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Rights Entitlement is like a token that the issuer credits to shareholders' demat accounts. Rights Entitlement (RE) in stocks refers to the right granted to existing shareholders to purchase additional shares in a company during a rights issue. This entitlement allows shareholders to buy the new shares at a discounted price and in proportion to their existing shareholding as of the record date.
REs are temporary and remain valid only during the subscription period of the rights issue.
REs are offered in a specific ratio, such as 1:2, meaning one additional share can be purchased for every two shares held.
In a renounceable rights issue, REs can be traded or sold in the stock market, allowing shareholders to monetize their rights if they choose not to subscribe to the new shares.
