Rights Entitlement (RE) Shares: Definition and Process of Buying
What are Rights Entitlement (RE) Shares? Rights Entitlement (RE) shares are temporary dematerialized securities issued to existing shareholders of a company during a rights issue. They represent the shareholder’s eligibility to purchase additional shares at a discounted price, proportionate to their current holdings. REs are credited to the shareholder’s Demat account based on a predetermined ratio (e.g., 1:5 means 1 new share for every 5 held) and a record date set by the company. Key features of RE shares: Temporary Credit: REs are valid only until the rights issue subscription period ends. If unused, they expire and become worthless. Tradable: Shareholders can sell their REs on stock exchanges (e.g., NSE/BSE) during a limited trading window. Discount Benefit: Rights issues are typically priced below the market value, allowing shareholders to increase their stake at a…