A rights issue is a type of corporate action that enables a company's current shareholders to purchase extra shares in proportion to their existing holdings, generally at a reduced price. Eligible shareholders will receive right entitlements (REs) in their demat accounts, which can be used to apply for the rights issue or traded on the market. However, if the REs are neither sold nor utilized for the rights issue, they will eventually expire and become worthless. To learn more about REs, see What is a Right Entitlement?
To learn more about rights issue and other corporate actions, visit zerodha.com/varsity/chapter/five-corporate-actions-and-its-impact-on-stock-prices.