Back-ground: In earlier days, there used to be trading in the renounciation forms in case of all listed Comany issueing fresh shares by way of Right issue. There is absolute need for a platform for such trading to help investors to dispose off their entitlements in a transparent form. There is talk of SBI coming up with right issue with lakhs of shareholders.
Suggestions:
With a few simple steps , it is possible to start trading of the RIGHT ENTITLEMENT in the stock exchange(s) where its existing securities are listed and being traded.On announcement of a record date/book closure date for any issue, the Company should create an Demat ID in cooperation with depositories (CDSL & NSDL) for the right entitlements and apply for permission for trading such entitlements to the stock exchange(s).
On the record date, the Company should allot appropriate quantity of entitlements to the respective beneficiaries and send a suitable intimation for necessary follow up actions. However, for shares held in physical form, an intimation as at present shall be made with form & documents.
Trading in the stock exchange(s) should be allowed with effect from the first day of acceptance for such entitlements on a trade to trade ,as per the standard terms and usages, basis and should expire 3 days before the closure day and settled as usual.
For applying for shares in acceptance, beneficiary should submit off market instruction in favour of Escrow a/c in cases of entitlements in non-physical form and make payment in acceptance of the original/acquired entitlements. Further,the ASBA e-forms may be suitably modified and provision for pay-in by way of either physical cheque or draft or on-line pay-in may be made. As this will help in curtailing errors in manual processing and time, the process of the right issue allotment shall be as smooth as in cases of fresh IPO.
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