Understanding the Rights Issue Application Process
When a company announces a rights issue, eligible shareholders have the chance to purchase additional shares during a specified period, known as the rights issue application time. This process allows you to:
- Apply for the shares you're entitled to
- Request additional shares if available
- Transfer or sell your Rights Entitlements (REs) to someone else
Applications can be made online through ASBA (via your bank or broker), the Registrar’s Web Application Platform (R-WAP), or in some cases, by submitting a physical form provided by the registrar.
Methods of Applying for a Rights Issue
You can apply for a rights issue either online or offline, depending on your preference and resources. All applications go through the ASBA (Application Supported by Blocked Amount) system, where the funds are blocked in your bank account and only deducted once shares are allotted.
Applying Online with ASBA
To apply online, you can either use your bank’s Net Banking portal or a registered stockbroker’s platform.
Via Net Banking (Bank Route)
- Log into your ASBA-enabled bank account.
- Navigate to the Rights Issue section.
- Choose the relevant company’s rights issue.
- Enter your DP ID, Client ID, and the number of shares you wish to apply for.
- Confirm the details, and the bank will block the necessary funds until the shares are allotted.
Via Broker Platform
Only a select number of brokers offer online rights issue applications.
- Access your broker’s app or website.
- Locate the Corporate Actions / Rights Issue section and select the company.
- Enter your entitlement details.
- Confirm the order, and the associated ASBA bank account will automatically block the necessary funds.
Note:
The process can vary slightly depending on your bank or broker’s platform for rights issue applications.
Applying Offline with Physical ASBA
If you prefer offline applications:
- Download the Rights Issue Application Form from the company’s or registrar’s site.
- Complete the form with details like your name, PAN, folio number, and the number of shares you’re applying for.
- Submit the form to a Self-Certified Syndicate Bank (SCSB) branch before the issue closes.
- The bank will block the application amount in your ASBA account, as cheques or demand drafts are not accepted.
- Retain the acknowledgment slip for your records.
Using Plain Paper Applications
If the standard application form is unavailable, SEBI allows applications on plain paper. The application must include:
- Company name and applicant details (as per records)
- Registered folio number / DP ID–Client ID
- Number of shares held, entitled, and applied for
- ASBA bank account details and authorization to block funds
- PAN and signatures of all holders in the same order
- Necessary approvals or declarations (for NRIs or special cases)
Plain paper application formats are often available on the Registrar’s website. It’s important to include all mandatory details before submitting to an SCSB branch. This option is not for renouncing rights and is only for situations where the standard form is unavailable.
Applying for Additional Shares
If you wish to apply for more shares than your entitlement, you can submit a Right Issue Excess Application in the same form or through the online application process.
- Additional shares are only allotted if there are unsubscribed shares after all eligible shareholders have applied.
- There is no guarantee of receiving the excess shares.
Rights Issue Application Timing
Applications can be submitted anytime between the opening and closing dates announced by the company. On the closing date, applications should be submitted before 5:00 p.m. (Indian Standard Time) or the extended time as allowed by the stock exchange.
Although some banks and brokers may offer flexible hours, many ASBA-enabled banks or trading platforms set earlier internal deadlines.
To avoid last-minute issues, it is wise to submit applications a day or two in advance, or well before 3–4 p.m. on the final day.
Checking Application Status
Once the issue closes, you can verify the status of your rights issue application:
- On the Registrar’s website using your PAN, DP ID, or Application Number.
- Through your ASBA bank or broker platform in the IPO/Corporate Actions section.
- After allotment, confirm the credit of new shares in your demat account.
Allotment and Share Credit Details
After the basis of allotment is confirmed:
- Shares are credited to your demat account under the same ISIN (or a different ISIN for partly paid shares).
- Funds blocked are debited for allotted shares, and any remaining funds are unblocked.
- You will receive a confirmation email or SMS from the Registrar and your depository.
Common Mistakes to Avoid
- Using a non-ASBA bank account or incorrect DP ID/Client ID.
- Submitting multiple applications under the same PAN.
- Missing the application time window.
- Making payments from third-party accounts.
- Forgetting to sign or include required details in physical forms.
Key Takeaways
- Rights issue applications are completed through the ASBA mechanism, ensuring funds are blocked until shares are allotted.
- Applications can be made online via a bank’s Net Banking portal or a broker’s platform, or offline at a Self-Certified Syndicate Bank (SCSB).
- Plain paper applications are only allowed if the standard form is unavailable and must include all required details.
- Cheques or demand drafts are not accepted for rights issue applications.
- Track your application and status through your bank, broker, or registrar’s website.
- Submit applications early to avoid technical or banking delays.
- The application process may vary slightly depending on your bank or broker interface, but core steps remain consistent.
- Applying correctly ensures you retain entitlements and benefit from discounted share prices.