Capitaland conducted a rights exercise not long ago to raise capital so I thought it will be good to use it as a case study using pictures to illustrate the process. I realize that rights issue can be very confusing thus I hope this post will help.
The important dates for a rights issue are given in a schedule and this can be found in the Offer Information Statement or the OIS.
Once a rights issue is declared, the counter will go on ‘cum-rights‘ and there will be a ‘CR‘ beside the name of the counter.
Subsequently, the counter will go on ‘ex-rights‘ and there will be a ‘XR‘ beside the name of the counter. If you wish to receive the rights, you will have to buy the counter before it goes on ‘XR‘.
Next, the rights will be traded on the market after it is issued to the shareholders who bought before ‘XR‘. This can be seen in the ‘Capitaland R’ and ‘Capitaland R 500‘ counters.
After this, the trading of the rights will be stopped. When the payment of rights is done, the rights will be converted to rights shares and that will be the end of a rights issue exercise.
In this case, Capitaland has a rights issue at a ratio of 2:1. This would mean that shareholders who are holding an odd number of lots for example, 1 lot will receive 500 shares if they subscribe to the rights issue. To facilitate the trading of these 500 shares, a counter labelled ‘Capitaland 500′ with a lot size of 500 shares will be listed temporarily on SGX.