DRAFTOperational aspects of applying in Rights Entitlements (REs)

20-May-2020Online

We start at 4:30 sharp

1

DRAFT

Rights Entitlement (RE)

• Concept of RE was operationalised from 22-Jan-2020• SEBI circular ref. SEBI/HO/CFD/DIL2/CIR/P/2020/13• Subject of streamlining the Process of Rights Issue• Applicable for Rights issue where Letter of Offer (LoF) is filed with

the stock exchanges on or after 14-Feb-2020

• Since then• First major rights issue with RE concept in progress

2

DRAFT

How to know your RE

• Details with respect to RE entitlement available on thewebsite of the Registrar

• Investor can check there• Adequate security controls like demat account details, PAN, etc.

will be put

• Email also sent by issuer/ Registrar

3

DRAFT

RE – highlights – demat shares

• REs credited in the demat account of the shareholder• Separate ISIN• If the demat account frozen/ closed/ not available, in suspense

escrow• Investor can trade in the RE

• Buy/ sell in the market through Stock Broker OR• Off market buy/ sell using Delivery Instruction Slips (DIS)

• RE holders can• Apply for entitlement OR• Apply for more than entitlement OR• Apply for less than entitlement

4

DRAFT

RE highlights – Physical shares

• Physical shareholders can get RE only in demat form• Required to provide demat account details to Issuer / Registrar

not later than two working days prior to issue closing date• credit of REs in their demat account to take place at least one day

before issue closing date

• Physical shareholders can apply for their entitlements(pandemic relaxation)

• However cannot renounce

5

DRAFT

What if investor does nothing

• REs which are neither renounced nor subscribed by theshareholders, shall lapse on closure of the Rights Issue.

• Why would anyone do that? Ignorance?• Challenge for the broking/ DP community to educate investor

6

DRAFT

How to apply

• Only ASBA application was initially permitted• However due to pandemic

• Additional option of paying given (explained later)

• Submit only one application per demat account• If REs in multiple demat accounts, multiple applications please

• Application Form• Applicants can use application form available on the website of

Registrar OR• to make an application in writing on a plain paper

7

DRAFT

Allotment

• As on issue closing date Registrar will• Obtain details of holders of REs from the depositories.• Reconcile the same with valid ASBA applications and funds

blocked

• Matching will be carried out by Registrar

8

DRAFT

Trading on Stock Exchanges

• BSE - R group/ NSE - BE• T + 2 settlement• Trade for trade

• Remember, no short selling allowed

• Trading commences along with the opening of the issue• closed at least four days prior to the closure of the rights issue

9

DRAFT

Other aspects – fractions

• The fractional part shall be ignored by rounding down theentitlement

• However, priority allotment of 1 share if extra applied for subjectto availability

10

DRAFT

Pandemic relaxations

• SEBI/HO/CFD/DIL2/CIR/P/2020/78 dated 06-May-2020• Optional mechanism to accept the applications of the

shareholders• Third party payments not allowed

• Physical shareholder can apply• Allotment only in demat mode however

11

DRAFT

Current Rights Issue

• Rights Entitlement (RE) for demat shareholders• 1 (one) Rights Equity Share for every 15 Equity Shares• held on the Record Date 14-May-2020

• Issue Opening Date: 20-May- 2020• Issue Closing date: 03-Jun-2020

12

DRAFT

Online entitlement details

• Registrar Kfin Technologies Private Limited• Registrar website https://rights.kfintech.com

• Can obtain the details of Entitlements• Enter your DP ID and Client ID and PAN

13

14

DRAFT

Trading in RE

• Trading in Stock exchanges from 20-May-2020 to 29-May-2020

• Through Stock Broker• Like normal trading• Exchanges have issued notices, trading has commenced

• For off market trade• Give off market instruction to DP

15

DRAFT

Subscribing to RE

• There are two ways of subscribing• Option 1 - ASBA (as was done in the past ?? )• Option 2 - Special R-WAP facility (non ASBA – direct debit)

• Cannot subscribe through any other means• Not even your Stock Broker

16

DRAFT

Subscribing through ASBA

• Confirm whether your bank/ branch is accepting ASBAapplications

• Offline or online

• Submit the Application to Bank/ Branch• Online/electronic application convenient

• Money remains in account till allotment• Making plain paper Applications with bank also permitted

17

DRAFT

Subscribing through R-WAP

• Special facility due to the lockdown• Only for resident Investors• Operational from Issue Opening Date

18

DRAFT

Subscribing through R-WAP

• Go to website https://rights.kfintech.com• Fill the online Application Form available on R-WAP• Provide depository account details and PAN very carefully + other

details required such as such as total number of Rights EquityShares applied for, etc.

