If you've ever seen a strange ticker ending with “-RE” in your demat account and wondered what it means — you're not alone. Rights Entitlement (RE) trading is one of the most misunderstood corporate actions in India, despite becoming mainstream after SEBI’s 2020 reforms.
In this guide, we’ll break down rights entitlement trading in India, how to buy/sell RE, pricing, tax implications, and most importantly — how to avoid losing money by doing nothing.
A Rights Entitlement (RE) is a temporary security credited to existing shareholders when a company announces a rights issue. It gives you the right (not obligation) to apply for additional shares at a discounted price.
| Parameter | Rights Entitlement (RE) | Rights Shares |
|---|---|---|
| Nature | Temporary tradable right | Actual shares |
| Trading | Can be bought/sold on NSE/BSE | Listed after allotment |
| Validity | Limited (issue period) | Permanent holding |
REs are credited as a separate line item with a unique ISIN. Example format: ABC-RE. You can track and trade it just like a stock during the trading window.
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Since SEBI’s 2020 circular, RE trading has been made mandatory to protect investors. REs are listed and traded on both NSE and BSE during the rights issue window.
Yes — even if you don’t own the stock, you can buy REs from the market and apply for rights shares.
Existing shareholders who received REs can sell them if they don’t want to invest more capital.
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RE pricing is driven by market forces, but theoretically:
RE Value ≈ Market Price – Rights Issue Price
Example:
However, real market prices may differ due to demand-supply and sentiment.
This is the biggest mistake investors make.
If you:
→ Your RE expires worthless → You lose money AND get diluted
Worst possible outcome = Doing nothing.
| Transaction | Tax Treatment |
|---|---|
| Sell RE | Short-Term Capital Gains (STCG) – 20% (as per latest tax rules) |
| Subscribe & Sell Shares Later | Capital gains based on holding period |
| Cost of Rights Shares | Actual price paid |
📌 Reference: Income Tax Act provisions & SEBI ICDR Regulations (Source: SEBI Circular on Rights Entitlement Trading, 2020; Income Tax Act, India)
Investors who:
Source: Company Update
| Your View | Action |
|---|---|
| Bullish on company | Subscribe + apply for extra shares |
| Neutral / no funds | Sell RE |
| Bearish | Sell RE immediately |
RE is a temporary tradable right; rights shares are actual equity shares allotted after application.
Yes, REs are listed and can be sold on NSE/BSE during the issue period.
Yes, anyone can buy RE and apply for rights shares.
Your RE expires worthless and you get diluted.
Typically 7–10 trading days within the rights issue period.
Yes, profits are taxed as short-term capital gains.
Yes. Even if you do not hold shares in the company, you can purchase Rights Entitlements (REs) from existing shareholders on the open market (NSE/BSE) during the specified trading window. Once purchased, you can use these REs to apply for the actual rights shares.
If you neither apply for the rights shares nor sell your REs in the market before the trading window closes, your REs will lapse and expire worthless. This means you will lose the monetary value of the RE, and your overall ownership stake in the company will be diluted.
Under current Indian tax laws, the profits generated from selling Rights Entitlements (REs) directly on the exchange are classified as Short-Term Capital Gains (STCG). This is typically taxed at a flat rate of 20% (plus applicable surcharge and cess).
The theoretical value of a Rights Entitlement is generally calculated by subtracting the discounted rights issue price from the current market price of the stock. However, actual trading prices on the exchange may vary based on market sentiment and supply-demand dynamics.
Rights Entitlement trading is one of the most powerful yet underutilized opportunities in Indian markets. It gives you flexibility — invest, exit, or monetize — all within a short window.
But remember: Doing nothing is the only wrong decision.
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Disclaimer: Investments in the securities market are subject to market risks, read all the related documents carefully before investing. The information provided in this material is only for education purposes and should not be used for public distribution and must not be reproduced or redistributed to any other person. One must consult their legal, tax and financial advisors before taking any investment related decisions. https://www.mnclgroup.com/research-disclaimer
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Name of the Company has changed from Networth Stock Broking Limited to Monarch Networth Capital Limited upon Certification of Incorporation received from Registrar of Companies, Mumbai vide certificate dated 13th October, 2015.
