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How do I apply for a rights issue at Zerodha?

In a rights issue, a company gives you the right to apply for additional shares based on the number of shares already held by you. The company may issue these shares either to fund a new project, reduce debt, or restructure its equity capital base. The Rights Issue shares will be available at a discount to the market price, almost like an open privilege to all the shareholders of the stock. 

Eligible shareholders will receive the rights entitlement (RE) in their demat accounts before the rights issue opens. These REs are not rights shares by themselves and need to be used to apply for the rights shares. The REs will be in the form of temporary demat securities which will lapse if you do not use them to apply for the rights or sell them.

The process of applying for a rights issue is through ASBA (Applications Supported by Blocked Amount). If your bank supports it, you can apply online just like an IPO. 

If not then you would have received a courier of the Composite Application Form (CAF) from RTA (Registrar and Transfer Agent) of the company. You will have to fill the form and submit it at a Self Certified Syndicate Banks (SCSBs) branch.

Due to the COVID situation, SEBI has temporarily allowed the Registrar & Transfer Agents of a company to collect rights applications online through their web portal. You can check your company's website to find the RTA and their contact details. 

The details of the Rights issue will be mentioned in the form which primarily includes the Rights Issue ratio and the Book closure date.

The details to be filled are:

  • *Cheque/DD details (non ASBA)
  • Select NSDL - if your DP starts with IN. Select CDSL if the DP ID is completely numeric.
  • Your PAN number. If you have a joint account then fill in the PAN of the second holder.
  • Fill your DP details. You can find your DP ID and the Beneficiary number under the profile section of Console.
  • Your signature. Signatures of both account holders if it is a joint account.
Once done you can submit at any branch of a Self Certified Syndicate Banks (SCSBs). The list of banks can be found on the application form itself.

For an example of how to apply for a Rights issue, check out this post on TradingQ&A.