RIGHT ISSUES

pushpakumara · 1 RIGHT ISSUES Sun Apr 17, 2011 2:53 pm

pushpakumara

Senior Manager - Equity Analytics

Posts : 312
Equity Stars : 5103
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Join date : 2011-04-13

I have some questions with regard to right issues and appreciate experts' opinion on the following.

I am looking at two scenarios

1) Being a shareholder of a company which offers rights

1.1 Can rights be traded before I make the payment (I.e. can I sell?)
1.2 If I sell my rights at a profit before the last date of acceptance and payment, do I still have to pay for the allotments?
1.2 What is Renunciation?

2) Being a non shareholder of a company which issues rights
2.1 Can I buy and sell rights in the market
2.2 In this case if I sell my rights at a profit within the stipulated time period do I still have to make a payment for the rights I bought?.

I am bit confuse over this type of transaction, so if someone could help me?

Thanks in advance Very Happy

Slstock · 2 Re: RIGHT ISSUES Sun Apr 17, 2011 3:09 pm

Slstock

Director - Equity Analytics

Posts : 6610
Equity Stars : 13377
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Join date : 2011-01-22

Answer below

1) Being a shareholder of a company which offers rights

1.1 Can rights be traded before I make the payment (I.e. can I sell?)
YES within the right trading period.

1.2 If I sell my rights at a profit before the last date of acceptance and payment, do I still have to pay for the allotments?

If you sell all of your rights that mean you will not have any. SO you do not have to pay. Even if you hold some rights ( remaining after you sell) it is your choice to pay to convert or loose your rights completely.

1.2 What is Renunciation?
You decline your rights.

2) Being a non shareholder of a company which issues rights
2.1 Can I buy and sell rights in the market
YES.

2.2 In this case if I sell my rights at a profit within the stipulated time period do I still have to make a payment for the rights I bought?.
If you buy and sell right within the stipulated period you do not have to pay. If you hold after the renoucning dtae you will have to pay to convert or loose the money you spent to buy rights.

Hope it helps.

pushpakumara · 3 RIGHTS ISSUES Mon Apr 18, 2011 6:49 am

pushpakumara

Senior Manager - Equity Analytics

Posts : 312
Equity Stars : 5103
Reputation : 8
Join date : 2011-04-13

slstock wrote:Answer below

1) Being a shareholder of a company which offers rights

1.1 Can rights be traded before I make the payment (I.e. can I sell?)
YES within the right trading period.

1.2 If I sell my rights at a profit before the last date of acceptance and payment, do I still have to pay for the allotments?

If you sell all of your rights that mean you will not have any. SO you do not have to pay. Even if you hold some rights ( remaining after you sell) it is your choice to pay to convert or loose your rights completely.

1.2 What is Renunciation?
You decline your rights.

2) Being a non shareholder of a company which issues rights
2.1 Can I buy and sell rights in the market
YES.

2.2 In this case if I sell my rights at a profit within the stipulated time period do I still have to make a payment for the rights I bought?.
If you buy and sell right within the stipulated period you do not have to pay. If you hold after the renoucning dtae you will have to pay to convert or loose the money you spent to buy rights.

Hope it helps.

Dear SLStock

Many thanks for your precise answer to my questions. Within a short period of time in joining this forum I got quite a lot of essential information and all of you shared your knowledge generously. It is really encouraging and help people like me in making right moves. Thank you again and all the very best for todays trading and hope you will have a Very Happy

face to night!!!