• Make online payment using the internet banking or UPI facilityfrom investor own bank account

• Renouncees should select the category of ‘Renouncee’ atthe application page

• Existing shareholders cannot select ‘Renouncee’19

DRAFT

R-WAP Screen 1 – Terms and conditions

20

DRAFT

R-WAP Screen 2 – Existing Demat shareholders

21

DRAFT

R-WAP Screen 3 – Renouncee applicants

22

DRAFT

R-WAP Screen 4 – Email Mobile OTP

23

DRAFT

R-WAP Screen 5 – Changing bank details

24

DRAFT

Subscription – take care

• You are required to submit a separate Application Form foreach demat account

• Applications made with payment using third party bankaccounts are liable to be rejected

• Verification may be done through depository data, penny drop,cancelled cheque, other industry accepted and tested methods

• Incorrect depository account details or PAN number couldlead to rejection of the Application

25

DRAFT

Some terms of the issue

• Payment terms• On Application 25% of the Issue Price• Balance 75% when calls are due

• Allotment• Date of Allotment on or about June 10, 2020• Date of credit on or about June 11, 2020• Date of listing on or about June 12, 2020

• Trading in partly paid up shares• Under separate ISIN till partly paid

26

DRAFTREALLIFE

EXAMPLES

27

DRAFT

Scenario - 1

• Situation• Applied for 100 Rights in Demat account 1• RE balance in Demat account 1 is 100

• Allotment• 100 shares to be allotted provided there are no errors

28

DRAFT

Scenario - 2

• Situation• Applied for 100 Rights in Demat account 1• Applied for 100 Rights in Demat account 2• RE balance in Demat account 1 is 100• RE balance in Demat account 2 is 50

• Allotment• 100 shares to be allotted in Demat Account No. 1• 50 shares to be allotted in Demat Account No. 2• Additional shares (max 50 more) may be allotted in Demat

Account No. 2 subject to oversubscription29

DRAFT

Scenario - 3

• Situation• Originally had 100 Rights in Demat account 1• Applied for 100 Rights in Demat account 1 on Day 1• Sold the RE in the market• Nil RE balance as on closure of issue

• Allotment• Nil allotment• Amount will be refunded

30

DRAFT

Scenario - 4

• Situation• Originally had 100 Rights in Demat account 1• Purchased 200 more• So 300 RE balance as on closure of issue• Applied for 1000 Rights in Demat account 1

• Allotment• 300 shares to be allotted in Demat Account No. 1• Additional shares (upto 700 max) may be allotted subject to

oversubscription

31

DRAFT

Scenario - 5

• Situation• RE balance in Demat account 1 is 100• RE balance in Demat account 2 is 50• Applied for 150 Rights in Demat account 1• Applied for Nil Rights in Demat account 2

• Allotment• 100 shares to be allotted in Demat Account No. 1• Nil shares to be allotted in Demat Account No. 2 – 50 RE lapsed• Additional shares (max 50) may be allotted in Demat Account No.

1 subject to oversubscription32

DRAFT

Scenario - 6

• Situation• RE entitlement – physical - 100• RE balance in Demat is 200• Applied for 100 Rights for physical using R-WAP• Applied for 200 Rights in Demat using ASBA

• Allotment• 100 shares to be allotted – you will need to provide demat details

for the shares to be received in your demat account• 200 shares to be allotted in Demat Account

33

DRAFT

Common questions

• BTST• NRO/ NRE• Issues with Bank softwares

• Some asking for Common Application Form (CAF) number• At least one not accepting decimal places• Other issues

34

DRAFTQuestions

35