Right Issue is the means of increasing the issued share capital of a company. The subscription for Right Issue is only opened to the existing share holders as of the Ex-Date declared by the company. (Date as of which the investors should hold the shares of the issuing company to become eligible to subscribe)
Rights Issues are announced from time to time by the respective companies. Each company would announce the Lead Bank and the other participating banks, form whom the application forms could be obtained.
The Prospectus issued the respective company in relation to Right issues will give vital information on the company profile, objectives, financial performance, Board of Directors and would stipulate the terms of offer including the total number of shares on offer for subscription, the unit price, the premium where applicable, minimum subscription, percentage or number of shares to which the investor would become entitled, means of subscription, issue of allotment letters, relevant closing dates of acceptance etc.
The Prospectus issued by the respective company in relation to Right issues will list the required documents for prescription (individuals, companies or financial institutes)
In case of Right Issues, the Company would issue an Invitation Letter (also called 'Allotment Letter') in which the number of shares entitled by each investor would be specified.
Invitation Letters (Letters of Allotment)
The respective company will announce the Ex-Date during the Annual General Meeting or Extra Ordinary Meeting with regard to the Rights Issue and the percentage / ratio which the share holder would become entitled to subscribe for the Rights Issue. All eligible share holders will be issued with an invitation letter specifying the number of shares the investor is entitled to subscribe.
If any investor is entitled to subscribe for the Right issue by virtue of holding the shares of the company as at the declaration ex – Date and he/she does not receive the invitation letter, the following steps could be followed to obtain a letter of invitation.
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Contact the respective share markets (DFM / ADX) and obtain a certified Inventory statement as at the Ex-Date as proof of his holding of the company shares.
(This Statement could be obtained from the Central Depository System –
(CDS) of the respective share markets) -
Submit this certified inventory statement to the relevant Company along with a request for an invitation letter.
