A company announces a Rights Issue to invite existing shareholders to buy more shares, usually at a discounted price. These shares are known as Rights Shares. After the Rights Issue is announced, the company then credits its existing shareholders’ Demat Accounts with REs (Rights Entitlements).
These REs are not the Right Shares but the benefit given to existing shareholders to apply for the Right Shares. If shareholders do not wish to apply for these Rights Shares, they can even trade these REs in the market until a particular date.
When you receive REs and do not apply for the rights share or trade them, your rights entitlements (REs) will lapse and you will lose the value the REs are worth.
What happens if I buy/receive Rights Entitlements (REs) but don't apply for rights shares?
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