Hi, i have got RE of orient green power in my account, 50 shares , price which is showing in demat account is its trading at 6.4 rs, but when i apply for ASBA, issue price is Rs.13, so do i need to pay 50x13 to apply for this, what happens to the 50 which is showing in my account at 6.4, should i sell them off
Since you’re an existing shareholder as of the record date, the company gives you a special right, called Rights Entitlement (RE), to buy additional shares at a set price.
Think of REs like coupons. You received them at no cost. These RE units are traded for a short period, and you can either sell them in the market for Rs. 6.4 each, or use them to buy new shares at the company’s offered price.
Once you apply for new shares, you cannot sell them off in market.
It’s important to note that these RE units will stop trading soon and will disappear from your demat account if you don’t use or sell them in time.
Check out the below post for more detials.
Thanks for the info, how can I use them to buy new shares, for example if I sell 50 at 6.4 I make profit of 300, but if I purchase them through asba I will have to pay 50x13, also when I go for asba do I need to purchase 50 only or more
Hey @anush.somani , if yu sell the 50 REs at 6.4, you’ll make a total of 320 (50 x 6.4). This amount is your gains if it was allotted.
Yea, if yu apply for the rights through ASBA, you’ll pay the issue price of 13= 650 (13*50). The REs allow yu to buy the same number of shares at this price, but you can apply for more.
The RTA may allot additional shares depending upon the issue subscription, and any unallotted amount will be refunded. Explained here.