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June 14, 2026
The Dispatch

Definition

Rights Entitlement

A rights entitlement (RE) is the tradable right credited to shareholders in a rights issue, allowing them to apply for new shares or sell the right.

When a company announces a rights issue, eligible shareholders receive rights entitlements in their demat accounts in proportion to their holding on the record date. An RE can be used to subscribe to the new shares, renounced (sold) to someone else on the exchange, or allowed to lapse.

SEBI made REs tradable on the NSE and BSE so that shareholders who do not wish to invest more can still realise value rather than letting the right expire worthless. RE trading happens for a limited window during the rights issue.

Related terms

  • Rights IssueA rights issue offers existing shareholders the right to buy additional shares, usually at a discount, in proportion to their current holding.
  • DilutionDilution is the reduction in existing shareholders' percentage ownership when a company issues new shares.

Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.