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Sandur Manganese Rights Issue: Everything you need to know about Rights Issue

22 Aug 2022 0 COMMENT

Sandur Manganese & Iron Ores Ltd recently has offered 1,80,03,882 shares through a Rights Issue of ₹18.39 Crores.

What are Rights Issues? Why do companies do Rights Issues? Why are they only available to existing shareholders? What should shareholders consider before exercising their Rights Entitlement? How to apply for Rights Issue?

This article will break this down for you.

What is a Rights Issue?

A rights issue is an offering of rights to the existing shareholders of a company that allows them to buy additional shares directly from the company at a discounted price rather than buying them on the secondary market. That is, if you own a share, you get the “right” to buy more shares – in a certain ratio, at a certain price. For example, a 1:10 issue means you get the 'right' to buy ONE share for every TEN shares you own.

Why do companies do Rights Issues?

The rights issue is a fast and economical method of raising capital for the company. The company saves a significant amount of money on expenses such as underwriting fees, advertisement costs, and so on that it would have incurred in any other kind of fundraising. Secondly, regulators are less stringent because a current shareholder already knows a reasonable amount about the company.

What is Rights Entitlement?

This is relatively new concept in the Indian stock market, where the entitlement itself is traded on the exchange. Owning RE shares is not the same as owning rights shares. An shareholder needs to apply for rights shares based on entitlements received separately. RE is a temporary credit of shares in the Demat account, which allows the rights holders – who are not interested in adding more shares of the same company – to sell their RE shares in a trading window on exchanges to other willing investors for a price.

To get a better understanding of this. Let's consider the example of Sandur Manganese & Iron Ores Ltd.

Sandur Manganese & Iron Ores Ltd  has offered 1,80,03,882 shares through a right issue.

All shareholders holding 1 (One) share of Sandur Manganese & Iron Ores Ltd. as on record date: 27th July 2022 would have received 2 (Two) Right Entitlements in their Demat a/c.

Details of the Right Issue:

Issue Open

Aug 8, 2022 - Aug 29, 2022

Deemed Date of Allotment

Sep 7, 2022

Last Date for On Market Renunciation

Aug 23, 2022 (RE is tradeable on exchange till this date)

Issue Size (Amount)

₹18.00 Crores

Issue Price

₹10 per share

Face Value

₹10 per share

Listing At

BSE

Terms of payment

Shareholders will have to pay the entire offer price i.e. ₹10/- per Rights Equity Share, at the time of application.

Downloads

Right Issue application form

Click Here

Detailed Letter of Offer

Click Here

Abridged Letter of Offer

Click Here

Download Rights Entitlements

Click Here

How to deal with the Rights Entitlement received:

1. Shareholders may renounce the Rights Entitlements credited to their respective Demat accounts by trading/selling them from their Demat Holding by 23rd Aug 2022. Once sold, the money will be credited within T+2 days of such sale of shares.

OR

2. Apply for Rights issues by making an offline application

NOTE: Any Rights Entitlement which is neither renounced NOR applied for rights issues shall lapse.

How to Apply for Rights Issue?

We'll walk you through the steps for applying for the Rights Issue of Sandur Manganese & Iron Ores Ltd.

Step 1: The Application Form for the Rights Equity Shares would be sent to the Eligible shareholders at the e-mail addresses of resident Eligible Equity Shareholders. Alternatively, investors can download the same from the website of the Registrar

https://www.vccipl.com/Documents/ipodoc/INE149K20016/Application%20Form.pdf

Step 2: Shareholders must fill this application form with the required details.     

Step 3: Submit the filled Application Form to the Designated Bank branches on or before 29th Aug 2022. Click here to refer to the list of Bank Branches where this application can be submitted.

Frequently Asked Questions (FAQs):

1. How do I obtain the details of my Right Entitlement?

One can obtain the details of their respective Rights Entitlements from the website of the Registrar

https://www.vccipl.com/RightsIssueDownload.html

by entering either their

  • DP ID and Client ID or
  • Folio Number (in case of resident Eligible Equity Shareholders holding Equity Shares in physical form) and PAN.

2. How does ASBA work in Rights Issues?

In the case of ASBA facility, the investor agrees to block the entire amount payable on the Application with the submission of the Application Form at designated branches of SCSB (Self-Certified Syndicate Banks) by authorizing the Bank to block an amount in the Investor’s Account.

3. How do I get the list of designated branches of SCSBs for submitting the application form for Rights Issue?

The list of banks that have been notified by SEBI to act as SCSB for the ASBA  process is provided on

 https://www.sebi.gov.in/sebiweb/other/OtherAction.do?doRecognisedFpi=yes&intmId=34

4. Can a investor make multiple Applications for Rights Issues?

Only one single Application Form shall be used by the Investors to make Applications for all Rights Entitlements available in a particular Demat account.

In the case of multiple Demat accounts, the Investors are required to submit a separate application form for each Demat account.

5. What is Right Issue Renunciation? How to opt out of Rights Entitlement?

This is the process of transfer of the right entitlements by the shareholders not willing to accept the right offer. The same can be sold online on stock exchanges just like selling any other stocks. The settlement of such transactions occurs on a T+2 rolling settlement basis. Following the purchase of the right entitlement, it is possible to apply for the rights issue.

NOTE: Any Rights Entitlement which is neither renounced NOR applied for rights issues shall lapse. 

Disclaimer: ICICI Securities Ltd. (I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is a Member of National Stock Exchange of India Ltd (Member Code: 07730), BSE Ltd (Member Code: 103) and Member of Multi Commodity Exchange of India Ltd.(Member Code:  56250) and having SEBI registration no. INZ000183631. Name of the Compliance officer (broking): Mr. Anoop Goyal, Contact number: 022-40701000, E-mail address: complianceofficer@icicisecurities.com. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The securities quoted are exemplary and are not recommendatory. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.