP (Qualified Institutional Placement)<\/li>\n<\/ul>\n\n\n\n

    Rights Entitlements (RE): The Tradeable Right<\/strong><\/h3>\n\n\n\n

    SEBI changed the rights issue mechanism in 2020 \u2014 Rights Entitlements (REs) are now credited to shareholders’ demat accounts and trade on NSE\/BSE for the duration of the offer period. You have three choices:<\/p>\n\n\n\n

      \n
    • Subscribe: Pay the issue price and receive new shares<\/li>\n\n\n\n
    • Sell your RE on the exchange: Receive cash for the entitlement you don’t want<\/li>\n\n\n\n
    • Do nothing: RE lapses after the offer period \u2014 you receive nothing<\/li>\n<\/ul>\n\n\n\n

      Financial Analysis: Should You Subscribe?<\/strong><\/h3>\n\n\n\n
      Scenario<\/strong><\/th>Action<\/strong><\/th>Rationale<\/strong><\/th><\/tr><\/thead>
      Rights price significantly below market; company fundamentals strong<\/td>Subscribe fully<\/td>Immediate value accretion at discount<\/td><\/tr>
      Unsure about company; need liquidity<\/td>Sell RE on exchange<\/td>Capture the discount value in cash<\/td><\/tr>
      Bearish on company<\/td>Sell RE immediately when credited<\/td>Avoid dilution risk; take cash<\/td><\/tr>
      Can’t afford to subscribe<\/td>Sell RE to fund partial subscription<\/td>At least partially participate<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

      Important: Never Let Rights Lapse<\/strong><\/h3>\n\n\n\n

      Allowing your RE to lapse is the worst outcome. If you are not participating, sell the RE on the exchange during the offer period. Lapsing means your holding is diluted (more shares outstanding) and you receive nothing in compensation. Many retail investors are unaware their RE has been credited \u2014 check your demat account during rights issues of companies you hold.<\/p>\n\n\n\n

      How to Subscribe to a Rights Issue via Lemonn<\/strong><\/h3>\n\n\n\n
        \n
      • Check if any held company has announced rights issue in corporate actions calendar<\/li>\n\n\n\n
      • Look for RE credit in your demat account after record date<\/li>\n\n\n\n
      • Apply via ASBA through your bank’s internet banking or Lemonn’s ASBA platform<\/li>\n\n\n\n
      • Amount is blocked in your bank account until allotment<\/li>\n\n\n\n
      • Shares allotted after issue closes; funds debited on allotment<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"

        What is a Rights Issue? A rights issue is when a company offers existing shareholders the right (but not the obligation) to purchase additional shares at a price below the current market price, in proportion to their existing holding. Example: 1:4 rights issue at \u20b9500 means for every 4 shares held, you can buy 1 […]<\/p>\n","protected":false},"author":15,"featured_media":14766,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_uag_custom_page_level_css":"","_ayudawp_aiss_exclude":false,"_ayudawp_aiss_summary":"A rights issue is when a company offers existing shareholders the right (but not the obligation) to purchase additional shares at a price below the current market price, in proportion to their existing holding. Example: 1:4 rights issue at \u20b9500 means for every 4 shares held, you can buy 1 additional share at \u20b9500, when market price may be \u20b9700. SEBI changed the rights issue mechanism in 2020 \u2014 Rights Entitlements (REs) are now credited to shareholders' demat accounts and trade on NSE\/BSE for the duration of the offer period.","_ayudawp_aiss_summary_provider":"extractive","_ayudawp_aiss_summary_hash":"13f8d66caf377726f190fd69e2f857c311b75c66","footnotes":""},"categories":[1],"tags":[],"class_list":["post-14765","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance"],"blocksy_meta":[],"uagb_featured_image_src":{"full":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights.png",1672,941,false],"thumbnail":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-150x150.png",150,150,true],"medium":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-300x169.png",300,169,true],"medium_large":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-768x432.png",768,432,true],"large":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-1024x576.png",1024,576,true],"1536x1536":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-1536x864.png",1536,864,true],"2048x2048":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights.png",1672,941,false],"web-stories-poster-portrait":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-640x853.png",640,853,true],"web-stories-publisher-logo":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-96x96.png",96,96,true],"web-stories-thumbnail":["https:\/\/lemonn.co.in\/blog\/wp-content\/uploads\/2026\/06\/Rights-Issue-in-India-Explained-Should-You-Subscribe-or-Sell-Your-Rights-150x84.png",150,84,true]},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/yudh\/"},"uagb_comment_info":0,"uagb_excerpt":"What is a Rights Issue? A rights issue is when a company offers existing shareholders the right (but not the obligation) to purchase additional shares at a price below the current market price, in proportion to their existing holding. Example: 1:4 rights issue at \u20b9500 means for every 4 shares held, you can buy 1…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14765","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/comments?post=14765"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14765\/revisions"}],"predecessor-version":[{"id":14767,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/posts\/14765\/revisions\/14767"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media\/14766"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14765"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/categories?post=14765"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/tags?post=14765"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}