Rights issues are one of the most common ways companies in India raise capital — and for investors, they present a unique opportunity to buy shares at a discount. But many investors still struggle with how to apply for a rights issue through a demat account.
This guide explains everything — eligibility, ASBA process, R-WAP method, broker-based application, timelines, and practical tips — updated as of 27 April 2026.
What is a Rights Issue?
A rights issue is when a company offers new shares to its existing shareholders at a discounted price, in proportion to their existing holdings.
Rights Issue vs IPO vs FPO
| Type | Who Can Apply | Pricing |
|---|---|---|
| Rights Issue | Existing shareholders | Usually discounted |
| IPO | Public | Market-driven |
| FPO | Public + shareholders | Market-linked |
📖 Learn more: Rights Issue vs FPO vs QIP
Eligibility – Who Can Apply?
To apply for a rights issue, you must:
- Hold shares before the record date
- Receive Rights Entitlement (RE) in your demat account
Record Date & Ex-Date Explained
- Record Date: Date when company checks eligible shareholders
- Ex-Date: Usually same as record date under T+1 settlement (post-2023)
👉 Detailed guide: Record Date Explained
Methods to Apply for a Rights Issue
ASBA (Application Supported by Blocked Amount)
The most widely used method (95%+ adoption as per SEBI data). Funds remain blocked in your bank account until allotment.
R-WAP (Registrar Web Application Platform)
Online platform provided by the registrar for investors without ASBA access.
Applying via Broker/Trading Platform
Modern brokers provide a seamless “Corporate Actions” dashboard to apply in one click.
👉 Try it here: MNCL Retail Broking Platform
Step-by-Step Application Process
Using ASBA (Recommended Method)
- Login to your net banking (ASBA-enabled bank)
- Go to “IPO / Rights Issue” section
- Select the rights issue
- Enter RE quantity
- Submit application → funds blocked
Applying via Broker
- Login to trading account
- Go to Corporate Actions / Rights Issue
- Select stock
- Apply using RE holdings
- Confirm via UPI/ASBA mandate
Applying for Additional Shares (Renunciation)
You can apply for more shares than your entitlement. These are allotted only if others don’t subscribe fully.
| Action | Meaning |
|---|---|
| Apply for Entitlement | Use your RE fully |
| Apply Additional | Request extra shares |
| Renunciation | Transfer/sell RE to someone else |
What Is Rights Entitlement (RE) and How to Use It
RE is a tradable security credited to your demat account before the issue opens.
- Use RE → Apply for shares
- Sell RE → Monetize value
- Ignore RE → Lose value (worst option)
📖 Learn full details: RE Trading Explained
Allotment Process & Timeline
| Stage | Timeline |
|---|---|
| RE Credit | Before issue opens |
| Issue Open | Day 0 |
| RE Trading Window | ~7–10 days |
| Issue Close | ~15–30 days |
| Allotment | Within ~7 days |
| Listing of Shares | Within ~2 weeks |
📌 Source: SEBI (ICDR) Regulations & NSE corporate action timelines (2024–2026 data)
Case Study: Vodafone Idea Rights Issue (2023)
- Issue Size: ₹18,000 crore
- Majority applications via ASBA
- Many investors failed to act → RE lapsed → dilution
Key takeaway: Always act — apply or sell RE.
Source: Vi Stock Exchange Submission
Tax Treatment
- Applying for rights issue → No tax
- Cost of acquisition = price paid
- Capital gains apply on sale (STCG/LTCG)
📌 Source: Income Tax Act, India (Capital Gains provisions)
FAQs on Rights Issue Application
Q1: How do I apply if I hold shares in physical form?
You must first convert shares to demat and provide details to the company.
Q2: Can I apply for more shares than my entitlement?
Yes, via additional application. Allotment depends on demand.
Q3: What is the last date to apply?
Before the rights issue closing date (mentioned in offer document).
Q4: Will I get a refund if extra shares are not allotted?
Yes, blocked funds are released.
Q5: What is ASBA?
ASBA blocks funds in your account without debiting until allotment.
Q6: Can NRIs apply?
Yes, subject to RBI and company-specific eligibility.
Q7: What happens if I don't apply for a rights issue and ignore my Rights Entitlement (RE)?
If you neither apply for the rights issue nor sell your Rights Entitlements (REs) on the secondary market before the trading window closes, the REs will lapse. This results in a total loss of their value and dilutes your overall ownership percentage in the company.
Q8: Can I apply for a rights issue using UPI?
Yes, many modern stockbrokers and ASBA-supported banking platforms now allow investors to apply for rights issues and confirm the blocked funds using a UPI mandate, similar to the standard IPO application process.
Q9: How long does it take for rights issue shares to reflect in my demat account?
Once the rights issue closes, the allotment process typically takes up to 7 days. Following allotment, the shares are credited to your demat account and usually listed on the stock exchanges within two weeks.
Q10: Are rights issues subject to taxation upon application?
No tax is levied at the time of applying for a rights issue. Taxation only occurs as Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG) when you eventually sell the allotted shares or if you sell your Rights Entitlements (REs) on the open market.
Final Thoughts
Applying for a rights issue is no longer complicated — thanks to ASBA and broker platforms. But the real edge lies in decision-making:
- Strong company → Subscribe
- No conviction → Sell RE
- Never → Do nothing
📊 Track rights issues, REs, and corporate actions easily: Download ReSach App
🚀 New to investing? Start here: Open Demat Account in Minutes
More Reading:
- “If you plan to trade your Rights Entitlements (REs) on the secondary market, mastering order types is crucial for optimizing your execution price.”
Market Order vs Limit Order: Key Differences Every Trader Must Know - “Beyond corporate actions, explore foundational wealth creation strategies to effectively deploy the capital in your portfolio.”
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