What is a Right Entitlement?

A Right Entitlement (RE) is a temporary entitlement given to existing shareholders of a company to subscribe to new shares being issued by the company. Basically, it's a right to purchase additional shares at a predetermined price before they're offered to the general public. The purpose of REs is to give existing shareholders a chance to maintain their ownership percentage in the company and also to raise capital for the company. RE’s are usually issued in the form of a rights issue, which is a formal offer made by the company to its existing shareholders to subscribe to new shares.

REs can now be traded on exchanges, and you can sell them just like stocks from your portfolio. Before the RE trading period starts, the REs that have been credited to your demat account won't show up in Tiqs holdings. Because they are settled trade-by-trade, the REs cannot be traded intraday. The seller is required to pay STT equal to 0.05% of the RE's value.