If you are not satisfied with the resolution provided, you can lodge your complaint online at: https://scores.sebi.gov.in/link
In case of grievance client can log on to the SMART ODR Portal, if they are unsatisfied with the response provided by us. Your attention is drawn to the SEBI circular no. SEBI/HO/OIAE/OIAE_IAD-1/P/CIR/2023/131 dated July 31, 2023, on “Online Resolution of Disputes in the Indian Securities Market”.
Purchase of REs only gives buyer the right to participate in the ongoing Rights Issue of the concerned company by making an application with requisite application money or renounce the REs before the issue closes. REs which are neither subscribed by making an application with requisite application money nor renounced, on or before the Issue closing date shall lapse and shall be extinguished after the Issue closing date. Please check your dp account for further details.
Please do not share your online trading password with anyone as this could weaken the security of your account and lead to unauthorized trades or losses.
Monarch Networth Capital Limited (‘MNCL’) | CIN No.: L64990GJ1993PLC120014
Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
“Monarch House”, Opp Prahladbhai Patel garden, Near Ishwar Bhuvan, Commerce Six Roads, Navrangpura, Ahmedabad - 380009
Mumbai
Monarch Networth Capital Limited, G Block, Laxmi Tower, B Wing, 4th Floor, Bandra Kurla Complex, Bandra East, Mumbai - 400051.
Email for Grievance: grievances@mnclgroup.com
Investors are requested to note that Stock broker (Monarch Networth Capital Ltd) is permitted to receive money from investors through designated bank accounts only named as Up streaming Client Nodal Bank Account (USCNBA). Stock broker (Monarch Networth Capital Ltd) is also required to disclose these USCNB accounts to Stock Exchange. Hence, you are requested to use following USCNB accounts only (Click to View) for the purpose of dealings in your trading account with us. The details of these USCNB accounts are also displayed by Stock Exchanges on their website under “Know/ Locate your Stock Broker".
Mechanism for addressing grievances and information about SCORES.
Monarch Networth Capital IFSC Private Limited (Wholly owned subsidiary of Monarch Networth Capital Limited) is a Registered Fund Management Entity (Retail) having Registration No: IFSCA/FME/III/2025-26/169. Monarch India Growth Fund will be an open-ended Restricted Scheme (Non-Retail) construed as a Category III AIF under the IFSCA (Fund Management) Regulations, 2025. Monarch AIF is a Category III AIF having SEBI Registration No. IN/AIF3/20-21/0787. This material is for informational purposes only and is not intended as an offer or solicitation or investment advice to buy or sell securities. Investments are subject to market risks. The offering is made only through official scheme documents to eligible investors under GIFT IFSC regulations. Investors should read all documents carefully and consult their advisors before investing.
Mechanism for addressing grievances and information about SCORES.
Monarch Networth Capital Limited (‘MNCL’) | CIN No.: L64990GJ1993PLC120014
(As per LODR Regulations and Companies Act, 2013)
Contact information of the designated officials of the listed entity who are responsible for assisting and handling investor grievances : Mr. Nitesh Tanwar : 022 - 66476400 / 66476405
Monarch Networth Capital Limited
Unit No. 803-804A, 8th Floor, X-Change Plaza, Block No. 53, Zone 5, Road-5E, Gift City, Gandhinagar - 382050, Gujarat
Ahmedabad
“Monarch House”, Opp Prahladbhai Patel garden, Near Ishwar Bhuvan, Commerce Six Roads, Navrangpura, Ahmedabad – 380009
Mumbai
Monarch Networth Capital Limited, G Block, Laxmi Tower, B Wing, 4th Floor, Bandra Kurla Complex, Bandra East, Mumbai - 400051.
For Broking and Demat Related Queries : +91-79-26666768
Email: cs@mnclgroup.com
Email for Grievance: cs@mnclgroup.com
Listing of Equity Shares on Stock Exchange at
BSE
NSE
(Formerly known as Link Intime India Private Limited)
For any queries related to broking please contact helpdesk@mnclgroup.com.
‘Investments in securities market are subject to market risks, read all the related documents carefully before investing.’
